CHARLOTTE, N.C.-Continental Tire North America Inc. began laying off workers at its Charlotte plant March 17 and said another round of cuts will occur in mid-May.
The layoffs came on the heels of Conti´s announcement March 10 that it will suspend tire production indefinitely at the factory in mid-September.
However, the company said it will shelve both plans if it reaches agreement with the United Steelworkers on a contract that slashes $32 million in manufacturing costs at the Charlotte site.
In both instances, the USW charged the firm doesn´t understand how to operate and compete in the U.S., has flawed business strategies and is moving most of its manufacturing out of the U.S.
The company´s first round of layoffs involves 140 workers, according to Rick Holcomb, the tire maker´s legal counsel. About 170 will be cut in mid-May and approximately 478 will lose their jobs if Conti stops producing tires at the site in September, he said. Another 50 salaried positions also may be axed in July.
With the initial cuts in place, production at the factory will drop to about 18,000 tires a day from 25,000. If another 150 workers are let go in May, that figure will be reduced to 12,000 a day, Holcomb said, with Conti plants in Mexico, Brazil Mount Vernon, Ill., and other low-cost facilities in Europe picking up the slack.
Eliminating tire production at the Charlotte site is part of Conti´s restructuring plan to reduce manufacturing costs and improve the overall performance of the firm´s North American passenger tire business, said Alan Hippe, president and CEO of the North American operation.
He cited high costs for energy, raw materials and health care as reasons why the plant can´t continue operating under its present cost structure.
"Because we have so far been unsuccessful in restructuring our labor agreement with the union to significantly reduce manufacturing costs, (Continental Tire North America) must take immediate steps to reduce its costs," he said.
Holcomb said that by making the announcement now, the company is covered under the six-month notice required under the collective bargaining agreement. "The timing also highlights the urgency of the situation," he said.
"If we reach an agreement, that could change," he said. "Quite frankly, we need the union to step up to the plate and begin negotiating in earnest."
The USW and Conti have been in contract negotiations since last November. The company has demanded $32 million in annual concessions and presented four plans as a guide on how that can be accomplished. All include worker wage, benefit or staffing cuts.
The union claims Conti hasn´t demonstrated the need for these savings and offered its own proposals it said reduce costs and improve productivity and efficiencies, but Conti said none come close to the mandatory $32 million figure.
Business plan questioned
After Conti unveiled its plan to suspend tire production at the Charlotte site, United Steelworkers´ officials said they weren´t surprised. It´s totally consistent with the company´s "inability to understand and operate in this environment," according to Ron Hoover, USW executive vice president. "We view it as another step in (the company´s) predetermined plan to abandon the North American market."
He charged that the manufacturer is "incapable of devising business and marketing strategies to enable them to compete here. Instead of conducting the required research and product development and making the needed capital investments to improve its plants, this company just looks to take money out of the pockets of its workers."
Mark Cieslikowski, president of USW Local 850, which represents workers at the factory, said "union members are upset because they spent their lives in the plant and the company doesn´t give a damn about them. This has been going on too long. They (management) have a distinct hatred for this union. This if the same management group that has run the company into the ground. It looks like they want to manufacture tires outside the country."
Hoover said company officials refused to provide necessary information during talks and came up with inadequate bargaining proposals that have hindered negotiations. He claimed that Continental "extracted concessions from workers at its Mount Vernon plant and is spending enough money there to patch together production as it brings its new Brazilian plant up to speed."
Negotiators are expected to meet again this week, but as of March 16, a date hadn´t been set. The Conti-USW contract, ratified in September 1999, expires April 30.
The company said it doesn´t plan to close the Charlotte plant and will continue rubber mixing, calendering, puncture sealant and warehousing operations to support its other factories. A work force of about 200-250 would handle those duties.