Titan CEO Says He’ll Buy Plant With or Without Union

(Akron/Tire Review – Freeport Journal-Standard) Following months of virtual silence about the future of Freeport’s Goodyear Tire & Rubber Co. plant, among the region’s last major source of good-paying industrial jobs, the CEO of Titan International Corporation Wednesday drew a rhetorical line in the sand, saying that while he wants to negotiate in good faith with the local United Steelworkers of America, Titan is in no mood for protracted talks or costly demands.

Titan Chairman and CEO Maurice Taylor Jr. must win the union’s approval for the planned sale of the Goodyear plant to Quincy-based Titan to move forward. But if the negotiations, slated to begin Aug. 8, don’t proceed quickly and smoothly over the months ahead, Taylor said he’d consider pulling his company’s offer, and let the union’s current contract expire next year.

Then Taylor said he would try to repurchase the plant from Goodyear, and convert it into a nonunion shop. “The options are to (negotiate) or to do nothing,” and let the contract expire and wait for Goodyear to decide the plant’s fate,” Taylor said.

The fiery CEO who ran for president of the United States in 1996, made his comments in a phone interview Wednesday, a day after he and other Titan executives visited Freeport to open negotiations with the union. Those negotiations, on hold for nearly a year, have been highly anticipated, given that the future of the farm-tyre manufacturing plant – and major part of Freeport’s already fragile local economy – hangs in the balance. “As I tried to point out to (the union in Freeport), everyone likes to go into bargaining from a position of strength,” he said. “I appreciate that people want to be in a strong position, but they better start worrying about the jobs.”

A spokesman for the national USWA office in Pittsburgh said Taylor would face significant legal and business hurdles in any attempt to break the union in Freeport through a post-contract deal with Goodyear. If such an attempt were made, United Steelworkers members at other Goodyear plants, as well as Titan’s Iowa factory, would not “abandon our brothers and sisters at the Freeport plant” without a fight, said Wayne Ranick, the USW spokesman. “They (Freeport workers) are obviously members of our union,” Ranick said. “Why would (Goodyear) jeopardize the good relationship that we now have?”

Goodyear, Taylor said, no longer wants the plant because it was “losing millions and millions” and didn’t fit in with their global business model. That’s why Taylor said he must take steps to make the plant profitable and to integrate it with Titan’s other operations to form a company uniquely positioned around the farm-tyre market niche. “This is our business,” Taylor said. “I’m a totally different (management) animal – there’s no one else in this industry where the CEO can go out (on the shop floor) and build a tyre.”

Though he wouldn’t discuss many specifics of Titan’s offer to the union, he said it would likely be a five-year contract that does not require any wage reductions by current union members, though new hires would likely not be paid as much as new workers make now, under the old Goodyear contract. He would not discuss benefits or other aspects of a proposal, though he did seem to allude to a desire to see some kind of reduction in total benefits. “If you are going to get those kind of wages, you better not be working about all of the other stuff,” Taylor said. “The company (Goodyear) that’s paying you lost a lot of money.”

The Titan sale, first announced last February, is considered part of Goodyear’s $1 billion restructuring plan, an effort to restore profitability to the company’s North America Tire unit and reduce debt that totaled about $5.6 billion in late 2004. Under terms of the deal, Titan also would get a licensing agreement allowing them to use the valuable Goodyear brand on its products.

The last round of negotiations with Freeport’s USW Local 745 culminated in a 2003 contract in which the union made key concessions. Meanwhile, Goodyear’s attention has shifted elsewhere in light of the fact that its farm tyre business now makes up only about 1 percent of annual sales of more than $18 billion.

Titan has offered $100 million to buy the Freeport plant from Goodyear. In addition to the purchase price, Taylor said the plant would likely need “millions” in upgrades and investment by Titan. For his part, the 750-member local union’s point man in the upcoming negotiations, Steve Vanderheyden, took a more reserved approach. “We are going to sit down and listen to the proposed plans and that includes a contract,” he said. “We’re withholding judgment on what that contract might look like.”

The first step in the Freeport negotiations will be a visit early next month to Titan’s Iowa plant. Taylor said he expects the trip to be an eye-opener for the Freeport union officials and workers. Vanderheyden said he’s familiar with Titan from work the local union has done in the past in support of Titan’s other plant in Des Moines, Iowa. In 1998, USW Local 164 workers at Titan’s manufacturing plant in Des Moines, called a strike that lasted 40 months, a rubber industry record. Titan also experienced labor difficulties in Natchez, Miss., in 1998, after acquiring the plant there as part of a bankruptcy filing. “They (the union Titan workers in Iowa) have had a lot of trouble in the past and we’ve helped them,” he said, without citing specifics.

According to Taylor, the Iowa plant doesn’t have a lot of union-related meetings and arguments between management and workers, and said, “you could count on one hand the number of grievances” that have been filed by the local against management there. He also said he isn’t in any mood for lengthy and contentious negotiations in Freeport, saying his patience is wearing thin following months of negotiations with the national union representatives to win the right to start negotiations here. “It’s not in my hands, it’s in their (union) hands and they need to move fast,” Taylor said. “I’m the last of the Mohicans.”

Titan’s tyre division is part of Titan International Inc. According to company earnings statements released last week, the firm’s net sales increased $13.5 million to $134.7 million, an 11% increase for the second quarter of 2005 over the same period in 2004. The company has said it would move its corporate headquarters to Des Moines or Freeport in 2005, a decision Taylor said would be based, in part, on the outcome of the negotiations for the Freeport plant.