Continental Tire North America (CTNA) Inc. is moving ahead with a restructuring plan that eliminates tire manufacturing at its Charlotte facility by September and cuts most jobs at the factory.
The decision came late April 30 after the company failed to reach agreement with the United Steelworkers on a new contract for the Charlotte site. The old pact expired that night. In March, Continental had threatened to eliminate tire production at the factory in September if the two sides did not settle on a contract by April 30.
On May 1, Conti implemented ``certain terms of our last, best and final offer,'' said Rick Holcomb, the tire maker's legal counsel. That includes cutting workers' wages and benefits along with a lower pay scale for new employees.
The wage reductions-amounting to about 15 percent for all plant workers-went into effect immediately, he said, while sickness and accident benefits will be cut by 50 percent effective Aug. 1 and pension accruals will be frozen on that date. Among other conditions implemented, employees will be paid only for hours actually worked and overtime was mandated for all workers.
After failing to forge a new pact with the USW, Conti declared an impasse in its negotiations with the union April 30, which allowed it to move ahead with implementation of its cost-cutting plan in Charlotte.
The USW denounced the move and filed unfair labor practice charges against the company with the National Labor Relations Board (NLRB). ``We consider the action unlawful and will take every step to see that the company's action is reversed,'' said Ron Hoover, executive vice president of the USW.
However, it likely will take between three and six months for the NLRB to rule on the grievance, according to Mark Cieslikowski, president of United Steelworkers Local 850, which represents workers at the plant. In three months, he said, many workers will be laid off and production will be transferred to lower-cost factories. If it takes six months, Conti will have halted tire production at the facility.
Continental's plan is to cut 170 workers in mid-May, 50 salaried posts in July and 478 hourly and salaried positions in mid-September when it suspends tire manufacturing in Charlotte. It chopped 140 jobs at the site in March.
The company does not plan to close the factory, Mr. Holcomb said. About 200 workers would remain to handle rubber mixing, calendering, puncture sealant and warehousing operations.
Mr. Hoover said the firm is looking to take money out of workers' pockets rather than update its products and upgrade its plants. The union maintains that Conti has had a pre-determined plan in place to abandon the North American market and move production to lower-cost countries. The company and Local 850 met for 12 hours April 30, the last day of negotiations.
Conti presented its ninth proposal-which totaled $32 million in annual cuts, the same as its first-to the union on April 25. The union countered on April 30 with a plan it said slashed $16 million in costs, though the company claimed it fell ``significantly short'' of what is needed to make the Charlotte factory cost-competitive.
``We are disappointed that the union would not work with us to reduce costs and that we were unable to reach an agreement,'' said Rick Ledsinger, Conti vice president of human resources and chief negotiator.
``However, we've run out of time, and at this point we have no choice but to move forward with our North American restructuring plan to get CTNA back to profitability.''
The USW held a large solidarity rally April 29. Its members have authorized a strike, but as of yet the union's leaders have not called one, maintaining that a strike would be a last resort. Right now ``a strike is not worth it,'' Mr. Cieslikowski said. ``They're going to close down tire production at the plant.''
He said the company quickly dismissed the union's counterproposal. ``We asked them to take the proposal and study it. But they didn't even do that. They ranted and raved and left the room. There was a federal mediator there and he got them to come back but this time they had a letter declaring an impasse.''
Mr. Holcomb countered that the union's proposal fell far short of the $16 million figure, which, in turn, was only half the $32 million in cuts needed. He said the plant is the highest-cost facility in Continental's global organization.