Union Agrees That Goodyear Can Amputate Huntsville DunlopTire Plant

CHICAGO, Aug 21, 2003; Susan Kelly writing for Reuters reported that Goodyear Tire & Rubber Co. will shut its plant at Huntsville, Alabama, which could lead to around 1,000 job losses, as part of a tentative labor pact reached with the United Steelworkers of America (News - Websites), a union spokesman said.

The company and union reached the settlement on Wednesday covering 19,000 workers at 14 U.S. plants after round-the-clock bargaining sessions over the past week that capped five months of negotiations.

"Part of the tentative agreement is the closure of the Huntsville plant," Kevin Johnsen, spokesman for Steelworkers union Local 915 in Huntsville, told Reuters. The plant is expected to close by the end of the year.

The Huntsville tire manufacturing plant, which employs about 1,100 hourly employees and 150 salaried workers, had been rumored for months to be targeted for closure by the company.

Local union leaders began to inform plant employees of the planned closure on Tuesday, Johnsen said.

He said Goodyear told the union it wanted to close the plant, which manufactures Dunlop brand tires, because it was one of its highest-cost facilities.

The loss-making tire manufacturer on Wednesday did not disclose terms of the tentative contract, which is subject to a vote by the union's rank-and-file members.

However, Goodyear spokesman Chuck Sinclair said the settlement would enable the company to begin to restore profits.

"We've said all along that we need the financial flexibility and capability to start to turn the company around. The agreement provides that," Sinclair told Reuters.

Goodyear shares have rallied in recent sessions on expectations a settlement was near and ended on Wednesday at $6.30 on the New York Stock Exchange, their highest level in two months.

EYES PROFITABILITY

Akron, Ohio-based Goodyear, which has racked up $1.3 billion in losses over the past two years, and the Steelworkers union had been deadlocked for five months over the issues of job security, health benefits and how the company should restructure.

The union said in a news release its leaders would hold meetings at each plant before voting to ratify the agreement.

The contract covers plants in Ohio, Alabama, New York, Nebraska, Kansas, Illinois, Texas, Virginia, Tennessee, Wisconsin and North Carolina.

Prior contracts expired on April 19 at plants that make Goodyear and Dunlop tires and ended on July 5 at those that make Kelly-Springfield tires, but had been extended on a day-to-day basis.

Last week, Goodyear threatened to move ahead with unilateral cost cuts if an agreement with the union was not reached by Friday. But company and union negotiators talked past the deadline.

Goodyear executives told investors in April the company planned to cut about $1.0 billion to $1.5 billion in costs by 2005 to reduce excess manufacturing capacity and return to profitability.

The company has already eliminated its dividend, stopped matching 401(k) retirement contributions, refinanced loans and put its chemicals unit up for sale.