Why the wheels came off at Goodyear SA plant

The tyres produced at Goodyear SA’s Kariega plant have no viable market in Europe and the facility lacks the manufacturing capacity and advanced technology of other modern facilities in the group. 

These limitations have contributed to the planned closure of the plant.

However, the National Union of Metalworkers of SA (Numsa) has rejected the claims, saying 1.7-million tyres from Goodyear SA were sold in 2024, which reflects a clear market.

Since announcing the shutdown on June 5, Goodyear has held three consultative meetings with unions, with the third having taken place on Wednesday.

Details of why the plant is closing are contained in a leaked response to unions on issues and concerns raised.

The response is written by Goodyear SA managing director Paul Gerrard.

He said Goodyear’s European plants were fully capable of absorbing the production needed to serve the European, Middle Eastern and African markets (EMEA).

“The Kariega plant does not have the installed manufacturing capacity adequate to assimilate that of any of the individual EMEA plants and equally lacks the requisite technological capabilities, [such as] the production of run flat tyres to match the capabilities of the EMEA European plants,” Gerrard wrote.

“Goodyear has made a decision to source tyres exclusively from its operations in Europe for distribution and sale in the EMEA market.

“This market includes SA.

“The decline of export opportunities from Goodyear SA into the European market caused by the economic considerations applicable within Europe has had the consequence of Goodyear SA being unable to realise the penetration into this market which was hoped for.”

Gerrard said the Kariega plant was operating at 50% of its installed capacity due to the declining market.

“The effect of this decision is that Goodyear SA has no customer for the tyres produced at the Kariega plant.

“In these circumstances, the manufacturing and production part of Goodyear SA's business must close. 

“The closing of the production facility will not cause the Goodyear SA business to become financially distressed.

“There is no basis for such a contention.

“The financial position of Goodyear SA will remain financially healthy and solvent.

“GYSA has adequate funding made available by Goodyear for this purpose.” 

With the planned shutdown looming, 907 jobs are at risk, with hundreds more down the value chain also hanging in the balance.

An earlier presentation by Numsa general secretary Irvin Jim had described consultations with Goodyear SA as a sham.

In the leaked presentation, which was also shared among workers at Goodyear, Jim said consultations could not be completed within 60 days as stipulated by Goodyear SA.

“On any reasonable consideration of the matter, it should be apparent that given the magnitude of the task at hand, it will not be possible to do justice to the process within a mere 60 days.

“While workers were presented with a Section 189A Notice at the 11th hour, common sense in conjunction with the hard evidence indicates that the closure of Goodyear SA’s manufacturing plant had been decided upon a considerable time ago, and management has been implementing this decision long before issuing the notice.”

However, Gerrard denied the suggestion that a decision had been taken in 2023 to shut down the Kariega plant.

In his response to Numsa, Gerrard also rejected the suggestion to enter into business rescue, saying no rational basis existed to support this.

“Nor is Goodyear SA aware of any viable alternative to that proposed regarding the discontinuation of the Goodyear SA manufacturing operation.

“Goodyear SA therefore urges the parties to engage constructively to determine the basis upon which the outcome proposed by Goodyear SA is capable of being implemented on a basis which best serves the interests of all parties.”

In his presentation, Jim said that with the plant’s infrastructure valued at R807m, they were seeking investors interested in a potential takeover.

“Is Goodyear SA willing to donate such infrastructure for free to workers and the community of Kariega and Gqeberha?

“Will Goodyear SA management, in particular those who run production, be willing to partner with workers in the takeover of the plant to run production?”

However, in his response to Jim, Gerrard said Goodyear SA was not aware of any viable alternative.

“Any strategic partner which may be sought for continuing production in the Goodyear SA facility would have to have its own technology and own manufacturing equipment, and be in a position to establish a viable basis upon which to give effect to any such outcome,” he wrote.

“It would also be necessary that any proposed intervention of this nature would have to be concluded within the time frame associated with the conclusion of the consultative process.

“As previously indicated, the inquiries made by Goodyear SA of other manufacturers in SA regarding the possibility of their taking over the manufacturing operation confirmed that they have no intention whatsoever of doing so.

“Goodyear SA is equally unaware of any other entity or strategic partner who is in a position to give effect to continuing production in the GYSA facility.

“Nor has any such entity or potential strategic partner which is in a position to give effect to this requirement been identified to GYSA.” 

Jim said the 1.7-million tyres sold in 2024 showed the company had a market.

“Here we are dealing with a company that has decided to change its product mix to supply the market, as such it has resolved to close the plant and to supply the market with imported, dumped tyres, which is an issue,” Numsa’s report read.

“We have no choice but to call on the government to render it illegal by making the necessary legislation that includes putting up 100% tariffs that must be backed with tight monitoring in terms of customs and excise.” 

Numsa regional secretary Mziyanda Twani said on Wednesday evening he was still at Goodyear and was not in a position to divulge any details.

A Goodyear spokesperson said consultations were ongoing.

“As part of the Section 189 process, Goodyear SA has entered into a consultation process with union and non-union employee representatives to address proposals regarding the closure of its manufacturing facility in SA and the realignment of certain sales, administration and general management functions. 

“Notwithstanding the above, Goodyear SA will continue to maintain a sales and distribution operation, and a HiQ retail presence in SA.”

One of the workers described the reaction to the situation as one of despondency.

“Some workers are anxious about the outcome as both parties have not yet agreed on payout packages.

“Workers have cars and houses to pay for. Some bought houses this year, not knowing that the company would close.

“We are unhappy with how Goodyear SA is handling this process.

“Some workers are stressed. One person was in the hospital. Absenteeism has skyrocketed.”

Another said he wished they would just tell workers to stay at home.

“I am frustrated and angry right now.”