(Updates with details on costs in seventh paragraph.)
Jan. 31 (Bloomberg) -- Goodyear Tire & Rubber Co., the largest U.S. tiremaker, will close its main French plant and cut its workforce in the country by 39 percent amid labor disputes and plunging auto demand in Europe.
The factory in Amiens in the north of France will be shuttered, with the loss of 1,173 jobs, the company said in a statement today. Goodyear currently employs about 3,000 people across the country, Mathilde Davadant, a spokeswoman, said by phone. There’s no set date for the plant closing, she said.
“We are deeply disappointed that the five past years of negotiations haven’t allowed us to reach a compromise with the employees’ representatives,” Henry Dumortier, head of Goodyear’s French unit, said in a written statement. “Today’s announcement is the only remaining option that we have.”
The economic contraction in Europe stemming from the sovereign-debt crisis has caused car and truck sales to plummet to nearly a 20-year low. Ford Motor Co. has widened its estimate for losses in the region, and Italian carmaker Fiat SpA scrapped its 2012 dividend yesterday to preserve cash after forecasting the auto-market slump will continue this year.
Strategy changes that Akron, Ohio-based Goodyear has sought to carry out at the Amiens-Nord plant in response to the global recession in 2008 have been stymied by disagreements with labor leaders. Titan International Inc. decided in December 2011 to drop a two-year-old plan to buy the factory’s farm-tire operations, citing union opposition.
The French plant cost Goodyear 61 million euros ($83 million) last year in losses, according to the statement.
The tiremaker will record a fourth-quarter charge of $74 million for the closing, which will cost in total at least $230 million, the company said in a U.S. filing today. The shutdown will improve operating profit by $75 million in Europe following its completion, Goodyear said.
Europe’s car market is forecast to drop to 12.3 million vehicles this year, 23 percent below the pre-crisis peak, IHS Automotive estimates. Carmakers across the region have announced 30,000 job cuts since the beginning of July in response to the prolonged slump.
General Motors Co., seeing Germany at risk of slipping into recession, said last week that its Opel brand may shutter a factory in that country two years earlier than planned as the European auto market sinks for a sixth straight year. The factory employs 3,100 workers. Ford is slashing 6,200 positions and closing three plants in the region.
Peugeot plans to shrink its French automotive operations by 11,200 positions over the next two years. The automaker is also closing a factory in Aulnay on the outskirts of Paris, selling assets and building a strategic alliance with GM.
Renault SA, the automaker whose sales in Europe dropped the most in 2012, said on Jan. 15 it would cut 17 percent of its French workforce, or 7,500 positions.
--Editors: Chad Thomas, Tom Lavell