Nine days and counting: The major issue between the USW and Goodyear remains unresolved

Oct. 13, 2006

How long will the strike between the United Steelworkers and the Goodyear Tire & Rubber Co. last? At least until both sides settle their differences on plant closings.

Goodyear wants to close two plants in the United States. The union is understandably against that. Analyst Saul Ludwig, a managing director with KeyBanc Capital Markets, believes the parties will remain entrenched until that major issue is resolved.

According to Ludwig, the strike is costing Goodyear an estimated $2 million a day without factoring in any loss in sales.

In a letter to Goodyear employees following the Oct. 5 strike announcement, Goodyear North American Tire President Jon Rich said the company prepared for the strike. "We have plans in place to continue operating our facilities and serving our customers," he wrote. (For more details, see the Oct. 13 item, "Goodyear borrows nearly $1 billion to enhance cash position during strike.")

The strike affects 16 Goodyear Tire & Rubber Co. plants in the United States and Canada. However, Goodyear's truck tire production is affected more than its consumer tire manufacturing because the company has two non-union plants in North America, located in Lawton, Okla., and Napanee, Ontario. Both facilities only make passenger and light truck tires.

The Lawton facility manufactures 63,000 tires a day and is the company's largest plant in North America. Goodyear's Napanee plant has the capacity to produce 19,000 tires a day.

Goodyear also can rely on production from its Medicine Hat, Alberta, and Valleyfield, Quebec, plants, which are not covered under the master contract. The tire plants have the capacity to manufacture 15,500 and 23,000 passenger tires a day, respectively. (The Medicine Hat plant also can manufacture 1,000 truck tires a day.)

The strike will soon cost the union money as well. Striking workers will be "paid" through the union's strike fund depending on how long the strike lasts. Striking workers also don't have to pay dues during the strike.

"We cannot allow additional plant closures after the sacrifices we made three years ago to help this company survive," said USW Executive Vice President Ron Hoover on Oct. 5.

"Negotiations stalled after the union's proposals did not include key items found in their agreements with competitors," wrote Rich in his letter to Goodyear associates.

"As we go forward, we plan to continue bargaining with the Steelworkers. We remain hopeful that we will arrive at a resolution. But I assure everyone that we will not agree to a contract that puts us at a disadvantage versus our competitors.

"I have no problem battling the competition in the marketplace. That's how it should be. But the marketplace must be a level playing field."

The same day Rich sent out his letter, the ICEM (International Federation of Chemical, Energy, Mine and General Workers' Unions) issued a call to all its global trade union affiliates -- including unions in the rubber sector -- to support the strike.