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Goodyear to Construct Facility for Premium Tire Production

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The Goodyear Tire & Rubber Company (GT - Free Report) , one of the world’s largest tire manufacturing companies, announced its plan to construct a facility in Luxembourg to be able to use innovative manufacturing process for producing premium tires. The decision falls in place to cater to the increasing demand of the company’s growing customer base.

Schedule to open in 2019, the facility named Mercury, will have highly-automated, interconnected workstations, using additive manufacturing technologies. This in turn would enable the infrastructure to manufacture premium tires in small batches. The production of these tires will depend upon the quantities on demand from replacement and original equipment customers.

The company will be investing $77 million to develop this facility with a potential capacity to produce roughly 500,000 tires annually. Also, the plant will generate 70 new, full-time jobs.

The Goodyear Tire & Rubber Company Price and Consensus

 

Goodyear believes that Mercury will increase the company’s capability to meet the swelling demand of small volumes of high-margin, premium tires. Also, the facility will advance its connected business model and provide the company with a competitive edge over others.

The company has been investing in projects to help meet the rising requirement for tires. Previously, it had pumped into $485 million to expand its tire factory at Pulandian, China. On completion in 2020, the facility will help Goodyear to supply the much-needed premium, large-rim-diameter consumer tires in China as well as the Asia Pacific region.

Price Performance

Goodyear’s shares have decreased 6.8% in the last three months, underperforming the 5.1% decline of the industry it belongs to.



Zacks Rank & Key Picks

Goodyear currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked automobile stocks are Toyota Motor Corporation (TM - Free Report) , Daimler AG (DDAIF - Free Report) and Ferrari N.V. (RACE - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Toyota has a long-term growth rate of 7%.

Daimler has a long-term growth rate of 2.8%.

Ferrari has an expected long-term earnings growth rate of 14.1%.

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