DETROIT—The strike that began Oct. 5 at Goodyear hasn't sat too well with General Motors Corp.
Several weeks after GM settled a dispute with Goodyear that threatened to interrupt tire supplies, GM claims the tire maker failed to warn the car manufacturer that it faced a strike from its union. Now 15,000 members of the United Steelworkers of America (USW) are striking 16 Goodyear plants in North America.
Goodyear is GM's second-largest North American tire supplier, shipping about 8 million tires a year to assembly plants. GM's annual purchase from Goodyear is valued at about $350 million. GM is down to a 25-day supply of Goodyear tires, said GM spokeswoman Deborah Silverman.
“The important point is that we have a contingency plan in place to cover the Goodyear tires and production is not at risk,” Ms. Silverman said.
Kari Kuvaja, GM's executive director in charge of tire purchases, said GM purchasing chief Bo Andersson was never given an indication that there was a possibility of a strike. “GM does not like surprises from its suppliers,” Mr. Kuvaja said.
In Goodyear's defense, he said, “They never interrupted any production.”
Goodyear spokesman Ed Markey said the tire maker is in daily contact with GM purchasing, and “we're not aware of any concerns.”
GM can do little if Goodyear cannot meet the auto maker's tire demands. Substituting another tire brand requires more than six months of rigorous testing before the tires can be validated for production vehicles, GM said.
The car maker's largest tire supplier is Bridgestone/Firestone; Continental Tire North America Inc. is the third-largest.
Other North American auto makers are exposed to Goodyear as well. DaimlerChrysler A.G. gets 72 percent of its tires in North America from Goodyear, according to Tire Business.
Markus Mainka, a spokesman for DaimlerChrysler in Auburn Hills, Mich., said the strike “has had no immediate impact on our production. We're working with Goodyear to prepare for a prolonged strike. We expect them to come up with solutions in case of a prolonged strike.”
Rolling right along
Goodyear is using salaried workers to operate all 16 of its plants being struck by the USW. That includes all eight plants that produce tires. Three plants were not struck, the company said.
GM's Mr. Kuvaja said he sympathizes with the difficulties Goodyear faces. The auto maker will work with Goodyear until the strike is settled, he said.
But he said suppliers that “disappoint” GM with potential production problems get scrutiny from the auto maker. Through a spokesperson, GM's Mr. Andersson said, “Goodyear will resolve their issues and come out a stronger company.”
This is GM's second public issue with Goodyear in recent months.
The auto maker filed a lawsuit against Goodyear on July 31, claiming the tire maker was improperly withholding some shipments in a dispute over prices and threatening GM with “catastrophic, irreparable losses.”
The lawsuit was filed in suburban Detroit. A Goodyear spokesman at the time characterized the lawsuit as unfounded and said it mischaracterized the relationship between the two companies.
GM also alleged that Goodyear timed its actions to cause the most harm to the car maker. The halt in the production and shipment of tires came on the eve of the start of production at the new Lansing Delta Township assembly plant in Michigan.
The lawsuit was settled out of court in September, GM said.
No end in sight
It's unclear how long the strike could last, and no negotiations were taking place last week.
Analyst Glenn Reynolds of New York-based CreditSights, said the problem facing Goodyear is that the USW is scrambling to protect jobs and its membership ranks. But Goodyear faces foreign competition, massive pension liabilities and higher raw material costs.
Goodyear, he said, is reportedly interested in having the flexibility to close as many as three plants. The union said no.
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