Union workers at Goodyear Tire & Rubber Co. have voted to end a nearly 3-month-old strike, ratifying a contract that will save the biggest U.S. tire maker as much as $610 million by cutting production and healthcare costs, both sides said Friday.
More than 10,000 United Steelworkers members voted on the contract, approving it by a more than 2-to-1 margin, the union said. All striking workers are set to return to work starting Tuesday, ending a walkout that began Oct. 5.
The new three-year contract establishes a company-financed trust fund of more than $1 billion that will secure medical and prescription drug benefits for current and future retirees, the union said. The company also agreed to invest $550 million in union-represented plants.
"It took a strike, but we achieved a fair and equitable contract that protects quality healthcare for active and retired members," said Ron Hoover, executive vice president of the union. "And by winning major capital investment expenditures, it secures our jobs for the future."
Goodyear said the trust fund would reduce a significant portion of its costs related to its retirees.
The company said its $1-billion upfront contribution would consist of at least $700 million in cash, with the balance in additional cash or common stock.
Under the contract, which covers workers at 12 tire and engineered-products plants, Goodyear will save as much as $610 million in costs and $300 million a year in ongoing savings, the company said.
"Reaching agreement on a contract that competitively positions Goodyear for the future is a huge achievement for everyone involved in the negotiation process," Goodyear Chief Executive Robert Keegan said.
The Akron, Ohio-based company said that under the deal it could pay lower wages and benefits for new hires during the first three years of employment.
Goodyear also agreed to close its plant in Tyler, Texas, after Dec. 31, 2007, instead of immediately, as it had wanted.
Shares of Goodyear jumped 98 cents, or 4.9%, to $20.99.