AKRON—Goodyear CEO Richard Kramer said the recently signed four-year contract with the United Steelworkers helped the tire maker "enable its North American business to continue its momentum" from previous contracts.
Kramer and Chief Financial Officer Darren Wells discussed the company's labor agreement with the United Steelworkers over a conference call with reporters and analysts on Aug. 27
The deal with Goodyear covers 8,500 workers at plants in Akron; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; and Topeka, Kan. It expires on July 29, 2017.
The CEO said the company's goal was to build on the progress made in the 2003, 2006 and 2009 contracts.
"Like the past three contracts, this contract addresses both our operation efficiency and structural costs," Kramer said. "The new agreement permits us to freeze legacy pension obligations for USW employees, building on our 2006 action to eliminate retiree health care obligations and our 2009 agreement to move new hires to 401(k)-type retirement plans," he said.
"In addition, the new contract adjusts our profit sharing plan to reduce its costs and keeps wages and benefits in aggregate consistent with the prior contract. These steps align with our strategy roadmap and further position our North America business to continue on its path."
Wells said the company's main objective in the negotiations was to obtain the ability to freeze the hourly defined benefit plan. The company can freeze the plan at any time during the life of the contract, and it becomes frozen 90 days after it is fully funded to Employee Retirement Income Security Act requirements. Once funded, the company is required to keep the plan at least 97 percent funded on an ERISA basis.
Goodyear has the flexibility to reduce employment levels at each of the six facilities by about 15 percent. It also has 230 discretionary buyouts in 2013 and can offer up to 400 additional buyouts for the duration of the agreement.