Goodyear plans to cut 5,000 positions and freeze salaries.

Goodyear, the biggest US tyre manufacturer, has today (18 February) announced plans to cut 5,000 jobs and freeze salaries, after it posted a fourth quarter loss.

The company has been adversely affected by the fall in demand for cars and reported a net loss of $330 million (£230m) – in comparison to the $52m profit made in 2007.

Goodyear’s sales in the fourth quarter of 2008 were $4.1 billion, down from $5.2bn a year earlier.

The job losses and wage freezes form part of a cost-cutting package Goodyear hopes will save $700m and ensure its long-term viability.

Robert J. Keegan, Goodyear Chairman and CEO, said: “Given lower industry demand, we are taking aggressive action, reducing tire production, cutting costs and adjusting investments to better match market conditions.”

The 5,000 job losses are in addition to the 4,000 employees made redundant in 2008 and represent 6.7% of the company’s workforce worldwide.

Manufacturing capacity will also be reduced by 15 million to 25 million units over the course of the next two years.

“Collectively, these actions address the new economic realities,” said Mr Keegan. “We will remain flexible and are prepared to take additional actions if the market conditions warrant.

“Our goal is to ensure Goodyear is positioned for success when tire markets recover.”

Goodyear employs approximately 75,000 people and manufactures its products in more than 60 facilities in 25 countries around the world.