A continued slump in new automobile sales, coupled with long-term changes in consumer tire product preference, led Uniroyal Inc. yesterday to close permanently two of its five tire manufacturing factories in this country.
Another major tire manufacturer, Armstrong Rubber Co., said it is laying off about 1,200 workers on a temporary basis and closing three of its plants temporarily because of slow auto sales.
Uniroyal said about 1,700 workers at an aged Detroit factory and 1,600 workers in Chicopee Falls, Mass., will be affected by its plant closings. No date was set for shutting the factories, but a contract with the United Auto Workers requires a six-month advance notice of shutdowns and the union was notified yesterday.
"At present, our U.S. tire company losses are more than offsetting the profits from our healthy non-tire operations," said Uniroyal Chairman David Beretta.
"While it is likely that the tire company losses will continue as the market remains depressed, we expect that by the end of 1980, the U.S. tire operations will be significantly improved," he said.
Uniroyal said yesterday it will set aside $75 million in a reserve fund to cover the expenses of plant closings, which are expected to be about $50 million, and other potentially adverse developments. The company said its Detroit factory -- a multistoried facility in business since 1906 -- has been its lest productive plant.
Both the Michigan and Massachusetts factories produced bias-ply ties, for which there has been declining demand because of the increasing popularity of longer-life radial tires.
Industry giant Goodyear Tire & Rubber Co. took a similar step last year, closing bias plants in Los Angeles and Conshohocken, Pa., at a cost of some $60 million.
Uniroyal, the third-largest tire maker in this country and fifth-largest in the world, will continue to manufacture tires in Ardmore, Okla., Opelika, Ala. and Eau Claire, Wis.
The Ardmore plant, which produces most of Uniroyal's radial tires for passenger cars, is the company's newest. The Eau Claire and Opelika factories produce a variety of tires and Uniroyal said yesterday the Alabama plant will be expanded and converted entirely to radial production.
A tire reserach and development plant as well as tire division management will remain in Detroit. Uniroyal said workers who lose their jobs will get termination payments and retirement benefits as well as company help in finding new work.
Of all major U.S. tire manufacturers, Uniroyal has had the slowest growth of sales and profitability in recent years. Although profits from chemical, plastics and industrial products were strong in the first nine months of 1979, the company posted a loss of $8.6 million on sales of $2 billion. The third-quarter loss alone was $11.5 million, as tire operations became more depressed.
In 1958, tires accounted for 58 percent of Uniroyal sales but only 45 percent of earnings while chemicals, rubber and plastic materials accounted for 16 percent of sales but 58 percent of earnings. Uniroyal sold European tire facilities last year but retains factories in Canada and Mexico.
Uniroyal also said yesterday that $25 million of reserves set aside are for anticipated losses in Turkey because of currency problems in that country, and possible losses on selling footwear and other assets.
Armstrong said half of the workers it will lay off are at a West Haven, Conn., plant, with the balance in Nashville and in Hanford, Calif.