Goodyear earmarks $130m for tornado-hit tire operations

Akron, Ohio – Goodyear Tire & Rubber Co. expects significant impacts from recent tornado damage to a passenger car tire plant and logisitcs facilities in the US.

On 1 April, the severe weather event significantly damaged Goodyear's tire manufacturing facility and adjacent warehouse in Tupelo, Mississippi.

Similarly, the tornado led to the shutdown of a leased distribution centre in Whiteland, Indiana, Goodyear said in a  26 April stock exchange filing.

The Whiteland distribution centre and the Tupelo warehouse were able to restart tire shipments on 11 April and 18 April, respectively, Goodyear reported.

Restart of the 37,000-tires-a-day Tupelo facility is anticipated by early June, though full ramp-up is "not expected until the third quarter."

Due to outages, Goodyear projected that its Americas tire sales would be negatively impacted by $110-130 million (€100-118 million) in the second quarter.

The costs are primarily due to the shutdown and subsequent ramp-up of the Tupelo tire manufacturing facility, the group noted.

Goodyear expects the Americas operating income to be negatively impacted by $60-80 million, due to reduced sales margins, as well as unabsorbed fixed costs.

Other additional expenses include Goodyear’s intent to continue to pay workforce, during the shut-down and ramp-up.

The Akron-based group expects a significant portion of property damage to be covered by a $15-million 'per occurrence' insurance policy.

The potential insurance reimbursement has not been reflected in Goodyear’s estimates due to uncertainty in determining the ultimate amount.