It shouldn't take a seer to figure out that the markets causing automakers General Motors
The largest U.S. manufacturer of tires reported that it plans to cut costs in less-efficient plants (by closing, in the case of an Australian plant) in order to expand production in lower-cost countries including China, Brazil, and Chile, as well as at European facilities in Germany and Poland.
June sales figures are due out next week, and analysts anticipate seeing huge declines from Detroit's Big Three automakers, perhaps as much as a 25% drop. Ford's decision to delay introduction of the new version of its once top-selling F-150 pickup truck is emblematic of the world of pain in which the automakers find themselves.
GM followed with plans of cutting production on its own pickup trucks, along with sweeping rebates. It's also in a no-huddle, hurry-up-offense meeting with Citigroup
Yet it's also having an impact on Goodyear and rival U.S. tire maker Cooper Tire & Rubber
Goodyear was able to report a first-quarter profit of $147 million in April as a result of raising prices and selling more high-end tires, even though the actual number of units fell. Its North American division has been particularly hurt, not surprisingly, by stubbornly high fuel costs.
With shares off yesterday around 10%, Goodyear's stock has fallen by half since it peaked at $36 a stub about a year ago. While shares appear to be a bargain at this level, the company seems to be approaching maximum pressure in terms of how much it will be able to cut from operations.