AKRON—Goodyear´s Tyler, Texas, tire manufacturing plant has become the focal point in the master contract negotiation stalemate between the tire maker and the United Steelworkers.
The company plans to close the factory by June 2007, dropping 1,100 workers from its payroll, many of them members of the union. The facility primarily produces lower-value tires in the 13-14 inch range, a spokesman said, "and we´re getting out of that end of the business because we´re under pressure from low-cost imports."
He said the Tyler shutdown is part of Goodyear´s previously announced strategy to stop supplying some private label tires, reducing production by about a third to focus on more profitable segments, and cutting 8 million units a year. "We´re looking to develop high-value products."
The plant´s estimated capacity is about 25,000 passenger and light truck tires a day. About 85 percent of those are smaller tires, the spokesman said, "and retooling the plant would be cost prohibitive." Goodyear said it would save about $50 million a year after taxes by closing the facility.
The USW maintains that with a little investment, the plant can be an asset to the firm and help keep the tire maker profitable. It sees no reason to close the factory because other options are available, such as the production of more complex tires. "We´ve shown we can do it," said Jim Wansley, president of USW Local 746L, which represents workers at the Tyler factory. The facility has the potential to build tires much cheaper than any other location, he said.
"We´re the best performing plant Goodyear has," Wansley claimed. "But there´s always been some discussion about us. Still, (the announcement that the site would be closed) was unexpected. We really felt we were beyond that here, based on our performance. Unfortunately, it´s creating a whole new series of announcements and tests of wills, and we´re becoming the whipping post."
At a Nov. 3 USW-Goodyear bargaining session, company negotiators "walked in and simply told our people they were going to close the plant in Tyler and they were willing to negotiate a closure agreement and walked out," USW President Leo Gerard said at a Nov. 4 rally at the USW Local 2 hall in Akron.
Like Wansley, Gerard believes the plant can be saved. "I think it´s about making Goodyear understand that you don´t save North American manufacturing by walking away from it," he said. "We were able to demonstrate that if you put money back into those plants, if you try to make the plants more productive and you really want to commit yourselves to North American manufacturing, that you can succeed. We´ve given them a rational, defensible, profitable plan for doing that. They´re just being unreasonably greedy and unreasonably unrealistic."
In a letter sent to all striking members of the company, Goodyear said it presented a proposal for enhanced transition benefits and aid to Tyler workers, maintaining that the offer surpasses or equals "anything provided by any tire company to USW members under similar circumstances." The firm noted that it also offered Tyler employees preferential hiring rights at any other Goodyear North American tire plant.
The company said the union´s alternatives to closing the Tyler site "included continuing the status quo and mounting losses on the wholesale private label businesses, losing even more money on this business by relocating more production from lower cost plants in Latin America, closing Lawton and/or running all Goodyear USW plants at less than full so as to keep Tyler near full."
Goodyear said it is prepared to make a minimum investment in USW master plants of $447 million over the life of the contract being negotiated, adding that it had offered to protect all plants for the life of the pact.
Goodyear´s decision to close a plant drew mild applause but some caution from two analysts. Merrill Lynch´s John Murphy said in a report issued after the closing announcement that it´s "the standard course of action as the company implements its plan to exit 8 million tires in the wholesale private label business in early 2007."
However, he said the decision will impact negotiations between the company and union, although it´s unclear whether the action will incite the USW to greater solidarity or put more pressure on the union to make concessions.
Wansley indicated that the union does not intend to back down on the issue. "Our people have become more and more determined," he said. "The only way they´ll close the plant is if they whip the whole Steelworkers organization. We shut down a plant in 2003, and we discovered that was a mistake. Nobody ever won anything by retreating."
It´s possible, too, that Goodyear will not shut down another U.S. plant in the near future, Murphy said, but instead look for savings in the form of lower wages, fewer job classifications and reduced legacy costs.
Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor, Mich., said that shutting down a factory is a requirement for Goodyear to stay healthy. "It must focus on its operations and optimize its manufacturing processes much like companies in Japan do."
But closing a plant isn´t enough to get it out of the woods, he said, pointing out that it just can´t close a facility and say it´s done.
The company must improve all plants and all parts of its operation, he said.