AKRON — Goodyear Engineered Products will close one plant and beef up others in the U.S. and Canada as it moves out on its own.
The one-time Goodyear division was renamed Veyance Technologies Inc. on Aug. 1 shortly after the Carlyle Group finalized a deal to buy the hose, belt and industrial product operation from Goodyear for almost $1.5 billion. A Veyance official also revealed plans to shutter its Collingwood, Ontario, facility by year-end.
The company is closing the facility because "the automotive segment has been challenging," according to Veyance CEO Timothy R. Toppen, "and we came to the conclusion that the plant was not competitive."
Carlyle also is planning to invest $45 million in new capital expenditures at its U.S. plants, a spokesman for the United Steelworkers said. The company did not say what those improvements would be or when they would be made.
The USW and Carlyle negotiated new contracts covering six plants — two in Canada and four in the U.S. — over the last several months and signed agreements at the end of July, setting the stage for Carlyle to proceed with its purchase of the business. The planned investment was part of its package with the USW.
As part of a separate contract covering the Collingwood factory, the approximately 135 workers at the site won´t necessarily lose their jobs when the plant closes Dec. 31, a USW official said.
"The package we bargained for is a significant economic package," according to Marie Kelly, assistant director for USW District 6, which covers Ontario and Canada´s Atlantic Coast provinces.
Under the pact, workers can accept a lucrative severance plan and retire from the firm or they can choose to remain with Veyance and transfer to the company´s Owen Sound, Ontario, facility located 80 miles from Collingwood, Kelly said.
She said the contract includes $3,000 per year severance for each year worked, with a minimum payment of $15,000 and no maximum. "Those who choose to retire can end up with $75,000-$90,000 in some cases along with their pensions" because some workers have 30 years of service time with Goodyear.
Collingwood workers have 30 days to make their decisions. "It´s hard to tell how many will go to Owen Sound," she said. "It´s a guessing game right now, but it will play itself out."
The 120 workers at the Owen Sound power transmission belt plant OK´d a five-year agreement with Carlyle that is similar to their old pact with Goodyear that ran for three years. The agreement includes some incentives, a slight bump up in the pension plan and additional security, Kelly said.
The Owen Sound facility also will receive "a significant investment in order to move people there," she said, adding that it´s likely production will be increased at the factory because the belting industry is doing well.
A third Canadian plant in Bowmanville, Ontario, opted to continue operating under the existing three-year contract it has with Goodyear, she said. Veyance also has a plant in Quebec not represented by the Steelworkers.
In the U.S., USW officials and Carlyle agreed on a five-year master contract July 30 after workers at the company´s four facilities represented by the USW ratified it July 27, pending the resolution of a health care issue. The deal was clinched July 31 when Carlyle agreed to form a trust for retiree health care separate from Goodyear´s plan, the union said.
The agreement took effect Aug. 1 and runs to July 31, 2012.
About 1,600 workers at plants in St. Marys, Ohio; Lincoln, Neb.; Sun Prairie, Wis.; and Marysville, Ohio, approved the pact by a more than 2-to-1 margin, the USW said. Four other U.S. facilities are not represented by the Steelworkers.
The contract mirrors one worked out with Goodyear, according to a union spokesman, with some minor exceptions.
The differences include an increase of $3 in the pension multiplier, bringing it up to $58 in August 2009; some minor increases in health care costs in 2010; and an extension of its cost-of-living allowance to 2012, with all increases in the last three years incorporated into wages.
Carlyle has been in discussions with the USW since it reached agreement with Goodyear to buy the Engineered Products division in March.
Goodyear said it anticipates net proceeds of about $1.4 billion on the sale and expects to record an after-tax gain in the third quarter. It will use the proceeds to reduce debt, address legacy costs and invest in its tire businesses.