Goodyear Workers Approve 3-Year Contract

Goodyear Tire & Rubber Co. employees approved a three-year contract, allowing the nation’s biggest tire company to contain wages and the costs of health care and other benefits in exchange for job security for workers.

The agreement was approved by about 70% of the United Steelworkers’ Goodyear employees who voted and all but one of the company’s 14 union locals, company and union officials said Monday. Ratification required approval by at least eight locals and an overall majority.

The contract, which replaces one that expired April 19, covers at least 16,000 employees at 14 plants in Ohio, Virginia, North Carolina, Illinois, Alabama, Nebraska, Wisconsin, New York, Kansas, Texas and Tennessee, plus about 22,000 retired workers.

“In the short-term, we made certain sacrifices to provide the company with the flexibility it needs to financially restructure, while maintaining quality health care benefits for both our active and retired members,” said United Steelworkers President Leo W. Gerard.

The contract gives 12 Goodyear facilities a “protected plant” designation, which means the sites must remain open under “all but the most extreme circumstances,” according to the Steelworkers.

Minimum-staffing levels must be maintained at those plants, and the company can’t transfer production from a protected facility to a plant staffed by nonunion workers.

The company, which makes tires, rubber products and chemicals, also is obligated to consider protected plants first when developing new products for sale in North America, the union said.

The new contract restricts imports and the company’s right to transfer production. It also downsizes management at the corporate headquarters and shop floor. The Steelworkers also gain a seat on Goodyear’s board of directors.

For the first time, workers and retirees will pay regular health care premiums. Typically, individuals will pay $3 a week and families will pay $9 a week -- about 5% of Goodyear’s monthly premium cost.

The contract does not include any wage increases, aside from quarterly cost of living allowances.

Goodyear officials called the contract an important step in a turnaround plan that was presented to analysts in April.

“This groundbreaking agreement is fair and demonstrates what can be accomplished when the parties work cooperatively to address the serious problems facing U.S. manufacturers,” Goodyear Chairman and Chief Executive Robert J. Keegan said.

Goodyear this year eliminated approximately 700 salaried positions, the majority of them at its Akron, Ohio, headquarters.

Goodyear’s turnaround plan calls for reducing costs by $1 billion to $1.5 billion by the end of 2005 and possibly selling some of the company’s non-tire businesses. The company had a net loss of $236.9 million, or $1.35 a share, in the first half of this year.

Shares of Goodyear rose 5 cents Monday to $8.03 on the New York Stock Exchange.