Retail

Cooper is reviewing options after arbitrator's ruling

Posted on September 23, 2013

Cooper Tire and Rubber Co. says it is assessing its options after an arbitrator blocked the sale of two of its plants to Apollo Tyres Ltd. The arbitrator upheld two grievances filed by the United Steelworkers (USW) in a ruling issued on Sept. 13.

The arbitrator’s decision recognized the “successorship clause” in the USW’s labor agreements with Cooper applied to the transaction, according to a press release issued by the union. The arbitrator ordered Cooper to put the sale of its plants in Findlay, Ohio, and Texarkana, Ark., on hold until Apollo and the USW can reach collective bargaining agreements covering about 2,500 USW members.

The ruling came despite Cooper’s assurance the collective bargaining agreements would continue after the merger. In a June 12 press release, the company stated it “will continue to recognize the labor unions and honor the terms of collective bargaining agreements presently in effect while generally maintaining compensation and benefit levels for non-union employees.”

The USW says its members are concerned about the debt that will be placed on Cooper. In June, Cooper agreed to be acquired by Apollo in an all-cash transaction valued at approximately $2.5 billion. Apollo is borrowing the $2.5 billion purchase price.

The USW likely wants to see Apollo invest a certain amount of capital in the plants, according to Nick Mitchell, senior vice president of research for Northcoast Research Holdings LLC based in Cleveland, Ohio, and MTD columnist.

“I think the issue boils down to the USW wanting to know Apollo is committed to maintaining U.S. manufacturing at the same level as Cooper. One way to gain confidence in this is by requiring capital improvement investments to keep the plants competitive,” says Mitchell.

Cooper said it is “assessing its options related to this decision” in a Security and Exchange Commission filing on Sept. 19. Spokespeople from both companies confirmed intentions to continue talks with the USW.

“Apollo and Cooper are continuing discussions with the USW with the aim of reaching an amicable resolution,” says Anne Roman, vice president of corporate communications for Cooper.

"Apollo looks forward to working with Cooper and the USW to resolve this matter. The strategic merits of Apollo’s combination with Cooper are clear,” says Apollo spokesperson Rohit Sharan.

Cooper does not expect the ruling to delay the close of the deal. “We are moving forward with the transaction and expect to close within our original timetable, by the end of 2013,” says Roman.

Concern over debt also is behind labor tensions at Cooper 's passenger and truck tire plant in Rongcheng, China. According to The Courier in Findlay, Ohio, workers at the Chinese plant "are skeptical of the financial underpinnings of Apollo's proposed $2.5 billion acquisition."

After a strike to protest the deal, manufacturing employees returned to work, yet are producing only non-Cooper tires, according to Roman. “Regarding the labor action at Cooper Chengshan (Shandong) Tire Co., Cooper's joint venture in Rongcheng, China, Cooper continues to communicate with the union, the workers and the JV partner with regard to returning the Rongcheng plant to full operation as soon as possible.”

The seven-year-old Rongcheng plant, located in China's Shandong Province, is a joint venture between Cooper (the majority owner at 65%) and Shandong Chengshan Group Co. Ltd. Chengshan Group opposes the Apollo-Cooper merger and filed a lawsuit to dissolve the joint venture.

Roman says, “As to the lawsuit filed by the JV partner, Chengshan Group, to dissolve the joint venture, it has been reported that the hearing in Weihai Intermediate Court has been postponed to an undetermined date. Cooper believes the lawsuit is without merit and will defend vigorously against it.” 

For more information on the Cooper-Apollo deal, see:

If Apollo pulls out of deal, it will cost $112.5 million

Apollo: Cooper's management team will stay

Exclusive! Roy Armes talks about Cooper-Apollo

What will Cooper/Apollo merger mean to industry?

Apollo Tyres to acquire Cooper Tire

Related Topics: acquisition, Anne Roman, Apollo Tyres, Cooper Tire & Rubber Co., Ltd., NIck Mitchell, Rohit Sharan

Comments ( 0 )
More Stories
Article

Dealers Hope New President Will be Good for Business

Each month we ask members of our National Advisory Council (NAC) a question or questions on a current hot topic. Recently we asked, “What effect do you believe Donald Trump will have on your business as president?” Here are some of their responses.

Service Line says its Renegade Model TMB4000 manual parts washer is a cost-effective way to wash parts without solvents.
Product

Service Line Has Manual Parts Washer

Service Line Inc.’s Renegade TMB 4000 manual parts washer for general repair cleaning is designed to be a practical alternative to washing parts with solvents.

Bosch says the Robinair AC1234-6 machine has a liquid refrigerant flushing function that flushes A/C systems or individual components using liquid refrigerant instead of harsh chemicals.
Product

Robinair Offers 1234YF Recover, Recycle, Recharge Machine

The Robinair AC1234-6 was the first commercially available fully automatic R1234YF machine to meet the SAE’s requirement for recovering, recycling and recharging vehicle A/C systems with the new refrigerant, according to Bosch Automotive Service Solutions.

Tire Factory moved its dealer meeting out of Oregon and planned new activities for dealers, including a visit to Octane Raceway and a timed pit crew challenge. Tiffany Fox prepares to lower the jack once her teammates from Point S J&J Tire & Auto Service in Helena, Mont., finish their tire installations.
Article

Point S Rebranding Exceeds Expectations

Tire Factory Inc. members have rebranded the vast majority of their 206 stores to the Point S banner at a breakneck pace. And leaders of the Oregon-based cooperative are unveiling new programs with two big hopes: the momentum of current members continues, and more independent tire dealers join their network.

(From left to right) Dan King, Tire Warehouse Inc.; Gary Longerbeam, Monro Muffler Brake Inc.; and Shawn Denlein, Hankook Tire America Corp., enjoy the opening night reception.
Article

Hankook Gains Ground on its Goals

Continued growth in the U.S. and Canadian markets will be the key for Hankook Tire Co. Ltd. to reach its self-imposed goal of being the industry’s fifth largest tire company by 2020. This is the message about 80 key distributors and dealers of Hankook-branded tires were told at the company’s annual Partner’s Day Meeting in Los Cabos, Mexico, last month.

Nexen's updated sponsorship of Manchester City now includes the double-winning Manchester City Women's Team.
News

Nexen Sees a Marketing Opportunity — on a Sleeve

Nexen Tire Co. Ltd. has created a first-of-its-kind partnership with an English Premier League club. The tire company will be the Official Sleeve Partner of the Manchester City Club, and the Nexen logo will appear on the club's uniform sleeve for all league games in the 2017-2018 season.

BKT’s ConExpo-Con/Agg booth featured its farm, ATV and UTV tires.
News

From Farm to UTV, BKT Made a Big Splash at ConExpo

The BKT USA Inc. booth at the recently completed 2017 ConExpo-Con/Agg in Las Vegas gave show attendees plenty to talk about. The company showcased not only its Earthmax farm tires, including the new Earthmax SR 35, but also its ATV/UTV tire lineup.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!