With contract extensions intact and talks shutting down with other tire companies, the United Steelworkers of America now can turn its full attention to Goodyear, its target for 2003 negotiations.
Company executives are encouraged by how the talks are going. However, the Steelworkers already have rejected one Goodyear proposal, and the company had more bad financial results the week of April 28.
USWA members at U.S. plants run by Goodyear, Michelin North America Inc. and Bridgestone Americas Holding Inc. are working on day-to-day extensions of their previous contracts, which lapsed in April (except for workers at Goodyear's Kelly-Springfield unit facilities, whose contract doesn't expire until July).
Bridgestone/Firestone suspended its negotiations with the union April 28 to allow the Steelworkers and Goodyear to focus on their talks. Michelin's Uniroyal Goodrich units are expected to break off bargaining soon.
The next step is an agreement between Goodyear and the union, which represents about 20,000 workers at 14 Goodyear, Kelly and Dunlop tire and rubber facilities. The USWA believes Goodyear's ideas for keeping the struggling company afloat are shortsighted, especially by targeting union jobs and benefits.
According to the Steelworkers, Goodyear's plan involves concessions worth more than $900 million from its members and its retirees, including jobs, wages, cost-of-living allowances, pension coverage and health care coverage.
It also makes no provision for the survival of or investment in organized plants, the union claimed, leading it to believe the company plans to put available money into non-union or offshore factories.
In a letter sent to members dated April 26, the union's Goodyear policy committee said the company strategy would provide some ``short-term money,'' but it wouldn't address long-term problems.
``Two years from now Goodyear will be in worse financial shape, with even less chance or ability of avoiding a financial meltdown,'' the letter said. The Goodyear plan has been ``studied and rejected,'' the union said.
The USWA's proposal, shared with members in a letter dated April 15, calls for a reduction in management positions and other ``useless'' salaried personnel; improved production methods; debt restructuring and reduction; and cost savings for health care.
The union also is pushing for contract language outlining the utilization of and investment in North American organized facilities.
Goodyear has had little to say about negotiations beyond its original desire to be chosen as the bargaining target, but in its quarterly earnings call April 30 executives said the company is encouraged by the tone of the discussions between its negotiators and the USWA.
``We've been more open with information than ever before, and this is leading to improved joint understanding conceptually,'' said Jon Rich, president of Goodyear North American Tire. ``I'm confident, cautiously optimistic.''
Goodyear hasn't stockpiled tires in anticipation of work stoppages, but does have contingency plans in place for key accounts, the firm said.
David Meyer, associate professor of management at the University of Akron's College of Business Administration, said the capital market is putting intense pressure on Goodyear and other U.S. manufacturers.
If conditions force a company to cut its costs to the lowest level possible, it isn't likely to invest in North America, but in places like China, he said.
But Goodyear also has made some questionable decisions in recent years, Mr. Meyer said, that coupled with bleak economic conditions led to its current plight.
The company reported a first-quarter net loss of $163.3 million on sales of $3.5 billion, with the biggest blemish a $61.5 million operating loss in its North American tire unit.
The problem is that workers are usually the ones who pay for a company's wrongs, he said.
``CEOs should pay for their own mistakes, but that's not the case,'' Mr. Meyer said. ``In reality, the CEOs make mistakes, the investors pay for some of them and the workers pay a lot.''
Mr. Meyer said the union is not in a position to ask for much, and the company can't give much. A strike might hurt the union more than the company, he added.
The USWA should seek to get its eligible workers to retirement-perhaps 70 to 80 percent of them-by the end of the next contract and keep whatever jobs are needed in the U.S. before Goodyear really starts moving production offshore, Mr. Meyer said.