AKRON—Goodyear is touting the new four-year labor contract with the United Steelworkers as cost-saving, but more importantly an agreement that will change the way it runs its unionized tire plants in the U.S.
The contract, ratified Sept. 18, runs through July 27, 2013, and covers about 10,300 employees at seven Goodyear facilities. Union members at the company's Danville, Va., factory had voted the new deal down on Sept. 10, but workers at the remaining sites approved it over the following week.
Goodyear said the contract will save the company about $555 million over its term, including $340 million from local pre-bargaining agreements in Akron; Buffalo, N.Y.; Danville; Topeka, Kan.; and Union City, Tenn. Those savings will be realized through scheduling changes and staffing reductions, the Akron tire maker said.
The Union City factory is the only one of the seven not given protected plant status for the contract, although Rich-ard Kramer, the firm's chief operating officer and president of its North American Tire unit, said closing the site isn't in its current plans. The facility will be moving to a five-day workweek, the executive said.
About $215 million in cost reductions during the term of the contract will result from productivity upgrades, savings in wages and benefits, flexibility changes and the transition to a defined contribution plan for pensions from a defined benefit plan.
Kramer said while the cost savings are significant, the realities of today's tire industry and the global economic crisis required more than hitting a cost-cutting number.
The contract needed to address the improvement of Goodyear's “efficiency, flexibility and competitiveness in both the near term and long term,” driving working capital improvements and allowing for better responsiveness to customer needs, he said.
Agreements reached with the Steelworkers in 2003 and 2006 addressed costs and competitiveness, Kramer said, including the support of the then-financially troubled company's turnaround in 2003 and the establishment of a $1 billion Voluntary Employees' Beneficiary Association trust fund to pay for retiree health care costs in the future. While the 2009 contract builds on those foundations, it also focuses strongly on the work the company does “within the four walls” of its plants, he said.
Some of the changes benefiting Good- year include upgraded, more consistent output and individual performance standards; elimination of “grandfathering” wage rates when union workers voluntarily move to lower-paying jobs; increased cost-sharing for workers in their medical plan; 50-cent raises for newer workers only; the shift to a defined contribution pension plan; and the ability to make up to 600 additional buyouts at the protected plants.
The agreement will enable the company to “realize profitable growth by manufacturing tires in North America,” Kramer said.
Benefits for both sides
Kevin Johnsen, the USW's contract coordinator for the Goodyear chain, said the negotiations were successful for the union and company. “They got their flexibility needs, and there were job and plant security needs that we were able to fulfill.'
The Union City site was an exception, but the plant was not protected even before negotiations in June based on a local agreement with the company back in April, Johnsen said. As part of that plan, up to 600 workers there were offered buyouts, and slightly more than 500 accepted when the buyout was completed July 1.
The facility employs about 1,800 USW workers following the buyout, he said.
The labor organization is holding out hope for the Union City plant's future in the wake of the Chinese tire import decision, which placed duties on passenger and light truck tires brought in from China beginning last month. The USW in April filed a petition for relief with the U.S. International Trade Commission, claiming Chinese tire imports were causing market disruption within the U.S. tire industry.
“We're hoping it will have an impact in Union City and help secure some of those jobs going forward,” said Stan Johnson, USW secretary-treasurer and head of the union's Rubber/Plastics Industry Conference. “We think it will, and we're confident that it should. And we're going to see the impact from the decision at other tire facilities as well.”
As for the contract, Johnsen said he is “very proud” of the plant security achieved over the four-year period. Following the past two negotiation seasons, plants covered by the master contract in Huntsville, Ala., and Tyler, Texas, were closed.
Another Goodyear plant in Valleyfield, Quebec, where the USW represented a smaller group of workers, was also shuttered following the 86-day strike at 12 company sites in 2006.
The union also attained a monthly pension increase—to $58 per year of service for retiring workers and $63 for those working beyond next year—for veterans staying on the traditional defined benefit plan, and $600 million in capital investments at the protected plants.
“You have to have those investments to keep the plants competitive,” Johnsen said. “Having a guarantee of security is nice, but at the end of the day you want the upgrades so when the next contract comes around your plants are still competitive.”
Given the overall circumstances surrounding the industry and the global economy, the USW is satisfied with the results of the contract, Johnson said.
“We'd certainly like to see more increases in pay and better benefits and all the things we think our members deserve with their work, but it's a tough landscape out there,” the union official said.
“All in all we're satisfied with what we've achieved with these three contracts.”
In other master contract negotiations, USW members were to complete voting on a tentative agreement with Bridgestone Americas Inc. the week of Sept. 28, but results weren't made available until Oct. 3.
The proposed four-year deal would cover about 4,500 Steelworkers staffing seven company tire and rubber product plants.
Workers at Michelin North America Inc.'s unionized BFGoodrich tire plants ratified a three-year deal with the company in August. That agreement covers about 2,500 workers at BFG sites in Tuscaloosa, Ala., and Fort Wayne, Ind. It doesn't include the Opelika, Ala., facility, which is scheduled to close Oct. 31.
Michelin planned to lay off about 350 people at the Opelika plant effective Oct. 2 as part of its phasing out of the facility.