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Goodyear Exits After 46 Years in S. Africa : Both Politics and Economics Cited by Chief Executive

June 07, 1989| From Associated Press

JOHANNESBURG, South Africa — Goodyear Tire & Rubber Co., one of the largest U.S. companies in South Africa, today announced that it is pulling out of the country after 42 years and selling its assets to a South African company.

A combination of economic and political factors was responsible for Goodyear's decision to divest itself of its Uitenhage, South Africa, tire and general products manufacturing operation.

The business will be sold to Consol Ltd., an industrial subsidiary of Anglovaal Ltd., a South African financial, industrial and mining group.

Tom H. Barrett, Goodyear's chairman, president and chief executive officer, said the company regrets leaving South Africa after providing jobs there for more than four decades.

But, he said in an announcement of the sale, "it is becoming increasingly difficult for American companies to obtain adequate returns on investments there."

Barrett said the reasons for Goodyear's disinvestment included U.S. sanctions against South Africa, double U.S. taxation of South African earnings and the likelihood of a continuing decline in the value of the South African rand against major currencies.

Tax Credit Eliminated

Congress in late 1987 enacted legislation that eliminates a tax credit for U.S. companies that allowed them to deduct taxes paid to South Africa against taxes owed to the U.S. government.

The former Reagan Administration opposed the amendment and considered fighting to have it repealed, but it remains the law.

Former State Department spokeswoman Phyllis Oakley said at the time the bill was passed that "the most likely effect will be to accelerate the takeover of U.S. assets by South African firms at bargain prices."

Barrett said Anglovaal Ltd. is a responsible group that has demonstrated concern for human rights in the workplace and has expressed intentions to retain the current work force of 2,400 people, the majority of whom are black and colored.

Mike McNamara, chairman and managing director of Goodyear's South African business, said the company will continue to operate under the same management.

"We have always taken great pride in our people, and our management team and employees have vast knowledge of the local tire and rubber industry," McNamara said. "For them, we will continue to operate under present employment policies, practices and benefits, and all existing agreements and arrangements with our two trade unions remain unaltered."

Adhered to Sullivan Principles

Goodyear began manufacturing tires in South Africa in 1947, the year before the South African government adopted the apartheid policy of racial separation.

Over the years, Goodyear took the position that it could contribute to social progress in South Africa by maintaining its operations in the country.

The company says it has spent more than $10 million in education and training of blacks, housing and social programs in South Africa. Goodyear has adhered to the Sullivan Principles, a set of guidelines for companies operating in South Africa that address employment and other practices.

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