17 July 2008
The Goodyear Tire & Rubber Company plans to boost its savings target for 2009 by more than $200 million (£100 million).
The tyre manufacturer's new goal now exceeds $2 billon (£1 billion) and replaces the $1.8 billion (£910 million) target set in 2007. It has already saved $1.2 billion (£600 million) of the total and is seeking the extra cost reductions through supply chain efficiencies, strategic sourcing and back-office consolidation.
Robert Keegan, chairman and chief executive of Goodyear, said the tyre industry's supply chain had become increasingly challenging and needed to be simplified. He announced a new supply scheme that will make it easier for dealers to order tyres from the company. It intends to move to lean manufacturing so it can forecast orders more accurately, ensure sufficient supply and drive savings.
Goodyear aims to move 50 per cent of its production capacity to low-cost countries, such as China, by 2012. It is also considering buying materials from Eastern Europe, where it sees potential for further savings.
Back-office cost reductions will be made through consolidating offices and standardising processes across the firm. Last month the company closed a factory in Australia in a bid to reduce high-cost sources of supply and save $35 million (£17.7 million). It hopes simplifying back-office processes will deliver savings of up to $250 million (£126 million) by 2009.
It also confirmed its outsourcing of certain categories of spend would continue and those savings did form part of the revised target.