Goodyear reduces production temporarily
Oct 4, 2005 12:07 PM
The Goodyear Tire & Rubber Co, Akron OH, has implemented temporary reductions in production at its North American tire facilities due to disruptions in the supply of certain raw materials resulting from the impact of Hurricane Rita in Texas and Louisiana.
According to Christopher W Clark, senior vice-president, global sourcing, Goodyear has already begun discussions with its customers to assess their priority product needs, and indicated that no deliveries to customers have been impacted to date.
Currently, all of Goodyear's North American tire and engineered products plants are operating, although tire production has been reduced by approximately 30 percent in response to supplier shortages. Goodyear expects to increase production as the raw material disruption eases in the coming weeks.
"At our present production and inventory levels we currently anticipate that we have the ability to meet our obligations," Clark said. However, because of the uncertainty around supplier shortages and transportation system difficulties associated with the hurricane, Goodyear has declared force majeure under certain of its contracts (an action that excuses the company from liability as a result of an unforseen event beyond the company's control).
In addition, Goodyear's chemical facilities in Texas suspended operations in anticipation of the hurricane. Production resumed in Bayport and Houston after the hurricane, and the company's Beaumont operations resumed partial production last Friday. Full capabilities are expected at Beaumont when utilities are restored. The temporary disruption at Beaumont is not expected to significantly impact Goodyear's tire or engineered products production.
Goodyear said it is still assessing the impact of these events on the company's financial results. It anticipates that most of the impact will be related to higher production and raw material costs as well as higher transportation expenses, the effects of which will be felt in the third and fourth quarters.
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