Goodyear Tire & Rubber Company (GT) is dismissing 55 hourly workers based in its Danville, Virginia plant, according to sources. The layoffs will be effective from September 29 in the plant, which provides employment to about 2,300 workers.
The company is also adjusting production schedule at its Gadsden plant by implementing a two–week reduction in schedule this month. The two week period starts on September 29 and culminates on October 14. Goodyear has adopted this strategy to balance supply and demand of its products.
In August, the company’s plant in Fayetteville, North Carolina, stopped operation for a week. The move was intended to adjust the inventories.
Goodyear, in the second quarter of 2012, saw a 12% decline in its earnings (excluding special items) to 57 cents per share from 65 cents in the prior-year quarter. The results, however, exceeded the Zacks Consensus Estimate of 46 cents. The year-over-year fall was due to lower tire volumes, impacted by the ongoing macroeconomic uncertainty across the globe.
Revenues fell 8% year over year to $5.2 billion, missing the Zacks Consensus Estimate of $5.7 billion. The decline was driven by weak economic conditions and unfavorable foreign currency translation.
Goodyear Tire & Rubber Company is one of the largest tire manufacturing companies worldwide, selling its products under the Goodyear, Kelly, Dunlop, Fulda, Debica, Sava and various other “house” brand names as well as private-label brands. The company, on a worldwide basis, competes with Bridgestone of Japan and Michelin of France along with other major competitors including Cooper Tire & Rubber Co. (CTB).
The company is focused on the twin goals of top-line growth and cost reduction. However, it faces pricing pressure from OEMs and sluggish growth in the global tire industry.
Currently, Goodyear retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term (more than 6 months) Neutral recommendation on the stock.
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