A trend has started in the rubber industry. A very bad trend.
Pirelli Armstrong Tire Co. began it by seeking to eliminate the health care benefits of its retirees. The company, operating in the red since Pirelli bought Armstrong Rubber Co.'s tire operations six years ago, said it needs to cut costs to ensure its survival-a fact that is hard to dispute.
The U.S. District Court in Nashville said no, not that way, and ruled against the company.
Now Bridgestone/Firestone Inc. and Michelin subsidiary Uniroyal Goodrich Tire Co. have taken up the banner.
Neither company has gone as far as Pirelli Armstrong in attacking retiree benefits. Rather than eliminate health care benefits, the two manufacturers have passed along costs to their retirees. For 20,000 Uniroyal Goodrich retired salaried and union members, the changes include increasing the medical coverage deductible and co-payment maximum for a family; boosting the prescription co-payment to $7 from $1; and capping Medicare Part B plan reimbursement at $41.10 per month. Bridgestone/Firestone added $7 to the $1 co-payment for drugs for hourly retirees, and enacted a similar cap to its Medicare reimbursements.
It might be up to the courts to decide the legality of these changes. But in the court of public opinion, both companies are guilty of a lack of sensitivity.
To many retirees living on a fixed income, these additional medical costs can be devastating. The fact is older adults need more medical care and use more medicine. You won't find many retired tire builders, office staff or maintenance workers living on Easy Street: The cost of higher medical expenses will cut into what they spend on basic necessities.
We have no quarrel with a company's decision to defray higher medical costs by passing some of the expense along to the active employees. It may hurt, but these people still are wage earners, and can recover the costs eventually.
Not so for retirees.
There's no doubt medical costs are outrageous, and companies like Bridgestone/Firestone and Uniroyal Goodrich need to find ways to curb the rising expense. But taking it out of the hides of retirees is like robbing a child: You can do it, but that doesn't make it right.
Find another way.