AKRON (Aug. 27, 2013) — During an investor conference call today Goodyear said the four-year master labor contract ratified Aug. 22 by members of the United Steelworkers (USW) union meets the goals the tire maker established prior to negotiations.
"Our goal for these negotiations was to build on the structural cost improvements and progress made in the 2003, 2006 and 2009 contracts and reduce the potential future impact of legacy pension obligations on our North America business," said Richard Kramer, Goodyear chairman and CEO.
"Over the past decade, these four ground-breaking contracts have enabled us to reduce high-cost capacity, establish a VEBA (Voluntary Employees' Beneficiary Association) to eliminate legacy retiree medical benefit obligations, create a tiered wage structure, improve productivity and now, cap our legacy pension obligations," he said.
The new contract allows Goodyear to freeze defined benefit pension plans and replace them with a defined contribution plan at any time during the length of the contract, once full funding is achieved, Goodyear said. This capability will help to eliminate the "volatility that pension obligations have historically had on our earnings and cash flow," Mr. Kramer added.
Goodyear said the agreement also reduces the percentage of North American earnings paid out under the company's profit-sharing plan and reduces the maximum annual payouts during the contract. The pact also provides flexibility to reduce staffing, while continuing medical benefit cost sharing and keeping wages and benefits in line with the prior agreement.
The master contract, which was approved by USW local members at six plants by a 3-1 margin, covers about 8,000 associates at plants in Akron; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; and Topeka, Kan.
A replay of the investor conference call can be accessed by calling 800-688-9459 or 402-220-1373 or by visiting Goodyear's investor relations website.