Goodyear shuts down manufacturing facility in RP on slowing global tire exports

Giant tire manufacturer Goodyear on Friday announced it would be closing down its Philippine production facility by end-September, which will leave 500 people jobless.

The company cited declining exports as reason for the closure.

“The cessation of the manufacturing operations of Goodyear Philippines will be effective September 30, 2009,” David Joseph Morin, Goodyear Philippines Inc. president and managing director, told reporters in a briefing.

The company said the plant in Barangay Almanza, Las Piñas City, would be shut down as the Ohio-based tire maker streamlines operations “in response to unfavorable market conditions and to ensure long-term business viability.”

Morin said global tire exports have been declining since the fourth quarter of last year. He said the Philippine facility exports replacement tires to North and South America, the Carribean, Europe, South Africa, and the Middle East. About 50 percent of the plant’s capacity is for export production, while the remaining half is for manufacturing original equipment supplied to the domestic market, he said.

With the closure of the local facility, Morin said Goodyear Philippines would source from company affiliates in neighboring countries Indonesia, Malaysia and Thailand, tapping the zero-duty regime of the Asean Free Trade Agreement that begins next year. He said the local unit is already importing a “significant” number, adding that about 50 percent of the total domestic tire market is currently accounted by imports.

Morin said sales in the country declined in the fourth quarter of last year but improved by the first quarter of this year, and started to return to normal in the second quarter. “Midyear sales are probably down by less than 5 percent. But we expect to meet our yearend targets,” he said, but he refused to elaborate.

Ron Castro, director for communications in the Asia-Pacific region, added that Goodyear Philippines is the domestic market leader as it has the widest distribution network with five times the number of retail stores of its nearest competitor.

However, Morin said the local market is not growing at a rate that can offset the losses in the export business. Also, with the decline in exports, the plant’s capacity utilization has dropped by about half, he said.

According to its website, Goodyear Tire & Rubber Co. has about 60 manufacturing facilities in 25 countries and has an about 71,000 strong workforce.

Morin said about 500 workers, mostly from the manufacturing division, of the total employees, will lose their jobs. Associates in the administration, distribution, marketing and sales departments will be retained, he said.

Morin said the separation packages “far exceeds what is legally required,” but he refused to give details. He added that the company has set aside about P1 million for retraining displaced workers, through which the employee, and the spouse or any child at least 18-years-old, can undergo two out of 13 skills training programs that will hopefully help them gain employment in probably another industry, he said.

Meanwhile, Morin said Goodyear Philippines plans to keep leasing the 18-hectare Almanza property to continuously house the company’s remaining distribution, marketing and sales operations.

But when asked if the company will consider resuming operations here once the global economy recovers, Morin said it would be “difficult to do as the operations here have ceased.”

Goodyear manufactured its first tire in the Philippines way back in 1956.

Sought for comment, Gary Olivar, deputy presidential spokesman for economic affairs, told The Manila Times in a text message that: “I will assume the plant closing was based on rationalization of their global production chain due to unfavorable global sales, not on specific issues with the Philippine facility.”  –Ben Arnold O. de Vera, Manila Times