Cooper said it will reduce annual spending by $70 million and boost profit by $100 million with “better pricing and a change in our manufacturing strategy.”
The plans also include operating three of the company’s U.S. tyre plants around the clock while staffing a fourth with temporary workers during peak periods to help return the biggest share of its business to profitability.
Financial analysts and stock traders responded positively to the news with share prices rising 15% on Sept. 10, one day after the announcement. They particularly noted the company’s acknowledgement that the savings would kick in fully until 2008.
“We were impressed with the aggressiveness and some of the specifics of their turnaround plan,” said one Deutsche Bank report, adding: “Our view on the stock is mitigated by the company’s execution track record, and the headwinds. Nonetheless, we believe new management at Cooper is likely to make a significant difference, and this situation is worth watching.”
One of the biggest problems for the Findlay tyre maker, which makes 70% of its sales in North America, is matching production to seasonal demand, and the so-called flexible plant is to be fully functional by late next year, CEO Byron Pond commented, announcing the cost-cutting plans.