Capacity Planning - Good Year Tire Company

gletDefinition: Capacity Planning – “a key strategic component in designing the system… [encompassing] many basic decisions with long-term consequences for the organization” (Stevenson, 2011, p. 183).

Summary: The Goodyear Tire & Rubber Company was “founded in 1898 by 38-year old Frank Sieberling” (Goodyear, 2013). Operating 53 plants in 22 countries, Goodyear “is one of the world’s largest tire companies, with operations in most regions of the world” (Goodyear, 2013). Goodyear was not safe from the global recession, just as many other companies. In 2009, the Goodyear Tire & Rubber Company took a step “to align the North American production capacity with weak industry demand” (Goodyear, 2009).

Discussion:  It is no secret that supply and demand in many industries has seen a decline in consumer purchasing. The Goodyear Tire & Rubber company is one of those companies that have had to realign their capacity to support the weak industry demand. In 2009, one way of combating this decline was for the company to restructure their Union City, Tennessee tire plant “from a continuous operating schedule to a five-day, three shift operation” (Goodyear, 2009). They also offered “approximately 550 associates…buyout packages as part of the change” (Goodyear, 2009). Ultimately, in 2011, Goodyear announced that the Tennessee plant would be closed to align with “its strategy to reduce high-cost manufacturing capacity globally and provide cost effective high-value-added products that the market is demanding while continuing to make high quality products for its customers” (Goodyear, 2011).

With the economic slowdown, it seems that Goodyear has chosen to attack the problem head on. They have continued to “respond aggressively to the environment…with additional cost savings and inventory reductions” (Goodyear, 2009). A spokesman for the company stated that, “we continue to adjust production to reduce inventory levels and to keep pace with the lower demand...