The new three-year contract sets a 20% reduction in wage rate structure and an increase in employee healthcare cost sharing.

Specifically, the agreement calls for the three plants to adopt a simplified, five-level job hierarchy with a 20% lower wage rate structure; union employees to increase their cost sharing in healthcare coverage, resulting in a savings of approximately $5 million annually for MNA; new employees to receive substantially lower hourly pay; greater use of contingent staffing in full-time, rotating shifts; and retiree healthcare to remain capped at $5,000 annually.

In return for the USW’s cost-reduction commitments, MNA has agreed to a modest pension increase consistent with inflation; a $10 million contribution to a trust managed by a third party to assist retirees; a $100 million capital investment in the three plants through 2009; and no BFGoodrich tire plant closures or significant employee reductions through the contract term.

“The North American tire market is one of the most competitive in the world, with increasing price pressure from vehicle manufacturers, unprecedented raw material and energy costs, and a surge of replacement market tires from competitors in lower-cost countries,” said Jim Micali, chairman and president of MNA. “Getting our labor costs in line with market rates and limiting our long-term liabilities are crucial to securing the future viability of our North American facilities.
 
“There can be no more ‘business as usual’ in this climate of escalating costs and increased competition,” said Micali. “We’re committed to our manufacturing base in North America. But, significant change has to occur to assure the competitiveness of our plants. Our facilities must be productive, efficient and profitable in order to remain viable for the long term. This new agreement for our BFGoodrich tire facilities is definitely another step in the right direction.”