The Goodyear Tire & Rubber Co. ended up losing $330 million in 2006 – compared to profits of $228 million in 2005 – due to the 12-week strike by the United Steelworkers (USW) against the company late last year. The company said that the strike reduced tire volume by 2.8 million units, cut sales by $363 million and reduced net income by $367 million.
Robert Keegan, chairman & CEO, added that high raw material costs and difficult market dynamics added to the challenges posed by the strike last year. The company also incurred costs to exit certain segments of the private-label tire business and divestitures that began in 2005. Divestitures in 2005 reduced sales by approximately $265 million in 2006 and cut tire volume by 1.1-million units.
Improvements in pricing and product mix of approximately $784 million partially offset higher raw material costs, which increased 17% in 2006 or some $869 million, compared to 2005. Revenue per tire increased 7% in 2006 compared to 2005, Keegan noted.
Still, despite those issues, Goodyear posted higher revenues – both in the fourth quarter last year as well as for all of 2006. Fourth quarter sales reached nearly $5 billion, a 2% increase compared to the same period in 2005, despite an 8% decline in tire volumes due to the USW strike. For the year, Goodyear’s sales topped $20.3 billion, a 3% increase over 2005 despite a 5% decline in tire unit volume.
