Cooper's capacity study may recommend plant closure

Findlay, Ohio -- Cooper Tire & Rubber Co. is likely to close one of its four US tyre plants as a result of soft demand for tyres, said Pat Brown, Cooper's vice president, global branding and communications.

The Findlay-based tyre maker has begun conducting a 90-day capacity study to review and analyse each of its US plants as a result of lost market share in the US Cooper reported it has more capacity than necessary to meet consumer demand for its tyres.

“While any reduction in manufacturing footprint is difficult, if a decision is made to close a US plant, Cooper Tire will be a stronger competitor and a more stable company for future success,” Cooper said in a media briefing. Cooper operates non-union tyre plants in Albany, Georgia, and Tupelo, Mississippi, and unionised plants in Texarkana, Arkansas, and Findlay, employing 5000. Combined daily capacity is listed as 110 000 units.

When Cooper initiated strategic planning in 2007, it predicted a growth rate in replacement tyre demand of 3 percent per year. According to the company, new forecasts indicate that the replacement tyre market will decline 1-2 percent per year during the next three years.

The capacity study will look at things such as cost savings opportunity, cost of implementation, individual plant performance, quality and competitiveness, level of plant automation, plant flexibility, operational impact on the network and community impact among a number of other factors.

“Economic conditions, including demand for replacement tyres, are certainly more difficult than when we initially developed the plan, and this has resulted in surplus capacity in our US facilities,” Cooper CEO Roy Armes said. “Unfortunately this type of action has become a necessity.”

Mr. Armes added that the company has developed a “transparent process and will communicate openly with those who may be affected in either manufacturing or administrative positions.” Cooper said results of the study will be communicated as soon as its board of directors approves a new strategic plan.

In June, Cooper announced plans to invest $31 million in minority ownership in a tyre plant in Guadalajara, Mexico, which Ms. Brown said has helped reduce some of the company's manufacturing costs.

From Tire Business (A Crain publication)