PITTSBURGH (Dec. 23) — Goodyear and the United Steelworkers reached a tentative agreement late Friday on a new master contract that brings the two sides one step closer to ending a strike the USW began Oct. 5.
The Steelworkers said the three-year deal — if ratified — "secures retiree health care benefits and dramatically increases Goodyear's investments in union facilities." It also gains a one-year reprieve for the Tyler, Texas, tire factory. Goodyear earlier in the strike announced plans to close the plant but it now will stay open at least through 2007.
From Goodyear's standpoint, the Akron-based firm said the deal "supports Goodyear's strategy to significantly reduce costs and improve competitiveness in its North American operations." That comes, in part, through redesign of incentive systems and immediate implementation of market-based wage and benefit levels for all new hires. Michelin gained a similar two-tier wage system in the master contract it signed earlier this year with the USW for three of its U.S. tire plants.
"Our goal was always to reach a fair agreement that improves our ability to compete and win with customers. This agreement would accomplish that goal," Robert J. Keegan, chairman and CEO, said in a Goodyear statement.
The tentative pact covers about 12,600 USW members at 12 tire and engineered products plants in the U.S. It doesn't include the more than 2,000 strikers at four Goodyear locations in Canada.
It was endorsed by the USW's Goodyear Policy Committee, comprising local union leaders from the company's master contract facilities throughout the U.S. Ratification votes are slated for Dec. 28 following informational meetings at each USW local. While full details won't be released until after ratification, the two sides did say the agreement:
—Secures retiree medical benefits through an independently administered Voluntary Employees' Beneficiary Association to be launched with an up-front $1 billion contribution from Goodyear. The firm will pay in $700 million in cash and up to $300 million in additional cash or common stock at the company's option. The VEBA would assume full responsibility for providing retiree medical benefits to all present and future Goodyear USW retirees.
—Enhances the ability of USW-represented plants to meet the challenges of global competition by having Goodyear triple its capital investments to at least $550 million in those plants; and
—Maintains "affordable, high-quality medical and prescription drug coverage for active members and retirees," according to the USW.
"This agreement validates the solidarity of our members and their families, who wouldn't allow the company to walk away from obligations earned through a lifetime of hard work and loyalty," USW President Leo W. Gerard said in a statement.
Thomas Conway, USW vice president and chair of the union's Goodyear negotiations, said that securing "solid medical and drug benefits for current members and retirees in the midst of today's health care crisis, our bargaining committee was able to drive the proverbial wolf away from the door for tens of thousands of retirees and thousands more workers who are nearing retirement."
The tentative agreement comes after months of wrangling between the two sides. Negotiations between the USW and Goodyear began in June, with the old contract set to expire July 22. The two sides extended the pact day-to-day until the USW began the strike Oct. 5. The latest round of bargaining began Dec. 18 in Pittsburgh, more than a month after the last set of formal talks.
While the union wasn't able to secure full plant security for Tyler, it said the new agreement "instead provides for a one-year period of transition during which workers will have the opportunity to take advantage of sizeable retirement buyouts."
"Though we're not entirely happy with the outcome at Tyler," Conway said, "we were able to ensure that as long as Goodyear stays in the market for the tires built at Tyler, those tires will have to be produced at USW-represented plants in the U.S. The company simply won't be able to outsource that work or service this market segment with imports from China or anywhere other than a USW facility."
USW Executive Vice President Ron Hoover said that "what we achieved would never have been possible if we hadn't struck."
The ratification process will follow a "majority of the majority principle" — meaning that a majority of the locals as well as a majority of the overall membership must vote to accept the tentative pact for it to be ratified. Factories covered by the master contract are in Akron; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; Lincoln, Neb.; Marysville and St. Marys, Ohio; Sun Prairie, Wis.; Topeka, Kan.; Tyler; and Union City, Tenn.
Goodyear said it plans to hold a conference call in January for investors, financial analysts and media to discuss specifics of the new contract if it is ratified by the USW membership. The timing of that call will be announced at a later date.
If the rank-and-file ratifies the contract, the USW then would turn its attention to reach a pact with Bridgestone/Firestone, the last of the three tire makers covered under the master contract process.