MAYFIELD, Ky.-Continental General Tire Inc. laid off 100 workers at its Mayfield plant Nov. 1-and is moving some of the unit's tire-building equipment to its Charlotte, N.C., factory-after union officials rejected a proposed renegotiated contract. The cutbacks bring the total number of employees laid off at the unit to 500. The plant now employs about 1,000.
The agreement expires Oct. 15, 1997, but CGT said it needs to implement changes now to make the factory more cost-effective.
CGT offered wage, cost-of-living and other benefit concessions, but the union local indicated it wasn't interested in changes until the contract expires, said Michael Polovick, CGT director of human resources.
The company in 1993 sought concessions when it asked the union to open contract talks early. The union accepted the company's proposal after the firm threatened to lay off 190 employees and freeze capital expenditure. Approval of that contract came three weeks after union members rejected it.
The firm also sought to lower per-tire production costs in Mayfield at that time. Mr. Polovick and Romey Holmes, president of United Steelworkers of America Local 665, agree the factory has been haunted by high costs per tire produced.
Mr. Holmes said the company told the union in February it cost $6.35 more to build a tire at Mayfield than at other CGT plants. He said that number has since been reduced to $2.81.
``Mayfield's improvements (in cost reduction) occurred over the last three years-not the last six months,'' Mr. Polovick said.
Mr. Holmes believes the situation may be remedied by increasing volume, which he said had dropped to 16,000 tires per day from 20,000 tires per day earlier in the year. The volume will be reduced to 14,000 tires per day as a result of the Nov. 1 cutback, according to Mr. Holmes.
The radial passenger and light truck tire plant has the capacity to produce 24,000 tires per day, according to TIRE BUSINESS' 1996 Global Tire Report.
``The only way to bring the cost per tire down is to put our plant at capacity,'' Mr. Holmes said. ``There's a lot of high-priced equipment here that isn't used to capacity, which drives the cost up.''
Mr. Polovick indicated the company is in a Catch-22 situation.
``By virtue of the fact that Mayfield is a high-cost plant, it is the last plant to increase production and the first plant to suffer a reduction of production because we want to keep our more efficient plants running at capacity,'' he said.
``It's a better use of our resources. If we can get Mayfield's costs in line with our other plants we would have more flexibility in our sourcing decisions.''