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New Contract Protects Retirees, Preserves Unionized North American Production

The 2003 labor agreement covering some 16,000 workers and 20,000 retirees at Goodyear, including Kelly-Springfield and Dunlop Tire companies, comes on the heels of a staggering loss of $1.3 billion by the corporation over the past two years.

While one plant in Huntsville, Ala. will close, production and jobs at the 13 other U.S. facilities have been preserved. In addition, production capacity from Huntsville will be transferred to other USW-represented facilities, and our members from Huntsville will be given special preferential hiring rights at Goodyear facilities.

The negotiations took place over five months, coming to a conclusion in late August, bypassing a June 27 deadline that included a suggestion of a work stoppage at the company’s 14 plants. The company, which continued losing money, hinted at taking unilateral action, including the shutdown of three or more plants. Our members remained on the job with a 72-hour rolling contract extension. Pressure to reach agreement was intense. The settlement finally came after several weeks of continuous bargaining.

"This agreement makes our union a true partner in the future success of the company," said International President Leo W. Gerard. "We were committed from the onset of the negotiations to saving Goodyear for our members, our retirees and their communities."

No restructuring on workers’ backs

Goodyear’s troubled financial circumstances presented major obstacles and sorely complicated the bargaining process. The company had initially planned to substantially reduce its North American production by closing a number of plants and downsizing several others. Production from the facilities the company proposed shutting down was scheduled for transfer offshore with capital investments earmarked for foreign and non-union domestic facilities. In addition, the company’s "slash and burn" strategy was based on USW members and retirees accepting nearly $1 billion in major wage, benefit and other contractual language concessions.

Our union utilized a team of Wall Street experts to work with our own financial and legal experts to analyze Goodyear’s finances, operations and business strategy. We came to the bargaining table with a strategy that focused on restructuring the company by improving production efficiencies, managing health care costs and eliminating excessive layers of management.

"We made it clear that for there to be a contract, our plants would stay open and capital expenditures would be made to keep them globally competitive," stated Executive Vice President John Sellers, the head of the USW Rubber/Plastic Industry Council (R/PIC).

Give and Take

Our Union's financial analysts saw that Goodyear needed to restructure in order to turn things around, but our Policy Committee refused to let the company be restructured on the backs of our members and retirees. Our goal was to save the company for our members, retirees and communities. As a result, we ultimately agreed to short-term sacrifices in return for longer-term job security and future profit sharing for workers and retirees at Goodyear's North American facilities.

There is no general wage increase in the new agreement but future COLA payments will prevent erosion of purchasing power. Pensions credits are frozen over the first two years, meaning that a worker with 28 years of service can retire in two years but he will have 28 years of pension credit instead of 30. In addition, the two remaining COLA payments of 2003, totaling 21 cents-an-hour, will be held until 2006. Regular COLA payments resume in 2004.

With job security as our main focus, the new contract prohibits any shutdowns at 13 of the 14 union plants in North America. It provides for an intricate network of protections for our members by designating 12 of the facilities as Protected Plants. These include the tire and engineered product facilities located in Akron/Green, Ohio; Gadsden, Ala.; Buffalo, N.Y.; St. Marys, Ohio; Lincoln, Neb., (except the Global Distribution Center); Topeka, Kan.; Freeport, Ill.; Danville, Va.; Marysville, Ohio; Union City, Tenn.; Sun Prairie, Wis.; and, Fayetteville, N.C.

The Tyler, Texas plant will have partial-Protected Plant status initially and will obtain protected status upon attaining goals of improved profitability and expanded production and capacity.

The Protected Plants must remain open during the term of the agreement and minimum-staffing levels must be maintained.

Transfer of production from a Protected Facility to non-USW plants is restricted.

Protected Plants must also be given "meaningful and significant first consideration and preference" for all new products developed for sale in North America, meaning that our members will get first crack at new product lines. Goodyear must give the same consideration to USW-facilities when designating capital expenditures for increasing capacity or modernizing facilities for production of products for sale principally in North America.

Retirees and Jobs Protected

Tireworkers have a proud union tradition and a strong sense of obligation to those who came before us. The sacrifice by active workers giving up two years of pension credits and agreeing to withhold the 21-cent hourly COLA payments helps fund retiree health care. The retiree health care plan will change from traditional coverage to a nationwide Preferred Provider Organization (PPO).

Imports will be restricted under the new contract, as well as the company’s right to transfer production. Management will be downsized at both corporate headquarters and on the shop floor, with bargaining-unit members now empowered to make more of the critical decisions in the production process. The use of outside contractors will be greatly curtailed.

Our Goodyear/Kelly-Springfield/Dunlop bargaining committee has a strong history of solidarity and resisting company attempts to divide the membership and play one plant off against another. Our solidarity will be further enhanced because we have achieved the common expiration date of July 22, 2006 for agreements at all facilities.

Financial Restructuring

Thanks to the workers’ Solidarity, Goodyear conceded that the Union Survival Plan was their only option. The company was on the road to bankruptcy unless it restructured its finances. With the help of our financial advisors, we worked with Goodyear and reached agreement to get the company back on its feet while protecting our members’ interests.

Our union will have a seat on Goodyear’s Board of Directors, the highest policy-making level in the Goodyear structure. It is the first Union Board seat in the tire and rubber products industries.

The new agreement requires Goodyear to reduce its debt obligations and refinance them within specific time frames and with specific penalties if it fails to comply.

 For example:

• Goodyear must restructure its debt before it becomes so strapped for cash that it cannot be salvaged.

• Goodyear must remain in compliance with existing loans.

If Goodyear fails, the company must seek outside investors, which would likely want to change the present management. This provision, therefore, provides a strong incentive for existing management to succeed.

• Goodyear must refinance approximately $1.3 billion by December 1, 2004.

The new loans or securities must mature no earlier than three years from the closing of the transaction or September 30, 2007. If Goodyear fails, it must pay each active member covered by the Master Agreement $1,000 and each retiree from a master facility $500.

Our union would also have the right to strike.