Goodyear shuts down Philippine tire factory

GOODYEAR Philippines Inc. is closing down its tire manufacturing operations by Sept. 30 following a slump in exports, which account for half of its business in the Philippines.

President and managing director David Morin told reporters that some 500 employees in the Las Piñas plant would lose their jobs. About 100 workers would be retained to man the company’s marketing, sales, distribution and administrative operations.

“The closure is primarily due to the issue of eroding cost competitiveness,” especially power, Morin said.

But the Philippine operations could still be competitive if the Las Piñas plant were running on full capacity, he added.

“In the fourth quarter, the export business was severely and swiftly impacted by the global economic recession,” Morin said.

“We then assessed our cost competitiveness and hoped the export business would come back, but it has not and we don’t foresee this happening in the near future.”

The Philippines exports tires mainly for the replacement markets of North America, South America, Europe, Africa, the Middle East and the Caribbean.

Morin said that as early as last December, the company already had retrenched 46 people who then represented about 7 percent of its total manpower.

“To maintain competitiveness and support our distribution, we must make changes to the cost structure and close our manufacturing operations,” Morin said.

The retrenchment package aside, displaced employees may choose two out of 13 programs that Goodyear Philippines has prepared for them so they can take on new jobs. If an employee chooses to skip retraining, he or she could pass it on to a spouse or any child aged 18 years and above.

With the plant closure, Goodyear Philippines will now import from sister companies in Thailand, Malaysia and Indonesia, where its manufacturing operations will be retained.

Morin said the export market was now in a slump, but the domestic market was improving.

“The fourth- quarter impact on the domestic market was fairly significant in [relation] to the global recession,“ he said.

“In the first quarter, it started to stabilize and we saw improvements during the second quarter. As of mid-year, we are down 5 percent in domestic sales.”

The company could manage a 5-percent fall in sales if it was merely an issue of domestic operations.

“We could manage that but it’s not a domestic discussion. It’s now an export issue,“ Morin said.

“The high component of export business makes us less cost competitive. It is the total cost structure that would be impacted by the loss of exports. The domestic business is not growing at the pace needed to make up for the loss of [our] export business.”

The company’s parent, Akron, Ohio-based Goodyear Tire and Rubber Co., said in a separate statement the closure of the Las Piñas plant would cut yearly capacity by nearly two million units, which was part of its strategy to remove 15 million to 20 million units of its capacity over the next two years. –Elaine R. Alanguilan, Manila Standard Today