AKRON (Oct. 11, 2006) — The impact to Goodyear—in terms of both costs and customers—from the United Steelworkers' strike at 16 plants in the U.S. and Canada will depend largely on the strike's length, industry analyst Saul Ludwig said today.
Mr. Ludwig, of KeyBanc Capital Markets in Cleveland, estimates Goodyear will lose $2 million a day in profits.
“The longer the strike lasts the bigger that number becomes,” he told Tire Business. “But I haven't offered any estimate as to, you know, at three weeks it's X amount, at four weeks it's Y amount and at five weeks it's Z amount. I don't know what those numbers are.”
He predicts that Goodyear has enough inventory and production to meet its needs initially, but afterwards revenue could be impacted. Mr. Ludwig said it's unknown how much inventory Goodyear has on hand or, for that matter, how long the strike could last.
“(Goodyear and the union) don't know,” he said, referring to the strike's potential longevity. “This is something that both sides have a strong position on, and I don't know what it's going to take to bring about a compromise.”
Though the Akron-based tire maker has instituted contingency plans to have salaried workers fill in for union employees, Mr. Ludwig estimates that salaried employees will be able to replace only a small piece of the production.
“If you've got 15,000 workers out, you can't replace 15,000 workers,” he said.
Besides the question of how long the strike lasts, Mr. Ludwig said another major factor in Goodyear's ability to deal with the strike is how much product it is able to bring from overseas operations and from the two plants continuing to operate in North America — Lawton, Okla., and Napanee, Ontario.
“They do have production coming out the door,” he said, “and I think they'll just focus that production on where their needs are the greatest.”