HEARD ON THE STREET: Goodyear's Stock Treads Well Despite Strike [Wall Street Journal]
Summary: Surprisingly, the strike by over 12,000 Goodyear workers at 16 of the company's American and Canadian factories that began on October 5 has not yet had a significantly negative impact on the stock. Investor faith is sustained by 1) a belief that the workers will be forced to yield; and 2) indicators that the tire business will reap benefits from falling oil prices. Many also appear to expect a rise in the sale of replacement tires as Americans drive more. The main issue behind the strike is Goodyear's demand that it retain the right to close two of 12 unionized plants. Closing two factories could save Goodyear approximately $100 million a year, which would help the company stay competitive with rivals who supply the U.S. market with tires made either abroad or in non-unionized factories. The duration of the strike is a concern: it is already costing Goodyear about $2 million a day, and that figure could jump if the strike continues longer than a month.
Related links: Auto Suppliers' Troubles Point To Broader Industry Challenges • Michelin Raises Prices; Have Tire Makers Bottomed? • Goodyear Tires: Don't Count On a Recovery
Potentially impacted stocks and ETFs: Goodyear Tire and Rubber Company (GT), Cooper Tire and Rubber (CTB)
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