The Goodyear Tire & Rubber Co. announced on June 26 it is making some changes to the way it will do business going forward. CEO Robert J. Keegan said the company will leverage its innovation capabilities to differentiate its products in the marketplace.
"Growth in markets such as China, Russia and Brazil and a transition to increasingly high-value-added tires in these markets represent significant opportunities," Keegan said. "Our leadership teams in these markets have proven capability to develop markets, build strong distribution networks, leverage our brands and deliver high returns. We see many opportunities for our businesses in emerging markets to continue to be a major growth engine for Goodyear."
The company has increased its cost savings target to more than $2 billion by 2009 from its prior goal of between $1.8 billion and $2 billion through intensified focus on efficiency throughout the supply chain and in back office operations. It will close its manufacturing plant in Somerton, Australia, but will invest up to $500 million to increase its presence in China through a relocation and expansion of its manufacturing plant in Dalian to facilitate increased production of high-value-added consumer and commercial tires for the Asia-Pacific region.
In the U.S. the company plans to commit $500-$700 million over five years to modernize four U.S. manufacturing plants to increase high-value-added tire production and improve cost efficiency.
Brazil and Chile will receive investments of up to $600 million to expand production. And $500 mill ion will be spent in Germany and Poland for the same reason.
"Going forward, we anticipate capital investments totaling between $1 billion and $1.3 billion per year from 2008 to 2010," Keegan said.
The company expects to increase high-value-added capacity by 50% from 2006 levels and to increase its low-cost capacity to 50% of its worldwide total by 2012.