Goodyear and the United Steelworkers of America (USWA) have reached a tentative agreement on a three-year master contract, but one of the company's tire plants and its workers will be casualties of the pact.
After four consecutive days of long, intense bargaining, negotiators for both sides announced they had reached an accord Aug. 20. As part of the deal, Goodyear will close its Goodyear-Dunlop Tires North America passenger and light truck tire factory in Huntsville, Ala., which employs about 1,300-more than 1,000 of them USWA members. The shutdown is expected to take place by the end of the year, according to a spokesman for USWA Local 915 in Huntsville.
Goodyear purchased majority ownership of the 34-year-old operation, as well as the Dunlop plant in Buffalo, N.Y., in 1999 as part of its global alliance with Japanese tire maker Sumitomo Rubber Industries Ltd. The plant has the capacity to produce about 27,000 tires per day, according to Tire Business' 2003 Global Tire Report.
Further details of the proposal won't be available until the union shares the information with its members, Goodyear said. But the agreement does support the ``business turnaround needs of the company, strengthens our relationship with the USWA and addresses the key concerns of its members and retirees,'' according to Jim Allen, Goodyear director of global labor relations.
The tentative pact also ties all 14 covered plants to one master contract with a common expiration date, a USWA spokesman said. Previously, the workers at the nine Goodyear, two Dunlop and three Kelly-Springfield facilities had separate deals, and the Kelly factories had a later expiration date.
The tentative agreement now must be ratified by a majority of the 14 locals included in the settlement representing a majority of the workers. The USWA represents nearly 20,000 active and laid-off employees and about 22,000 retirees at the unionized sites.
A summary of the pact was provided to all USWA members at those locations and explanation meetings were to be scheduled at all sites in the coming weeks, the union said. It expected ratification votes would be taken by mid-September.
The two sides worked long days and late nights since Aug. 17, when the company made the offer on which the tentative agreement was reached. The USWA's bargaining committee spent much of the time analyzing and going back to the company for clarification on various issues and language, a union spokesman said.
The financially strapped Akron tire maker has said it was seeking cost cuts in the $1.5 billion range by 2005, and in its contract discussions with the union revealed it was looking to reduce labor costs by more than $900 million during the next three years. Goodyear had a net loss of $237 million the first two quarters of 2003 and $1.3 billion the past two years.
The union primarily has been seeking job and plant security for the 14 covered plants, plus assurances from the company on restructuring its finances by reducing debt and eliminating some of the ``excessive layers'' of management. The USWA also wanted health care benefit protection, especially for its retirees.
Saul Ludwig of McDonald Investments Inc. in Cleveland-who couldn't comment on the deal since he has yet to see it-called reaching a tentative agreement a ``very positive event'' for Goodyear. He said it's a sign of good progress for the company in addressing its cost issues.
A report released by Merrill Lynch Global Securities in New York surmised closing one plant would be insufficient to achieve a meaningful improvement in Goodyear's financial health. The analysis firm believes the agreement also includes some as-yet-undefined benefit cost reductions.
David Meyer, associate professor of management at the University of Akron's College of Business Administration, said the two sides probably discussed the closure of more than one plant, but that would be an even more difficult position for the union to take back to its members. ``The people at the other plants might start wondering, `Who's next?''' he said. ``If people start voting `no' out of principle, the contract would be unratifiable.''
If the contract is ratified and a good portion of union members retire over the next three years and the economy recovers in the short term, the deal-even with a plant closing-could be good for both sides, he said.
``Goodyear and the union bought themselves some time,'' he said. ``The downward spiral won't be as steep. But a lot of other things have to fall into place.''
At Huntsville, the initial reaction has been negative-``pretty much what you would expect,'' the Local 915 spokesman said. He told Tire Business the workers' mood is obviously ``not too great'' and ``everyone's resigned themselves to the plant's closing.'' The closure decision will affect 1,050 workers on the firm's active payroll and about 300 who have been laid off since Goodyear's financial difficulties began, he said.
About 70 of those laid off have been working at Goodyear's Gadsden, Ala., plant, and some of the Huntsville members may be able to find work eventually at Gadsden or other company sites through a preferential hiring system, the spokesman said.
Negotiations for the tentative pact took many turns since openng in March. Goodyear was chosen as the target firm for 2003 bargaining in April, but the two parties couldn't get past key issues. They agreed to halt talks in Cincinnati by June 27, and when the union rejected a last-hour proposal, negotiators went home and bargaining was dead for the moment.
Negotiations reconvened Aug. 6 in Cincinnati, but the union again quickly rejected Goodyear's first offer of the new session. Finally, Mr. Allen told USWA negotiators Aug. 13 if a tentative agreement wasn't in hand by midday Aug. 15, Goodyear would begin implementing its own financial turnaround plan.
The bargaining's intensity seemed to pick up after Goodyear's ultimatum. Talks went past the deadline, into the Aug. 16-17 weekend, and culminated in the company's last offer and the tentative agreement.
Meanwhile, the USWA said if the tentative agreement is ratified, it will be used as the pattern for negotiations between the union and other tire makers including Bridgestone/Firestone and Michelin North America Inc. After Goodyear was chosen as the industry target, talks with Michelin and BFS were put on hold pending the resolution of the Goodyear contract.
USWA members at Yokohama Tire Corp. and Cooper Tire & Rubber Co. plants have contracts expiring this year; Continental Tire North America Inc. will have midterm reopeners with workers at three facilities.