USW Workers at Goodyear Engineered Products Ratify New Contract; Carlyle Group to Acquire Division

PITTSBURGH--News From USW: The United Steelworkers (USW) announced today that it was ratified a contract with the Carlyle Group and the four engineered products plants in the U.S. currently owned by Goodyear Tire and Rubber will become part of EPD, Inc. when the sale between Goodyear and Carlyle is finalized.

Members at the plants voted to accept the agreement last week by more than 2: 1 margin. 1,600 workers at the plants located in St. Marys, Ohio, Lincoln, Neb., Sun Prairie, Wisc, and Marysville, Ohio are represented by the USW. Outstanding issues between the USW International and Carlyle were resolved over the weekend, finalizing the tri-party agreement. The issues related directly to establishing a secure trust for retiree health care completely separate from the one at Goodyear.

"We believe this deal is beneficial to all parties involved," said USW executive vice president Ron Hoover. "It secures the future of our members while allowing EPD to aggressively compete in the global market.

"Goodyear made it clear last year that it was no longer interested in manufacturing engineered products," he added.

The Carlyle Group, a premier global private equity firm, has been negotiating with Goodyear to acquire this non-tire producing division, but needed to first reach a new labor agreement with the USW because of a "successorship" clause in the current contract. This language requires any potential buyer to recognize the workers' collective bargaining representative and to negotiate a new contract prior to finalizing any sale. When the sale is finalized, Carlyle will continue to produce Goodyear brands of hoses, belts and other products under the name of EPD, Inc.

"This is the first time we've dealt with Carlyle in the tire and rubber sector," said USW International vice president Tom Conway, a lead negotiator for the union. "They also have some holdings in steel, too, where we represent the hourly employees. Like other private equity firms, I hope they realize that the USW can be a good business partner, as long as you deal with us in an honest, straight-forward manner."

The new contract closely mirrors the existing agreement between Goodyear and the USW with some minor exceptions such as an increase of $3 in the pension multiplier (from $55) in August 2009 and some minor increases in health care costs in January 2010. In addition, the new agreement calls for $45 million in new capital investments expenditures in the four plants and an extension of COLA to 2012, with all increases in the last three years incorporated into wages.

The new USW-EPD agreement runs five years, beginning on the date Goodyear sells the plants to EPD and expires on July 31, 2012. The current USW-Goodyear runs for three years. The current pension plan will be frozen for workers at the four facilities as of the closing date of the sale and employees will be vested in EPD, Inc.'s pension plan upon completion of five years of combined service. A profit sharing plan to consist of profits up to eight percent of profits, with yearly maximum contributions will be established and all profit sharing amounts will be diverted to fund the EPD VEBA.