AKRON (Oct. 9) - Goodyear could lose about $38 million in revenue for each day its 16 plants affected by the United Steelworkers´ strike aren´t operating, according to analyst John Murphy of Merrill Lynch.
"Although we do not know how long the union will strike, given the magnitude of the daily losses, we believe almost any amount of time will be detrimental for Goodyear´s profitability," Murphy wrote in a note to investors. "We don´t believe that Goodyear is prepared to replace all union laborers but may be able to keep production running at minimal levels."
Murphy also downgraded Goodyear´s stock to "sell" from "neutral."
Other analysts quoted in various media reports offered various ranges for the potential financial impact.
A Goodyear spokesman said he could not comment on specific financial factors of the strike, but the tire maker´s contingency plans are in full force, he said.
The union began its strike Oct. 5 after contract talks broke down. The Goodyear spokesman said no new talks are yet scheduled.
"The decision on when formal talks will resume rests on the Steelworkers," he said.
In a letter to employees following the start of the strike, North American Tire President Jon Rich also reiterated the company´s contingency plans to keep supply flowing.
"We have plans in place to continue operating our facilities and serving our customers," he wrote. "We have all worked very hard over the last few years to regain the trust of customers, and we have to make sure we don´t let them down."
Rich also said he hopes to reach accord with the Steelworkers, but Goodyear will not agree to a contract that "puts us at a disadvantage vs. our competitors," he wrote.
"I have no problem battling the competition in the marketplace," he said. "That´s how it should be. But the marketplace must be a level playing field."