Goodyear, USWA look to '06 talks

The Steelworkers' contract will expire in July 2006. CLEVELAND (AP) -- When the Goodyear Tire & amp; Rubber Co. opens contract talks next year, it may want the United Steelworkers of America to draw on some tough lessons learned in the union's past struggles with a consolidated steel industry. Goodyear executives said in an investors' meeting in New York on Sept. 23 they are considering closing an undisclosed number of plants and saving up to $1 billion over the next three years. Goodyear did not say how many jobs would be cut, how many plants would be closed or identify the locations. But the company expected the union, which has seen the American steel industry shrink from several powerhouses to a handful of companies part of global firms, to go along with the reductions. "The Steelworkers understand what happened in the steel industry," said Jonathan Rich, who heads the company's North American tire unit, at that investors' meeting. The Steelworkers' three-year contract is set to expire July 22, 2006. "They support Goodyear, and I anticipate we will work together and take another step to make sure we have the right balance," Rich said. Possible model One steel industry model Goodyear might follow is mogul Wilbur Ross. As head of the former International Steel Group in Cleveland, which he created from steel assets in bankruptcy, Ross convinced the USWA to shed hard feelings toward steel's old guard in favor of collaboration aimed at saving the U.S. steel industry within global competition. Steelworkers agreed to drop retiree benefits and took on more work at lower pay in favor of profit sharing, bonuses and a say in how the company was run. The USWA represents more than 850,000 workers in North America. About 70,000 of them work in the tire, rubber and plastics industries as former United Rubber Workers members, a union now merged into the Steelworkers. The Goodyear contract, approved in 2003 after about five months of tense negotiations, covered about 16,000 employees and gave the company the option to cut jobs if production and cost-cutting goals aren't met. The union agreed to productivity-improvement targets at every union plant in North America. The contract provides for minimum employment levels and guaranteed capital investments. Ron Hoover, the union's Goodyear contract coordinator, acknowledged that health care and pension costs are ongoing issues. He also said the union and Goodyear can work together to maintain benefits while controlling costs. "Our union has shown that it can be an extremely innovative partner," Hoover said. But he wasn't sure what to make of Rich's comment about the union's experience with steel. "I'm a Steelworker and I'm certainly proud of it. What happened with us in the steel industry, I don't see how it applies to Goodyear," Hoover said. Trying to overcome problems Unlike numerous steel bankruptcies that threatened permanent loss of jobs, Goodyear appears to be overcoming its business woes. On Thursday, the company reported its third-quarter earnings more than tripled, boosted by record sales for any of its quarters. Goodyear earned $142 million, or 70 cents per share, on sales of $5 billion for the quarter. Hoover said the union would be supportive of any Goodyear need to close a nonunion plant. The company has 12 tire plants in North America -- nine in the United States and three in Canada. The plants represented by the Pittsburgh-based Steelworkers are in Gadsden, Ala.; Buffalo; Topeka, Kan.; Freeport, Ill.; Tyler, Texas; Danville, Va.; Union City, Tenn. and Fayetteville, N.C. A nonunion plant is in Lawton, Okla. In Canada, a plant in Napanee, Ontario, is not union-represented, but plants in Valleyfield, Quebec, and Medicine Hat, Alberta, are unionized. The question the union has to consider is how much the tire business is shrinking, if at all, said Mary Deily, associate professor of economics at Lehigh University in Bethlehem, Pa. "The Steelworkers understand now they must gauge the conditions in an industry, the competition, whether a company is in distress," Deily said. "A lot of people may be worried or frightened by what happened to some of steel. In the early part of contraction of the steel industry the union was holding the line, but that eventually went by the wayside." Robert Crandall, a steel industry expert and senior fellow at The Brookings Institution, a Washington think tank, said the old, big steel companies were being hurt by cheaper, newer nonunion minimills but couldn't build new facilities to compete. Goodyear is not facing that problem, he said.