NASHVILLE, Tenn.—Despite Bridgestone/Firestone´s decision to go ahead with the closing of its Oklahoma City tire plant, a United Steelworkers official doesn´t necessarily think the story is over.
"We´re not talking about it in the past tense," said Ron Hoover, USW executive vice president in charge of the union´s Rubber/Plastics Industry Conference. "It´s not a closure yet. We´re still optimistic about keeping the plant open."
Hoover said it is the union´s goal "to keep going," and that the company needs to make capital investments to ensure that all unionized locations can compete, noting that the "process isn´t complete yet."
His comments came a few days after Bridgestone/Firestone´s July 13 announcement that the company had made a final decision to close the 37-year-old facility by the end of the year. BFS in April had issued a notice of "potential plant closure" unless the plant could be made profitable and competitive on a global basis.
It employs 1,400-1,200 represented by USW Local 998-and had capacity to produce 43,500 tires a day, mainly low-end passenger and light truck units.
While calling it a difficult decision, Steve Brooks, BFS vice president of manufacturing operations, said "the reality is this plant produces tires in the low-end segment of the market where demand is shrinking and fierce competition from low-cost producing countries is increasing."
He said that even with substantial new investment, market forces made it "virtually impossible" to restore the plant to a competitive position.
Since the April announcement, Brooks said the company and union had met to try to develop a plan to save the factory, but no viable alternatives were found. "We reviewed many of the options, including infusion of capital," he said, "but we couldn´t develop a good business plan."
He previously said BFS had invested more than $40 million at the plant since 2002 to move production toward 15- and 16-inch lines, but that the market kept going for even larger rim sizes. He said the factory posted a loss of $40 million in 2005, and had a shortfall of $17.4 million in this year´s first quarter, and faced projected red ink of $60 million for 2006.
Brooks also noted that the company late last year turned down $1 million in state funding it was eligible for-based on the investment since 2002-because it wasn´t sure of the Oklahoma City facility´s future.
"It´s unfortunate because our teammates have worked hard and the government leaders in Oklahoma have been extremely supportive," he said.
Terms of the closure will be negotiated in follow-up meetings with the USW, and the company said it will work with the union and government officials to address the impact on the workers, their families and the community.
BFS said the Oklahoma City plant will continue to make tires for several more months but will scale back and cease operations by the end of the year.
Brooks said some of the production will be outsourced to other Bridgestone plants, both in the U.S. and globally, while a small amount will be purchased from other companies.
He also said the firm has told its dealers it will stop making some unprofitable lines, though he didn´t say which ones. "It may reduce the overall revenue of the company, but improve profitability," Brooks said.
Even with this loss of capacity, Bridgestone´s manufacturing capability is in good shape on a global basis, he said, noting that the firm looks not only at costs but also pricing of the product mix. "Based on these conditions, that pretty much tells the picture right there," he said.
The plant had been protected from closure under terms of the master contract between BFS and the Steelworkers, but that pact expired July 23. The two sides have been in contract bargaining, but the USW chose Michelin North America Inc.´s BFGoodrich tire manufacturing unit as the target company for master talks.
BFS offered to extend the master contract without the job security provision, but the union refused. The union did accept the firm´s offer to extend the local agreements with the Bloomington, Ill., off-the-road tire plant and the maintenance group at the LaVergne, Tenn., tire facility.
Local 998 officials were at the master negotiations and couldn´t be reached for comment.
Brad Dawson, Rubber & Plastics News staff, contributed to this report.