Goodyear, BFG union workers ratify pacts

AKRON—Members of United Steelworkers (USW) union locals at six Goodyear tire plants and two BFGoodrich plants recently ratified new collective bargaining agreements, impacting more than 10,000 workers in total. By a 3-1 margin, Goodyear union members at the tire maker's plants in Buffalo, N.Y.; Topeka, Kan.; Fayetteville, N.C.; Danville, Va.; Gadsden, Ala.; and Akron passed a new, four-year agreement by an “overwhelming” margin, the USW said on its website. The contract covers about 8,000 workers at the facilities. USW International President Leo W. Gerard said the ratified contract “improves income, retirement and job security, among other benefits.” Tom Conway, USW International vice president who chaired the union's Goodyear negotiations, said the new contract “protects our plants against closure throughout its term. “We also negotiated a commitment from Goodyear to invest in our North American facilities so that future generations can look forward to continuing the tradition of manufacturing in these communities.” Cost of living adjustment (COLA) coverage has been expanded to all USW-represented Goodyear employees, according to Mr. Conway, who noted that the new pact provides more flexibility for USW members to move between jobs within the plants. “Our membership demanded a fair contract that improved standards of living without sacrificing the long-term viability of the company or placing our jobs at risk,” said USW International Secretary-Treasurer Stan Johnson, the Pittsburgh-based union's Rubber and Plastic Industry Conference chair. “Thanks to their solidarity and the hard work of our negotiating committee, we are proud to have accomplished those goals with Goodyear.” During an Aug. 27 investor conference call, Goodyear Chairman and CEO Richard Kramer along with Darren Wells, Goodyear's executive vice president and CFO, discussed details of the new contract. “When we began negotiations with the United Steelworkers in late April, our goal was to build on the significant progress made in the 2003, 2006 and 2009 contracts and enable our North America business to continue its momentum,” Mr. Kramer said. “We believe our new four-year agreement meets that goal, allowing us to enhance our competitiveness even amidst continuing economic challenges.” The new contract, Mr. Kramer noted, addresses operational efficiency and structural costs and is designed to reduce the potential future impact of legacy pension obligations. Under the agreement, Goodyear will be able to transition the remaining participants in its defined benefit pension plan to defined contribution plans, which can occur at any point once the new plan is fully funded. “We can freeze the plan at any time during the life of the contract,” Mr. Wells said. “The plan becomes frozen 90 days after it is funded to ERISA (Employee Retirement Income Security Act) requirements. Once funded, we are obligated to keep the plan 97 percent funded on an ERISA basis. “...Once the hourly plans are fully funded, we'll change the asset allocation to substantially all fixed-income securities,” he continued. “This shift in allocation is designed to ensure asset returns offset any future impact of discount rates on the plan's unfunded status.” Mr. Wells noted that the timing of the funding has yet to be determined and will depend on interest rates and other factors. The company plans to address this further during an investor conference in September, he said. Employees who are participants in the defined benefits plan will begin receiving company contributions to their new 401K plans starting with the effective date of the defined benefit plan freeze. Contributions will range from $2,100 to $8,000 per year, depending on age, Mr. Wells said. “Those who aren't part of the defined benefits plan will receive increases in contributions to their 401K plans effective Jan. 1, 2014,” he said, adding that the company expects a $60 million favorable pension expense impact by the end of the new agreement. In addition, the new contract reduces profit-sharing percentage to 10 percent from 12 percent of North American EBITDA, Goodyear said, and establishes an annual cap of $35 million for the first three years of the agreement. By comparison, the 2009 agreement did not include any cap. Also, the maximum four-year payout has been reduced to $140 million from $175 million. Goodyear said the contract provides modest wage increases for the bottom two pay grades, which covers about 7 percent of employees. Overall wage cost for the company is neutral versus the 2009 contract, though the new agreement gives Goodyear the flexibility to reduce staffing by up to 15 percent in each facility. The tire maker also has the right to offer up to 230 discretionary buyouts in 2013 and an additional 400 during the remainder of the contract. USW members at BFGoodrich Tire plants in Fort Wayne, Ind., and Tuscaloosa, Ala., have ratified a renewed three-year labor agreement after initially rejecting a deal two weeks before. The contract covers approximately 2,450 employees at the two plants, the only two unionized Michelin North America Inc. facilities. The firm did not comment on contract details or say what changes were made to the deal rejected earlier. USW and BFG negotiators had struck a deal on July 20, but that's the agreement the unions subsequently rejected by a narrow vote on Aug. 8-9. Workers in Tuscaloosa had approved the contract narrowly, but those at Fort Wayne voted it down by more than 100 votes, according to the local's Facebook page. The locals approved the contract by a better than 2 to 1 margin, according to information posted on the websites of USW Local 351L and Local 715 representing workers at the Tuscaloosa and Fort Wayne plants. The approval of this contract wraps up contract negotiations between the USW and Goodyear, Bridgestone Americas and Titan International Inc. Cooper Tire & Rubber Co. has separate labor agreements with workers at its plants in Findlay, Ohio, and Texarkana, Ark., running through 2016. Its plant in Tupelo, Miss., is non-union. Yokohama Tire Corp. has a deal in place through May 2014 at its plant in Salem, Va. Carlisle Transportation Products, Continental Tire the Americas L.L.C., GTY Tire, Hoosier Racing Tire Corp., Trelleborg Wheel Systems/Maine Industrial Tire, Mitas Tires North America Inc., Pirelli Tires L.L.C., Specialty Tires of America Inc. and Toyo Tire North America Manufacturing Inc. all operate non-union plants. The USW represents about 850,000 workers in the U.S., Canada and the Caribbean in a variety of industries ranging from glassmaking to mining, steel, oil, paper, tire and rubber, as well as public sector, service and health care industries.