MUSCATINE, Iowa (June 15) — Bandag Inc. today said it is offering early retirement and voluntary separations to eligible employees in an effort to reduce its work force and operational costs.
The retread materials and systems provider said it also has closed its pension plans to new hires in the U.S. and Canada and will freeze the existing pension plans for salaried and hourly U.S. employees and for salaried Canadian employees.
Bandag said the pension freeze will allow it to control retirement benefit expenses better while at the same time preserving workers´ retirement benefits to date.
The company also said it is freezing its defined benefit pension plans while modifying the defined contribution program, which it said is better designed to encourage employees to save for retirement. Overall, the company estimates it will record a net curtailment pre-tax gain of $1.9 million in the quarter ending June 30 through the pension plan change.
"The North American markets for commercial replacement tires have changed irreversibly over the past several years, a situation exacerbated by record-high raw material prices and intensified competition," said Chairman and CEO Martin Carver, in a statement. "To stimulate growth in Bandag's traditional retread business, we are taking steps to simplify our operations and lower our operating costs."
To that end, the company is offering early retirement to approximately 170 employees who have reached age 55 by Dec. 31 and voluntary separation to other U.S. salaried employees. If voluntary separation and early retirement result in fewer than 175 salaried employee acceptances, Bandag said it will terminate employees to achieve a reduction in the U.S. work force of approximately 15 percent.