Sumitomo Rubber Industries Ltd. will close its U.S. tire manufacturing plant and dissolve its local subsidiary after recording a ¥46.5 billion ($309 million) loss, marking a major retreat from American production amid persistent operational challenges.
The Japanese tiremaker will terminate operations at its Buffalo, New York facility and dissolve Sumitomo Rubber USA LLC, according to a statement Thursday. The company expects to book an additional ¥28.2 billion in restructuring costs through 2025, mainly for employee severance and early contract termination fees.
The closure impacts about 1,555 workers at the century-old plant, which Sumitomo acquired from Goodyear Tire & Rubber Co. in 2015. The company said it will provide “fullest support possible” to affected employees for their transition and reemployment.
The decision came as the plant struggled with productivity issues that the company couldn’t resolve despite sending technical support teams from Japan. While Sumitomo’s North American business turned profitable through sales of tires imported from Thailand and Japan, the New York facility failed to achieve targeted efficiency improvements.
For the nine months through September, Sumitomo’s net income plunged 85% to ¥4.1 billion despite sales rising 2.8% to ¥874.9 billion. The company slashed its full-year profit forecast by 98% to ¥1 billion from a previous estimate of ¥41 billion, while maintaining its sales target at ¥1.2 trillion.
The company will maintain its North American sales operations through subsidiary Sumitomo Rubber North America Inc., focusing on importing tires from its Asian manufacturing bases. Research and development activities will be transferred to SRI America Inc.
