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[**Initial DD here**](https://www.reddit.com/r/ValueInvesting/comments/1pvm8ml/long_goodyear_tires_gt_best_turnaround/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button)
***Note:*** *I've been away on vacation so not much time for new full DDs yet. As to my previous post, I'll be researching and writing up on PayPal (most upvotes). As of now, PYPL is not a long, I am looking into whether its a short or a hold, more information to come.*
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We recently got news of Maduro's capture by the US, and this is very economically important, and it's extremely important to analyze the effects of these events on holdings and other areas of the market.
**Background:**
*Note: Use of AI to research & write the sanction background summary. (Reviewed by me)*
**2018**
* The Trump administration **expanded financial sanctions** on Venezuela.
* New executive orders **banned transactions involving Venezuelan government debt** and blocked dealings with Venezuela’s **state-issued digital currency (the “petro”)**.
* Goal: **cut off new financing** to Nicolás Maduro’s government and limit its ability to raise money internationally.
**2019**
* January\*\*:\*\* The U.S. sanctioned PDVSA, Venezuela’s state oil company, effectively **blocking U.S. companies from buying Venezuelan oil** and freezing PDVSA assets in the U.S.
* August\*\*:\*\* The U.S. **froze all Venezuelan government assets in the United States** and threatened sanctions on foreign entities that supported Maduro.
* Impact: Venezuela’s **oil exports and government revenues collapsed**, making 2019 the most severe sanctions year.
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**Goodyear Tires ($GT) Update:**
**December 10, 2018:** Goodyear formally announced it was halting operations in Venezuela due to economic conditions and U.S. sanctions. They locked the gates and laid off the workforce. (1,160 employees)
**December 11, 2018 (The Seizure):** The Maduro regime declared Goodyear's closure "illegal" and an act of "sabotage." The government invoked labor laws to immediately "occupy" and take control of the facility in Valencia, promising to restart production under state management.
In a famous detail from the 2018 exit, Goodyear gave each laid-off employee **10 tires** as part of their severance package because the currency (Bolívar) was so worthless that tires were a more stable store of value than money. *(AI)*
If the new U.S. backed transition government returns the plant, Goodyear gains a fully-constructed industrial facility. Even if it requires $100M in refurbishment, reclaiming a facility with a value of \~$500M+ is a huge gain for Goodyear, so I'll try to quantify this the best I can.
Before the complete economic collapse, Venezuela was a massive profit driver for Goodyear Latin America. We can look at 2014-2015 financial filings to quantify exactly what GT lost and what it could regain.
* In 2014, despite early signs of crisis, Goodyear Venezuela generated **$119 million in Operating Income**.
* In 2015, Venezuela accounted for **33% of Latin America’s net sales that year,** up from 16% in 2014, despite the broader regional sales decline caused by the Brazilian recession.
* At the time of the 2018 seizure, union leaders reported the plant was producing **10,500 tires per day** while running at only **20% capacity**.
* This implies a full capacity of 52,500 tires/day or 19m tires/yr (LATAM sales volume of 18m in 2013)
Its pretty clear that the restoration of this revenue stream, particularly under a stabilized currency or dollarized administrative regime, would represent a massive gain for Goodyear’s current shareholders.
**The Valencia Plant**
On September 16, 2025, the Venezuelan Ministry of Industries announced a strategic partnership with international investors to allocate over €30 million (approximately $32 million) to "reactivate and modernize" the Valencia plant.
This investment was directed toward:
1. Technological upgrades and restoration of production lines to replace aging legacy systems.
2. Training the workforce in coordination with labor unions to handle state-of-the-art machinery.
3. Implementing advanced technology to ensure that tires produced at the site meet global quality and durability standards.
4. Modernization of curing and extrusion set-points to improve energy efficiency and reduce conversion costs.
It is likely focused on the most critical failure points, curing presses and Banbury mixers.
If this plant was worth \~$USD600m in 2018, it was state-of-the art at the time, ill conservatively (see note below) estimate \~200mm in CapEx to reinstate this immense factory that can produce all of 2013's demand alone.
The capital saved by not having to build a greenfield site (a process that would take 24–36 months) allows Goodyear to quickly capture the post-war demand surge while advancing the Goodyear Forward goal of debt reduction.
*Note: Honestly, I could research further into this and get exact numbers by comparing precedent factory investments/projects from $GT and competitors to try and estimate how much investment would be needed to return this 7-Year old factory into what is needed for $GT's tires. Unfortunately, I'm writing this up on a Sunday and that'd probably take more time than I'm willing to put in for a marginal gain in thesis confidence.*
**Venezuelan Supply for Tire inputs**
Raw material costs typically account for 60% of total production expenses, while energy consumption during the vulcanization and curing cycles adds another 15–20%. The Venezuelan industrial corridor offers several unique advantages that could make the Valencia plant one of the lowest-cost producers in Goodyear’s global portfolio.
Goodyear’s Valencia plant is located in close proximity to Negroven S.A., a carbon black producer with an installed capacity of 70,000 metric tons per year. Carbon black is a critical reinforcing filler in rubber mixtures, and Negroven has remained operational throughout the crisis, continuing to export to international markets as recently as December 19, 2025. The availability of local carbon black eliminates significant logistics costs and import duties that affect other regional plants in Brazil or Colombia.
The Trump administration’s stated goal is to "get the oil flowing" by deploying major U.S. oil companies to fix the country’s broken infrastructure. This revival of the domestic petroleum industry, which has seen production stagnate at around 800,000–900,000 barrels per day despite a potential for 2 million+, will provide Goodyear with a direct source of petrochemicals required for synthetic rubber and high-temperature polymers used in tire tread inserts. The involvement of Chevron and other majors ensures that the processing facilities will be modernized, reducing the volatility of chemical feedstocks for the Valencia Plant.
Tire manufacturing is exceptionally energy-intensive. The Guri Dam hydroelectric system provides the vast majority of Venezuela’s power. While the system has faced threats of sabotage and neglect, the Transition Governing Council has identified the securement and establishment of technical oversight for the Guri Dam as an immediate priority to prevent total electrical blackouts. A stable, low-cost hydroelectric power source would give the Valencia plant a significant competitive advantage over plants in other emerging markets that rely on expensive fossil-fuel-based electricity or unreliable grids.
**There are several demand drivers that I'm happy to further discuss if not obvious that will fuel a catch-up phase in Venezuela and LATAM**
If the plant achieves its 2015 operating income of $119 million on only partial capacity, a fully utilized facility in a stable currency environment could realistically contribute $250 million to $300 million in annual segment operating income by 2028.
**TLDR:** A U.S. overhaul of Venezuela is EXTREMELY bullish for $GT and completes the initial thesis. As this continues to develop, we may see incremental $USD250-300mm gain in operating income within 2 years.