Under Goodyear’s new contract with the United Steel Workers union (USW), the company expects to save $555 million over the four-year term of the pact.
“Although we have achieved significant cost savings, the new realities of our industry require that this agreement do more than simply hit a cost-cutting number,” says Richard J. Kramer, Goodyear’s North American chief operating officer and president.
“This innovative agreement can truly change the way we run these factories. We can improve our efficiency, flexibility and competitiveness in both the near-term and long-term, driving working capital improvements and allowing us to be more responsive to the needs of our customers,” he notes.
Kramer says the 2009 accord builds on significant changes made in the 2003 and 2006 USW contracts and addresses core issues that impact the company’s competitiveness.
Key elements include:
• Increased productivity that allows changes in how Goodyear’s plants are run;
• Added ability to update and maintain competitive work standards;
• Clarified expectations for individual performance and accountability;
• Expanded ability to execute vacation shutdowns;
• Created ability for production workers to perform minor maintenance work;
• Wage and benefit savings that lower Goodyear’s overall cost structure;
• Eliminated wage grandfathering for voluntary job changes;
• Standardized and minimized job posting procedures;
• Increased medical benefit cost sharing to offset inflation;
• No general wage increase, modest increase for post-2006 new hires;
• Eliminated defined benefit pension plan for substantially all post-October 2006 hires and all post-August 2009 hires, replaced with defined contribution plan;
• Increased flexibility so Goodyear can respond to changes in market conditions;
• Increased staffing flexibility at five plants
• Unprotected status for workers at the Union City, Tenn. plant;
• Created ability to use buyouts to respond to unexpected market downturns
• Enabled outsourcing of certain equipment maintenance positions.
The company agreed to make enhancements to a profit sharing plan that includes a cumulative cap of $175 million over five years, and to increase the defined benefit pension multiplier for eligible workers. The contract also provides for Goodyear to invest $600 million over the next four years in its USW facilities to make them more efficient and productive.
Additionally, it provides continued job security for six of the company’s USW-represented manufacturing plants.
The seven plants covered by the master agreement are in: Akron, Ohio; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; Topeka, Kan.; and Union City, Tenn.
A playback of a Sept. 29 conference call discussing the contact is available at http://investor.goodyear.com or by calling 706-634-4556.
