Goodyear outlines union contract details
Goodyear Tire & Rubber Co. says the four-year master labor contract ratified by members of the United Steelworkers union on August 22, 2013, meets the goals established prior to the negotiations. It also helps the company continue its business momentum in North America.
“Our goal for these negotiations was to build on the structural cost improvements and progress made in the 2003, 2006 and 2009 contracts and reduce the potential future impact of legacy pension obligations on our North America business,” says Richard Kramer, chairman, CEO and president.
“Over the past decade, these four ground-breaking contracts have enabled us to reduce high-cost capacity, establish a VEBA (Voluntary Employees’ Beneficiary Association) to eliminate legacy retiree medical benefit obligations, create a tiered wage structure, improve productivity and now, cap our legacy pension obligations.
“These changes have been key factors in the turnaround of our North America business,” he says. "This new contract provides the opportunity to take away the volatility that pension obligations have historically had on our earnings and cash flow, enhancing our long-term competitiveness and supporting our goal to be profitable through the economic cycle.”
The new contract gives Goodyear the ability to freeze its defined benefit pension plans and replace them with a defined contribution plan at any time during the four-year contract once full funding is achieved. Other benefits include:
* a reduction in not only the percentage of North American earnings paid out under the company’s profit-sharing plan, but also the maximum annual payouts during the contract.
* the flexibility to reduce staffing; and
* the continuation of medical benefit cost sharing.
Wages and benefits remain in line with the prior agreement.
The master contract covers about 8,000 associates at plants in Akron, Ohio; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; and Topeka, Kan.
Goodyear will hold a conference call to discuss details of the contract at 9 a.m. today. Participating in the conference call will be Kramer and Darren Wells, executive vice president and chief financial officer.
Investors, members of the media and other interested persons can access the conference call on the Web site or via telephone by calling either (800) 895-1085 or (785) 424-1055 before 8:55 a.m. and providing the Conference ID “Goodyear.” A taped replay will be available by calling (800) 688-9459 or (402) 220-1373. The replay also will remain available on the Web site.
Financial and other information about the contract is available at Goodyear's investor relations Web site: investor.goodyear.com. Check out these links for more activity between the USW and domestic tire manufacturers: