Goodyear Tire & Rubber Co., the nation’s largest tiremaker, said Monday that it has agreed to sell its farm tire business for $100 million to an Illinois tire company.
The farm business is part of Goodyear’s rebounding North American division, which made its first profit since 2002 earlier this year. The farm business employs about 800 people, mostly at a plant in Freeport, Ill., that makes tires used on tractors and other farm machinery, said Goodyear spokesman Ed Markey.
The deal with Titan International Inc. includes the plant, property and equipment. It must be approved by federal regulators and by members of the United Steelworkers of America.
“Once that is done, Goodyear will be out of the farm business in North America,” Markey said.
Markey said Goodyear was unaware of how the sale might impact employees because Titan will make those decisions.
Titan president Maurry Taylor said his company has offered to extend the current labor agreement Goodyear has with some 700 hourly employees through 2010. The contract is due to expire in July 2006. The only changes would be a salary and vacation time cap for new employees, he said.
“Nobody’s going to lose anything,” Taylor said. “For the workers, it is the best thing in the world for those people up in Freeport.”
The USWA said Monday it was not optimistic about new labor negotiations with Titan, noting that members who worked at a Titan plant in Des Moines, Iowa, went on strike for 40 months beginning in April 1998.
“We hope that this proposed sale will provide Titan the opportunity to create a new relationship with the Steelworkers, but at this point it does not look likely,” said Mike Mathis, president of the USWA Local 164 in Des Moines.
Quincy, Ill.-based Titan, which makes steel tires for use on off-highway vehicles used in construction and agriculture, said the Goodyear purchase should add $210 million in annual revenue to its overall sales, $510.6 million in 2004. Titan employs about 1,800 people.
Akron-based Goodyear expects a one-time gain from the sale, followed by an annual loss of about $200 million. After that, the company that posted $15 billion in sales last year should benefit from the farm business sale because it will be free of its expenses and able to invest more in core divisions, including the making of tires for passenger automobiles, Markey said.
The agreement calls for the Goodyear name to remain on some of the farm tires manufactured by Titan and for Goodyear to sell some of the Titan tires. Titan said in a statement that it will decide by June whether to move the headquarters to Des Moines or keep it in Illinois.
Goodyear, which has said selling noncore assets is part of its $1 billion turnaround plan, saw shares fall 36 cents, or 2.5 percent, to 14.35. The company employs about 85,000 people worldwide and makes tires, engineered rubber products and chemicals in 28 countries.
Goodyear shares fell 39 cents, or 2.6 percent, to $14.32 in afternoon trading Monday on the New York Stock Exchange. The stock has been trading at a 52-week range of $7.06 to $16.09. Titan shares rose 66 cents, or 4.9 percent, to $14.19 in afternoon trading Monday on the NYSE. The stock has been trading at a 52-week range of $4.20 to $15.77.