USW to End Contract Extension With Goodyear

The United Steelworkers (USW) has advised Goodyear that it was giving the company the required 72-hour notice to terminate the extension of the parties’ labour contract. The contract expired on 22 July 2006, and both parties agreed to an extension that could be terminated with 72 hours notice. Some industry observers have interpreted this to be a precursor to industrial action. A possible strike would affect Goodyear’s 12 North American plants (eight tyre factories and four engineered products plants).

However, Jim Allen, Goodyear’s chief negotiator, was upbeat about the announcement: “The 72-hour notice simply creates a new deadline, which helps bring focus to the discussions as we work toward a new agreement,” he said, adding: “While we are working hard toward successful resolution, in the event that does not occur Goodyear has contingency plans in place to continue operating our factories and serving our customers.”

The 72-hour period ends Thursday, 5 October, leaving two scenarios possible. Before this time expires the parties could agree to another extension of the previous contract or reach a tentative agreement on a new contract. When the 72-hour period ends, three further scenarios are possible: The master plants could continue to operate and union employees could work without an agreement; the company could lock out the USW workers at the 12 master contract plants; and finally the Union could call a strike at the 12 master contract plants.

Earlier Deutsche Bank reports had revealed that “uncertainty surrounds the union negotiations.” The key areas of focus are believed to be employment levels, wages, and benefits. Goodyear is also seeking non-protected status at two master facilities, which some sources believe may be subject to closure. According to rumours, two of these three factories (the operations in Tyler and Fayetville) could be closed following Goodyear’s decision to phase out about 10 million units of private label production.

Goodyear has good reason to stick to its position. Compared with the negotiations it held with unions three years ago, the company has a relatively strong cash position and therefore can afford longer strike action. A more important consideration is how expensive it would be to win back market share lost due to a strike.

The USW’s response to Goodyear’s proposals has, in the words of Deutsche bank analysts, not been encouraging. In a solidarity alert issued earlier in September, the USW described Goodyear’s proposal as a “cut and gut” agenda.