Impending Master Contract Talks to Focus on Cost Cuts

Akron/Tire Review) The United Steelworkers (USW) stated goal of protecting job security will certainly be challenged as formal negotiations begin next month for new master contracts between the Steelworkers and Goodyear, Bridgestone/Firestone and Michelin. The talks will begin against a backdrop of ever-increasing raw material, benefit and legacy costs that have forced global outsourcing of production in order to maintain profitability.

The USW is already fighting an uphill battle in its negotiations with Continental Tire North America (CTNA) over the tyremaker’s Charlotte, N.C., plant. USW’s contract with CTNA expired last weekend, and the tyremaker immediately instituted an across-the-board 15 per cent wage and benefit cut.

The Steelworkers and Local 850, which represents Charlotte workers, want to continue bargaining, but report say that CTNA has cut off talks. The Charlotte Observer reported this morning that CTNA plans to close the plant for the last two weeks of May. The company said the shutdown is necessary to burn off inventory, but the union suspects the shutdown may last considerably longer.

Meanwhile, Goodyear’s contract with the USW ends 22 July and both sides plan to begin formal talks next month. Goodyear officials have publicly said that its U.S. plants need to be more productive and competitive – which translates into “lower costs.” The union, on the other hand, sees productivity and competitiveness gains coming from Goodyear investing more in its plants – which translates into “job security” for its 13,000 Goodyear members.

Bridgestone/Firestone North American Tire and the USW will be back at the table in June, just a year after finally reaching a three-year contract from negotiations started back in 2003. BFNAT also seeks lower costs from its North American plants, and fired the first salvo with its announcement last week that it planned to close its Oklahoma City, Okla., broadline tyre plant.

Michelin North America (MNA) has already begun shuttering its plant in Kitchener, Ontario, an old BFGoodrich facility that produced broadline tyres. While it is not expected that MNA will look to close other plants short-term, its contract talks with the USW will doubtlessly focus on significant cost-cutting efforts at its unionized plants.

While recently reporting increased sales for the first quarter of 2006, parent company Groupe Michelin’s net earnings are reportedly down primarily due to high costs and legacy liabilities. Not all of that is due to its North American business, to be sure, but trimming operating costs are important to Michelin’s global position.