Goodyear on a roll
By Staff -- Purchasing, 3/11/1999
Goodyear tires has announced it will acquire 10% of the Japanese company Sumitomo Rubber Industries and gain control of the company's U.S. and Western European operations, and also that it is initiating a cost-cutting drive that will result in 2,800 employees being laid off.The acquisition will bring about the creation of six joint ventures in Japan, the U.S., and Europe, expanding cooperative agreements between the Goodyear brand and Sumitomo's Dunlop brand. The new deal makes Goodyear the world's No. 1 tire company. Until recently it was third behind Bridgestone and Michelin.
The transaction between Goodyear and Sumitomo will take the form of a ten-to-one stock swap plus a payment by Goodyear of $1 billion.
The company is also planning cutbacks in an effort to reduce costs by $100-$150 million per year. The layoffs and plant cutbacks are a response to economic crises in Asia and South America, according to the company. The Goodyear plant in Gadsden, Ala., will cease manufacturing tires by the end of this year. It will continue its rubber-mixing function, however.
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