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Goodyear to Cut Costs, Brands, Jobs

May 01, 2003|From Bloomberg News

Goodyear Tire & Rubber Co., North America's largest tire maker, said Wednesday that it planned to cut costs as much as $1.5 billion by the end of 2005 in an effort to return to profitability after its loss widened in the first quarter.

Goodyear will eliminate brands, product lines, customers and more jobs, Chief Executive Robert Keegan said.

The company's first-quarter net loss increased to $163.3 million, or 93 cents a share, from $63.2 million, or 39 cents, in the year-earlier period. Sales rose 7% to $3.55 billion, the second straight gain after drops in seven of the previous eight quarters.

Keegan, who has eliminated 1,600 jobs since September, is trying to stem two years of deepening losses.

The company's North American tire business, the biggest of its divisions, had a 3.7% sales decline in the quarter and its loss widened because of rising costs for raw materials, energy and employee health care.

Goodyear shares fell 23 cents, or 3.9%, to $5.72 on the New York Stock Exchange. The Akron, Ohio-based maker of Goodyear, Kelly and Dunlop tires has lost 74% of its stock value over the last 12 months.

The company had $65.2 million in costs, or 37 cents a share, in the first quarter as it eliminated jobs in Akron and other North American sites as well as in Europe and Latin America.

The cuts account for about 1% of Goodyear's workforce, which now stands at 92,000 employees worldwide. The company expects to generate annual savings of about $70 million.

Goodyear didn't disclose any details about how many more jobs it would cut or how it would adjust capacity, citing ongoing negotiations with the United Steelworkers of America union. The labor contract expired April 19 and is being extended on a day-to-day basis during talks.

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