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Goodyear Tire Plans Phased Production Restart In Q2; To Cut Payroll Costs

While reporting its first-quarter financial results on Thursday, Goodyear Tire & Rubber Co. (GT) said it is planning a phased restart of production during the second quarter, which began earlier this month with some of its commercial truck tire facilities in the U.S. and Europe. The company expects the majority of its manufacturing facilities to resume operations by the end of May.

Goodyear Tire noted that decisions regarding production will be based on an evaluation of market demand signals, inventory and supply levels, as well as the company's ability to safeguard the health of its associates.

The company's plant in Pulandian, China is operating with 100 percent of its workforce, but is not yet operating at full capacity. The facility is expected to continue ramping up production during the second quarter.

Goodyear Tire said it expects 2020 capital expenditures to be no more than $700 million.

In addition, the company is implementing actions to reduce payroll costs through a combination of furloughs, temporary salary reductions and salary deferrals covering over 9,000 of its corporate and business unit associates. This includes substantial salary reductions and deferrals for the company's CEO, officers and directors.

Goodyear Tire is also reducing discretionary spending, including marketing and advertising expenditures. Together, the company expects these actions will help to mitigate the financial impact of lower industry demand as a result of COVID-19.

Further, Goodyear Tire is accelerating restructuring actions to further improve its cost structure. The company has recently reached a tentative bargaining agreement to permanently close its Gadsden, Alabama manufacturing facility as part of its strategy to strengthen the competitiveness of its manufacturing footprint.

The tentative bargaining agreement remains subject to approval by the membership of the local union. The company expects the closure will result in annual savings of about $130 million in 2021 when compared with 2019.

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