is cutting out part of its private-label tire manufacturing in North America in order to focus on more profitable segments of the business, the company said Wednesday.
The decision will affect around 10 private-label brands that are sold by a small number of wholesale customers to tire retailers. In 2005, this segment of Goodyear's private-label business represented around $300 million in sales and about 8 million tires, or roughly one-third of the Akron, Ohio, company's private-label manufacturing.
During the next 12 months, the company will work with the customers involved to help them start using other tires. Goodyear's tire manufacturing capacity in North America will be reduced as a result of the move.
"While our branded replacement business remains strong, the overall environment, including a very weak industry and continued raw material price escalation, likely will result in full year operating income for North America below 2005 levels," the company said.
Despite the earnings pressure this year in its North American tire segment, Goodyear said it's "confident that the strategic actions we are taking in North America will allow us to achieve 5% operating margins, consistent with the three-to-five year next-stage metrics announced to investors last September."
Goodyear's operations outside North America should have year-over-year improvements in total operating income, the company said.