Continental Asks for 35 per cent Pay Cut

Continental Tire North America has asked 1,000 employees at the company’s Charlotte plant to give up 35 per cent of their pay and benefits by January. If the workers’ union doesn’t agree, the company is ready to immediately cut the plant’s production by 30 percent, and hasn’t ruled out closing the plant altogether, the Charlotte Observer quoted chief executive Alan Hippe as saying. The plant’s union leaders have not yet made a decision on the request.

Failure to reduce costs at the plant, which the company has said is its costliest, would require “severe decisions,” Hippe told the local newspaper adding: “This is not excluding a stop of production in Charlotte.”

According to newspaper reports the request is having a negative effect on staff morale. “It’s unfathomable. It’s a huge cut for anybody to take,” one employee told the Charlotte observer. Furthermore union leaders see Continental’s “take-it-or-leave-it attitude” as extreme “relative to other negotiations we’ve seen in the tyre industry,” the paper added.

The cuts would bring the Charlotte workers’ compensation in line with the company’s European average, Hippe said, which includes both high-paid workers in Germany and low-paid workers in the Czech Republic. Hippe said the cuts are necessary to avoid shifting more production to low-cost countries such as Brazil, and to combat $80 million in increased raw materials costs for the North American operation due to increases in oil and steel prices.

The most recent pay concession negotiations follow Continental’s decision last year to cut the Charlotte plant’s production to about 6.5 million tyres a year, reducing its workforce by about 300 people.