The tentative agreement, covering workers at 12 tire and engineered products plants in the U.S., includes the launch of an “independently administered” Voluntary Employees’ Beneficiary Association (VEBA). VEBA will be created with an upfront $1 billion contribution from Goodyear, consisting of $700 million in cash and up to $300 million in additional cash or common stock.
The agreement would apply to workers at the following master-contract plants: Akron, Ohio; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; Lincoln, Neb.; Marysville, Ohio; St. Marys, Ohio; Sun Prairie, Wis.; Topeka, Kan.; Tyler, Texas; and Union City, Tenn.
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, Goodyear said.
In addition, the tentative agreement would provide for the closing of the Tyler, Texas, facility after Dec. 31, 2007; deliver “substantial” improvements in labor costs and productivity through the redesign of incentive systems and the implementation of market-based wage and benefit levels for all new hires; and improve job security and provide capital investments in USW plants of at least $550 million over the life of the agreement.
Goodyear said the agreement would allow the company to reduce excess high-cost manufacturing capacity and lower labor and legacy costs as well as improve productivity. These goals are consistent with the four-point, cost-reduction plan that was announced to investors in 2005, the tiremaker stated.
“Our goal was always to reach a fair agreement that improves our ability to compete and win with customers,” said Robert J. Keegan, chairman and chief executive officer. “This agreement would accomplish that goal.”
Goodyear will hold a conference call in January for investors, financial analysts and media to discuss specifics of the new contract if the tentative agreement is ratified by the USW membership. The timing of that call will be announced at a later date.
