GADSDEN, Ala. — Hourly employment at Goodyear's Gadsden passenger tire plant has shrunk to 637 workers following the departure in late December of 740 unionized workers who accepted a buyout package from the tire maker.
The total employed includes about 400 workers at the plant who were offered the buyout but decided to "stick it out" and forgo the plan, according to Mickey Ray Williams Jr., president of United Steelworkers Local 12, one of the workers still coming in for his shift at the 90-year-old plant located about 60 miles northeast of Birmingham, Ala.
The buyout offer appeared more favorable to those who were closer to retirement age, he told Rubber & Plastics News, a sister publication of Tire Business.
"I'm going to stick it out," he said. "I have 17 years of service there, and I'm 46 years old. The math just was not in my favor.
"It did give an out to some people who needed it," he said, "but we have people here now who are really worried about the future."
Goodyear initiated a revised U.S. manufacturing strategy — of which the Gadsden buyout is a part — last year, and said toward year-end in an 8-K/A filing with the Securities and Exchange Commission that it expected the plant to yield about $30 million in improved operating income in its Americas' segment in 2020 and an estimated $40 million annually thereafter.
The company has as yet not commented publicly on the long-term prospects for the plant, which produces Assurance passenger tires for cars and light trucks, but Mr. Williams cited the effect of a Goodyear plant in San Luis Potosi, Mexico, that opened in 2017, as an example of how he believed American workers — and specifically those at the Gadsden plant — can get caught up in supply-chain economics.
"When you take that plant, and then Goodyear takes tires out of our plant ... the people on the floor here knew that and were scared to death," Mr. Williams said. "We are getting caught up in NAFTA. We gave up a lot in concessions over the years, even our pension in 2013. This scares people all the way across the country."
Mr. Williams said the USW did not endorse a buyout option either way for its workers.
"What we did recommend was that they go home to their families to discuss this and the insecurities of the future," he said.
The Fayetteville plant is rated at 40,000 units a day with 2,900 employees, according to Tire Business' Global Tire Report, while the Gadsden plant was rated at 25,000 units a day, prior to the cutbacks.
A Goodyear spokeswoman said the company maintains "regular and frequent communications" with its workers. "We encourage two-way dialogue with our associates," she said.
Goodyear has said its strategy is to strengthen its manufacturing footprint by curtailing production of certain tires for declining, less profitable segments of the tire market. The tire maker's rationalization plan is expected to be "substantially complete" by the first quarter of 2020, Goodyear said in the SEC filing.
The terms of the buyout packages, governed by the five-year labor agreement reached by the USW and Goodyear in 2017, will see workers receive $2,000 for every year of service, with a minimum buyout of $8,000 per employee and a maximum buyout of $50,000 per employee, according to the labor agreement.
The 740 buyouts at Gadsden come on the heels of layoffs of 170 employees earlier in 2019, layoffs Goodyear said were done in connection with a change in the plant's work cycle to five days a week from seven, union sources said.
The move reportedly mirrors a similar strategy employed by the tire maker at two locations in Germany— where the company is looking to generate an earnings improvement of between $60 million and $70 million by 2022, while cutting up to 1,100 jobs between the two factories there — and is contrast to the situation at Goodyear's plant in Fayetteville, N.C., where the company plans to invest up to $180 million to expand capacity for larger-rim diameter passenger tires.