About 12,600 striking Goodyear employees in the U.S. could soon be back on the job following a nearly three-month-old strike if United Steelworkers (USW) members approve a tentative three-year pact forged Dec. 22.
The union membership vote was scheduled to finish Dec. 28, and results were not in by Tire Business' presstime. (Results will be posted at www.tirebusiness.com.)
At least three locals-in Lincoln, Neb., Union City, Tenn., and Danville, Va.-started voting Dec. 27. By presstime, Local 286 representing hose and belt workers in Lincoln had approved the pact, though representatives did not disclose the vote totals. Local 878 in Union City also approved the pact, with 64 percent in favor.
Danny Barber, president of Local 831 in Danville, said about 1,600 to 1,700 of his members turned out to vote, and union leaders were counting the votes early Dec. 28. The local represents about 2,000 workers at Goodyear's Danville tire plant, he said.
The pact must be approved by a ``majority of the majority,'' meaning both a majority of locals as well as a majority of members.
The tentative pact does not include four Canadian facilities, but Goodyear has given those employees a contract proposal on which they'll vote soon, a Goodyear spokesman said. If approved, the proposal would also end the strike for the roughly 2,400 Canadian employees.
Even if the U.S. pact is approved, however, some dealers expect to wait a bit longer before production and supply levels return to normal. Tony Montalbano, president and owner of Montalbano Tire & Auto Repair in Houston, said he expects to wait 60 days for normal supply, but that doesn't diminish his relief that an end is in sight.
``It hasn't been a pleasant two months, that's for sure,'' he said. Investors shared Mr. Montalbano's excitement, sending Goodyear's stock price to its highest levels in four years. The tire maker's stock rose 2 percent Dec. 26 to $20.12. It rose again to $20.22 on Dec. 27. Goodyear's stock last reached $20 on June 18, 2002.
The USW called a strike Oct. 5 at 16 North American facilities after contract talks broke down. The two sides met briefly for formal talks at the end of November, but they were unable to resolve major issues, including funding retiree health care and Goodyear's plan to close its Tyler, Texas, tire plant. Negotiators for both sides resumed talks Dec. 15.
In the pact, Goodyear agreed to hold off closing its Tyler plant for a year, during which time workers can take advantage of retirement buyouts, the union said. The facility can close after Dec. 31, 2007.
``Though we're not entirely happy with the outcome at Tyler, we were able to ensure that as long as Goodyear stays in the market for the tires built at Tyler, those tires will have to be produced at USW-represented plants in the U.S.,'' said Tom Conway, USW vice president and the chair of the union's Goodyear negotiations.
The Tyler closing is linked to Goodyear's June decision to exit parts of its private label business. The firm already charged $107 million relating to the closure against its third quarter results.
The Tyler plant has a capacity of about 25,000 passenger and light truck tires a day, and its closing will eliminate about 1,100 jobs and save the company about $50 million a year after taxes.
Also as part of the tentative pact, Goodyear will secure retiree medical benefits through an independently administered voluntary employees' beneficiary association (VEBA) with a $1 billion contribution from the company. Of that contribution, $700 million will be in cash and $300 million in additional cash or common stock at the company's option.
The VEBA will assume full responsibility for providing retiree medical benefits to all present and future Goodyear/USW retirees, subject to court and regulatory approval, Goodyear said.
Goodyear initially offered to contribute $660 million to the trust fund, which the union said was not enough.
The pact also provides capital investments in USW-represented plants of at least $550 million over the life of the three-year contract. The union said that figure is three times Goodyear's recent capital improvements.
The Akron-based tire maker's incentive systems also will be redesigned, and the firm will implement market-based wage and benefit levels for all new hires.
More details of the pact will be released if it is approved, and Goodyear plans to hold a conference call sometime this month to discuss the pact.
``Our goal was always to reach a fair agreement that improves our ability to compete and win with customers,'' said Goodyear Chairman and CEO Robert Keegan. ``This agreement would accomplish that goal.''
Union officials also praised the agreement, saying it ``secures retiree health care benefits and dramatically increases Goodyear's investments in union facilities.''
Initially the strike had been costing Goodyear about $30 million to $35 million in lost operating income per week.
Before the tentative pact was announced, Saul Ludwig, an analyst with KeyBanc Capital Markets in Cleveland, said the strike was dealing a direct blow to Goodyear's sales because of supply shortages, though it was too soon to determine the strike's long-term effect on Goodyear's market presence.
Crain News Service contributed to this report.
* * *
'Crucial areas' in pact
Although more details of the tentative agreement between Goodyear and the USW will not be released until all locals have voted, Goodyear said it has agreed to:
* Establish a $1 billion trust fund to assume full responsibility for providing retiree medical benefits to all present and future Goodyear/USW retirees;
* Delay closing the Tyler, Texas, plant until after Dec. 31, 2007, allowing workers to take advantage of retirement buyouts;
* Redesign incentive systems and implement market-based wage and benefit levels for all new hires; and
* Provide capital improvements in USW plants of at least $550 million over the life of the contract.