A tentative deal hammered out between Goodyear Tire & Rubber Co. and the United Steelworkers (USW) union may herald the end of a strike that began in October and involves 15,000 USW members at 16 Goodyear plants in the U.S. and Canada.
The tentative agreement, which only applies to 12,600 of the striking workers at 12 tire and engineered products plants in the U.S., would give Goodyear the ability to reduce excess high-cost manufacturing capacity, reduce legacy costs, improve productivity and reduce labor costs, according to the company. According to USW, Goodyear would raise its capital investment in the plants to $550 million “to increase global competition.”
The deal includes the creation of an independently administered Voluntary Employees’ Beneficiary Assn. (VEBA) with an up front $1 billion contribution from Goodyear. Subject to court and regulatory approvals, the VEBA would assume full responsibility for providing retiree medical benefits to all present and future Goodyear USW retirees, the company said.
The agreement would also allow the company to exit parts of the private label tire business and close its Tyler, TX plant after December 31, 2007. It would also allow Goodyear to redesign incentive plans and immediately implement market-based wage and benefit levels for all new hires.