From Staff & Wire Reports

AKRON, OHIO -- The Wall Street Journal reported Friday morning Goodyear Tire & Rubber Co., facing mounting debt pressure and stiffening global competition, may be looking to restructure its North American Tire division, an effort that could include plant closures, layoffs and shifting of tire production overseas.

Goodyear officials, according to the WSJ story, said no decisions had been made, and that any restructuring talk was part of larger strategies to reduce debt and improve its cost structures.

It has often been speculated by financial analysts that, in order for Goodyear to make a substantial dent in its $5.4 billion of debt, it would have to sell off non-tire operations and close some plants. The tiremaker’s 2003 master contract with the United Steelworkers of America (USWA), however, restricts Goodyear’s ability to close plants and reduce plant employment. That contract, which covers nine of Goodyear’s 12 North American plants, ends in 2006.

The WSJ article also suggested that Goodyear may sharply reduce its private brand manufacturing business to convert that production capacity to higher margin products or simply reduce overhead costs.

Goodyear refinanced some $2.3 billion of its debt last year, Richard Kramer, Goodyear CFO, noted in the WSJ story, and gained additional financial flexibility by extending the maturity date on that portion of its debt load. And, while Goodyear had been actively cutting costs over the last two years, the tiremaker has been increasing its capital and R&D spending; the WSJ article noted that Goodyear spent $383 million in 2003 on capital projects, increasing that to some $500 million last year. For 2005, Goodyear has set aside approximately $600 million for capital enhancements.

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