Goodyear Makes Contract Offer Direct to Workers

Immediately following the news that Goodyear would publish details of the progression of its negotiations with the United Steelworkers on a special website (www.goodyearnegotiations.com), the manufacturer published a copy of the letter it posted to the homes of all striking Goodyear Steelworkers in the US beginning on 8 November, along with a summary of the offer Goodyear made to the USW on 27 October.

Goodyear stock soared more than 16 per cent on 9 November after beating expectations with news about its quarterly earnings and sales. At the close of trading on the 9 November share traded on the New York Stock Exchange were valued at $17.67 per share.

Meanwhile, the United Steelworkers and Goodyear Tire & Rubber Co indicated they are ready to get back to the bargaining table and try to resolve the five-week old strike by more than 12,000 workers. As part of its third quarter results report Goodyear said it was sending its negotiating team back to Cincinnati, where the pre-strike talks broke off. Goodyear obviously hopes the Steelworkers will do the same.

“We intend to continue making the right decisions for the future of this company,” Goodyear Chief Executive Robert Keegan said in a conference call with analysts, according to the Associated Press. “Our resolve to come out of the negotiations with the Steelworkers with a globally competitive position cannot be compromised, and it won’t be compromised.”

The letter Goodyear sent to its employees was signed by William Cook, vice president human resources, Goodyear North American Tire; and Bruce Kendrick, director human resources at the company’s engineered products division. The complete text of the letter Goodyear mailed to workers and posted on its website can be found below:

Dear Goodyear Associate,

DETAILS OF GOODYEAR’S PROPOSALS

We are writing to you at this critical time because you are entitled to know the full facts about the proposals we have made to the United Steelworkers.

Hopefully, by now you have seen Jim Allen’s letter of October 31 and ours of November 8 as posted at www.goodyearnegotiations.com. You can now view our proposals in detail on this website. As you will see, Goodyear’s package of proposals, as of today, would:

* preserve the current wage structure of every active associate in every circumstance, including those on layoff for less than two years;

* provide wage increases for some associates;
* continue 100% COLA for all current employees;
* maintain or improve your current benefits package;
* restore service credit to current associates for the two-year pension freeze;
* protect all USW master agreement plants except Tyler;
* share profits on an ongoing basis;
* maintain the current Supplemental Unemployment Benefits program;
* maintain the current Supplemental Workers Compensation program, and;
* except in Gadsden, continue all current incentive programs on all incentive jobs for all current employees who are currently on incentive jobs.

Although the union has rejected our offer, you should have the facts to decide for yourself whether to continue supporting the strike. Hopefully, you will be afforded an opportunity to vote yes or no on our offer.

Much having been said recently on the subjects of Tyler and retiree medical, let us discuss these topics in more depth.

TYLER

Recently, we have seen competitors announce major plant closings in Mayfield, Kentucky; Kitchener, Ontario; Charlotte, North Carolina and Oklahoma City, Oklahoma. Given the impact that such decisions inevitably have on associates and communities, deciding to move forward with closing our facility in Tyler, Texas was not taken lightly. This decision is related to Goodyear’s exit from the extremely unprofitable wholesale private label business. In 2006 Goodyear will suffer enormous losses on about 8 million tires that we sold into this market. For Tyler , the problem was getting worse because of a continuous drop in demand for the types of products made in Tyler, the ongoing flood of imports from low-cost countries and rising raw material costs.

Goodyear cannot continue in this business. Refusing to face this reality would mean less money available to modernize factories, bring more new branded high value added products into production at USW plants, fund pensions, provide retirement benefits and fund marketing and other programs needed to continue our turnaround.

On November 3, we presented the union with a proposal for enhanced transition benefits and aid to Tyler associates. We believe these benefits surpass or equal anything provided by any tire company to USW members under similar circumstances. Additionally, we have offered to provide Tyler associates with preferential hiring rights at any other Goodyear North American tire plant.

The union states that it has provided Goodyear with various “reasonable” alternatives to closing Tyler. These included continuing the status quo and mounting losses on the wholesale private label business, losing even more money on this business by relocating more production from lower cost plants in Latin America, closing Lawton and/or running all Goodyear USW plants at less than full so as to keep Tyler near full. None of these can be fairly characterized as solutions. Some would obviously make the problem far worse.

Some have alleged that the closure of Tyler may be the first step in a grander plan to phase out Goodyear’s North American manufacturing operations. This is absolutely false. Nor is it true that Goodyear has been investing disproportionately offshore. Going forward, we are proposing minimum investments in USW master plants of $447 million over the life of the contract. And we have offered to protect all plants, except for Tyler, for the life of the agreement.

This is hardly a plan for abandoning North American manufacturing. To the contrary, unlike our competitors, modernizing our factories and bringing more new cutting-edge products into production at USW plants is central to our strategy. But this strategy requires a competitive labor agreement. The reality is there can be no meaningful job security for anyone without a contract that allows Goodyear to compete.

RETIREE MEDICAL

The intent of proposing an independent trust fund is to make retiree benefits more secure as well as more affordable in the long run, with the potential for retirees to keep pace with, if not out-run, inflation. As seen on its website, www.usw.org, the USW has established Voluntary Employees’ Beneficiary Associations, commonly called VEBA trusts, to provide retiree benefits at many other companies. Similarly, we believe that establishing a VEBA trust for Goodyear retirees would provide increased security for current and future retirees for many years into the future.

It should be noted that, under the current plan, there is zero money currently set aside in trust or otherwise to provide and secure retiree medical benefits. Under our proposal, Goodyear would make a contribution valued at $660 million to initiate the trust and secure the benefits.

External analysts and experts have estimated that Goodyear’s VEBA proposal could secure excellent benefits for retirees for the next 20 to 30 years. Simultaneously, a VEBA is more cost effective for Goodyear, thereby creating a win-win solution.

The only alternative is to continue the current approach to providing retiree medical benefits. However, premiums will inevitably go higher and higher. Beginning in 2007, a retiree’s share of the monthly premium will be between $107 and $159. Premiums are projected to exceed $200 in 2008 and reach nearly $350 in 2009… and will continue to increase with medical inflation.

It is for these reasons that we believe that establishing a trust fund provides the best solution for retirees, Goodyear and all stakeholders.

RETURNING TO THE BARGAINING TABLE

Successful negotiations require compromise… on both sides. As you can see, Goodyear has compromised. We are ready to resume negotiations with the USW at any time with no pre-conditions. As a show of good faith, Goodyear’s bargainers are returning to Cincinnati with the hope that your union’s bargainers will do likewise and resume bargaining.

YOUR RIGHT TO RETURN TO WORK UNDER THE 2003 AGREEMENT

Finally, we want you to know that you are welcome and entitled to return to work at any time under the applicable terms of the 2003 agreement. Associates who return to work prior to January 3, 2007 will maintain their company-provided benefits package beyond the January 3, 2007 cut-off date.

We will continue to operate our striking factories so that customers can continue to buy quality Goodyear products. As you know, while we have turned to temporary workers at our striking plants, we will also rely on our global manufacturing footprint – an additional 80 facilities and 70,000 associates around the world — to help supply our North American customers. Because, if we fail to serve our customers now, there may be no jobs for anyone to come back to once the strike ends.

NO WAGE CUTS, CONTINUED COLA, PENSION CREDIT RESTORED

Please take the time to carefully consider our proposals and evaluate for yourself whether this strike deserves your support. Again, under Goodyear’s proposals there would be no wage cuts, COLA would be continued, pension service credit would be fully restored and there would be only minor increases to your health care premiums.