MAYFIELD, Ky. (Sept. 30, 2004) — Continental Tire North America Inc. (CTNA) will suspend tire production at its Mayfield tire plant by year-end as planned after rejecting proposals by the United Steelworkers of America (USWA) to keep the plant open.
Conti said the union's cost-saving plans “did not represent a viable framework for continuing tire production” in Mayfield, the tire maker said in a statement. Conti plans to suspend car and light truck tire production indefinitely by Dec. 31, putting 815 employees out of work.
The USWA estimated its proposals to restructure the work force would have yielded more than $20 million in cost savings annually. In response, Conti said the union's estimate was “overstated” and the proposal depended on “substantial capital investment” in the plant.
“It is regrettable that these negotiations did not result in an agreement to preserve jobs at the Mayfield plant,” said Nick Fletcher, vice president of human resources for CTNA. “However, the company cannot continue to operate a plant that is not cost-competitive. The proposals made by the union simply did not go far enough to address the cost disparity between Mayfield and our other tire plants.”
Conti announced plans in late June to cease tire production at the plant, after scaling down production there twice previously in the the seven months prior.
Conti said it continues to talk with the union about the effects of the decision on Mayfield employees. The company said it expects an agreement will be reached to ease the transition for employees.
Earlier Conti took a $118.7 million charge against first-half earnings to cover the Mayfield action but said the cost could rise to $144 million before year-end.