Talks to Resume in Goodyear Union Strike

From Bloomberg News

Goodyear Tire & Rubber Co. and the United Steelworkers of America will resume talks today in an attempt to end a strike by more than 12,000 union workers, the company's chief negotiator said.

The talks are scheduled to resume this morning in Cincinnati on the contract covering striking employees at nine plants in seven states, said Fred Haymond, Goodyear's chief negotiator.

The union went on strike early Sunday morning after failing to reach an agreement on job security and wage-and-benefit issues.

Goodyear, saying its labor costs are already too high, vowed to keep the plants operating, though it wouldn't say how.

Analysts said a strike lasting more than four weeks would slash production and earnings at North America's largest tire maker.

"Goodyear doesn't have many days of inventory," said Brian Eisenbarth, an analyst with Collins & Co. "Customers will turn to other tire makers."

The effect on Akron-based Goodyear could be substantial if the strike continues for long, he said.

Goodyear will have about 65% of its total plant capacity operating during the strike, said Harry Millis, an analyst with Fundamental Research Inc. in Cleveland. Adding capacity to plants left operating will stave off damage to the company's full-year bottom line, he said.

"The strike will hurt second-quarter earnings immediately," Millis said. "But full-year earnings will be OK, unless the strike runs longer than four weeks."

Plants left open are those that don't fall under the master agreement or are nonunion, he said.

A prolonged strike would also benefit Goodyear's competitors as they snatch business, while keeping an eye on Goodyear's progress with the union.

The Steelworkers union has chosen Goodyear's Kelly Springfield unit to be its pattern-setting company for the 1997 tire and rubber master contract. That contract will remain the pattern until April 2000, the union said.

Goodyear's customers include auto makers, who could permanently shift more business to competitors if the strike drags on.

Goodyear, which has been trying to wean itself from its dependence on low-margin sales of tires to auto makers, still gets about 20% of its revenue from original tire sales to auto makers.

USW spokesman Kurt Brown said Goodyear will probably try to use supervisors to keep plants operating. If Goodyear tried to use replacement workers, it would be "very problematic," he said.

Neither side is eager to give ground, analysts said.

The plants affected are in Ohio, Alabama, Virginia, Tennessee, Kansas, Wisconsin and Nebraska.

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