"The location has not yet been determined as site selection is just beginning," Goodyear spokesman Keith Price said. "All locations in the Americans are on the table for consideration."
AKRON, Ohio -- A robust Goodyear Tire and Rubber Co. plans to spend about $500 million building its first new tire plant in the Americas in more than 20 years, but it's not clear if the company will tap the tire expertise of its hometown.
At a business conference in Boston Thursday, Goodyear's Chief Financial Officer Laura Thompson revealed that the Akron-based company plans a state-of-the-art factory that would produce an initial 6 million tires a year, but she said it has not decided where that new plant will rise.
In a press release, company executives said a site selection process has just begun. Goodyear also announced it is increasing dividends paid to shareholders, paying down debt and buying back stock.
Goodyear products are in demand, company executives said, revenues are strong, and Goodyear will build its most technologically advanced tire plant ever somewhere on the continent.
"With growing consumer demand for our high-value-added tires in North America and Latin America, the time is right to invest in additional manufacturing capacity in the Americas to maintain Goodyear's leading position and to grow earnings beyond 2016," Richard J. Kramer, the company's chairman and chief executive officer, said in a statement. "Goodyear is well-positioned to meet this market demand and has a proven track record of producing strong returns on capital investments."
These days, Goodyear makes only racing tires in Akron. But a site selection expert says the region and state offer enticing advantages to a global company seeking to build and distribute a quality automotive product.
Dennis Burnside, managing partner at the Cleveland office of Mohr Partners, a corporate real estate advisory firm, said Ohio should at least be a contender for the plant.
"Intuitively I would say that, based on what I know, Ohio would offer the assets, the workforce, the access to the markets, the access to natural resources and access to distribution," Burnside said.
"Based on my experience in terms of the last 24 months, Ohio has elevated itself in the world of site selection due to its abilities to compete with other states and other regions," he added.
A community in South Carolina is already claiming to be the favored location. Chester County, S.C., is in the process of approving tax breaks for an unnamed company that could invest more than $560 million and employ 1,500 people, The Herald newspaper reported on its website Thursday afternoon.
It said local economic development officials were declining to name the suitor but quoted a state representative, Ralph Norman, as saying the project -- code-named "Project Summer" -- is automotive related.
Goodyear spokesman Keith Price dismissed the claim.
"We have no knowledge of Project Summer and it's premature to speculate on a specific location for the new plant since our site selection process is just getting started," he said in an email.
In response to a question about whether Goodyear was weighing sites in Ohio, Price said: "All locations in the Americas are on the table for consideration. We expect to have a decision no later than the first quarter of 2015."
He added the company had no estimates on the number of people the new plant could employ.
Leaders of the United Steelworkers, which represents hourly workers at most of Goodyear's North American facilities, declined to comment on the company's plans.
Local economic development officials expressed surprise at the news.
Dan Colantone, president of the Greater Akron Chamber, said he was not aware of Goodyear's expansion plans but that he considers the news wholly positive, wherever the plant is built.
"I can't imagine Northeast Ohio not being considered. We'll put our best foot forward. It will be a team effort," Colantone said. "But I think the more important news is the continued success Goodyear is having. The positive economic report. The demand for more production."
The new plant is one of several initiatives the company announced Thursday in response to a healthy cash flow. In addition to building a tire factory, Goodyear said it plans to:
- Increase the quarterly cash dividend on Goodyear's common stock by 20 percent to 6 cents per share from 5 cents per share beginning in September.
- Buy back up to $450 million of its stock.
- Allocate an additional $400 million towards debt reduction, advancing the company's objective of achieving an investment grade credit rating.
"This updated capital allocation plan for 2014-2016 reflects Goodyear's commitment to balancing all our priorities - returning cash to shareholders, investing in high-return growth projects and achieving investment grade metrics - to drive long-term shareholder value consistent with our articulated strategy," Kramer said in a statement.
The company also reaffirmed its 2014-16 financial targets, which includes income growth of between 10 to 15 percent per year.