According to a Reuters report, Goodyear Tire & Rubber (GT) is facing labor abuse accusations at its Malaysian factory. Goodyear is an American tire maker with a global footprint. Its Malaysia factory is a joint venture with the country’s largest fund manager, Permodalan Nasional Berhad.
The Malaysian plant has foreign workers from countries including Nepal, Myanmar, and India. Goodyear is accused of mistreating the workers in a variety of ways, including overworking and underpaying them. The company is also accused of withholding the foreign workers’ travel documents.
While Goodyear’s local Malaysian employees have access to shift allowances, annual bonuses, and salary increases, the foreign workers allege they have been denied these benefits.
“The company had different rules for different sets of workers,” according to Sharan Kumar Rai, a former foreign employee in Malaysia.
Despite charges against Goodyear being filed and Malaysia’s labor department imposing fines on Goodyear for mistreating its foreign staff, the company denies any wrongdoing. A decision on its appeal is expected on July 26. Goodyear’s foreign workers claim the company owes them about $1.21 million in unpaid salaries.
Goodyear argues that foreign workers are not union members, and hence, are excluded from benefits outlined in the collective agreement. But a union representative told the court that foreign workers are also entitled to the benefits in the agreement. (See Goodyear stock analysis on TipRanks)
Last month, Deutsche Bank analyst Emmanuel Rosner reiterated a Hold rating on Goodyear stock but raised the price target to $21 from $19. The analyst’s new price target implies 5.90% upside potential.
Rosner noted that Goodyear’s first-quarter results showed that the company is in the “early stages of large earnings recovery, after years of underperformance.”
Consensus among analysts on Wall Street is a Hold based on 1 Buy, 3 Hold, and 1 Sell ratings. The average analyst price target of $18.75 implies 5.45% downside potential from the current price.
GT scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting the stock’s returns will likely align with the market performance.