Goodyear Tire & Rubber Co. (GT) said Thursday that it has decided to increase its cost savings target, focusing on the efficiency of supply chain and back office operations. The Akron, Ohio-based company also plans to capitalize on the growing demand for tires and build on the strength of its profitable businesses in the emerging markets of Latin America, Eastern Europe and Asia. The company will discuss its strategy and plans at an investor conference in New York on Thursday.
In the meeting, the company will discuss its decision to increase its cost savings target to more than $2 billion by 2009 from its prior goal of between $1.8 billion and $2 billion. The company will also discuss the announced closure of its manufacturing plant in Somerton, Australia. This plant closure completes the company's targeted reduction of approximately 25 million units of high-cost capacity as part of its 4-point cost savings plan.
Goodyear also intends to invest up to $500 million to increase its presence in China. The company will facilitate this investment through a relocation and expansion of its manufacturing plant in Dalian to increase the production of consumer and commercial tires for the Asia-Pacific region.
Further, Goodyear would make investments in the range of $500 million - $700 million over five years to modernize four U.S. manufacturing plants. Investments of up to $600 million and approximately $500 million have been planned to expand the company's production in Brazil and Chile, and Germany and Poland, respectively.
Looking ahead, the company expects capital investments between $1 billion and $1.3 billion per year from 2008 to 2010. The company also expects to increase high-value-added capacity by 50% from 2006 levels and low-cost capacity to 50% of its worldwide total by 2012.
GT closed Wednesday's trading at $20.51, up $0.70, on a volume of 4.59 million shares.
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