Timing is everything, so the saying goes. Continental Tire North America Inc. certainly understands the concept.
The German-owned tire manufacturer has made sure the timing is just right in dealing with a very a thorny issue-cutting labor costs. Since Conti bought General Tire 19 years ago, the company's financial reports out of North America mostly have been awash in red ink. The tire maker is determined to change that.
The ax is swinging at Conti's Charlotte, N.C., tire plant. Billed as the company's highest-cost facility, the union-organized factory will face 513 permanent layoffs, and its production will be reduced by two-thirds this year.
Shortly before contract negotiations with the Steelworkers began last November, Conti management declared it planned to cut $32 million in annual costs at the Charlotte plant. The company said it wanted to slice its workers' pay and benefits by 35 percent, and if a deal with the union wasn't forthcoming by January, it would act unilaterally.
January came, no agreement has been made, and Conti announced it is making the cuts.
A few days later the workers at the non-union Mount Vernon, Ill., tire plant got their lesson in timing. The company announced it will reduce hourly workers' wages by 10 percent, and require them to pay for health care insurance.
Tough news for workers who three times have voted to reject union organizing efforts. But management also said the company will spend $60 million to $70 million to upgrade the plant.
Conti has shown the Mount Vernon workers that they may feel financial pain, but they still have a measure of job security. The cuts in Charlotte point out the Steelworkers can't make that promise.
This isn't the first time Conti-by design or not-has shown the inability of the union to protect its members. Prior to a Mount Vernon union representation vote in 2004, Conti announced the closing of its Mayfield, Ky., tire plant, with the loss of 715 union jobs. A few weeks later the Mount Vernon workers rejected the union yet again.
It's not a comfortable position for the hourly workers at these Conti sites. But then, the North American subsidiary of Continental A.G. isn't comfortable being a money-losing operation in a highly competitive market. That can't go on forever.