The Goodyear Tire & Rubber Co. announced Jan. 2 that striking workers have begun returning to work at the 16 plants represented by the United Steelworkers.
"Goodyear welcomes the return to work of our USW associates," said Jon Rich, president of Goodyear's North American Tire business, in a statement. "I have no doubt our associates will quickly return to their normal high levels of performance and productivity."
The company announced on Dec. 29 that will realize "substantial costs savings" as a result of the contract it signed with the United Steelworkers union. The company put the price tag on savings of $610 million over the term of the contract with $300 million a year in ongoing savings.
Part of the savings will come from lower-cost wages and benefits for new hires during the first three years of employment.
On the healthcare front, all current and future retiree health care liabilities will be transferred to a VEBA trust. Goodyear's up-front contribution to the trust of $1 billion will consist of at least $700 million in cash.
On the manufacturing side, the agreement gives Goodyear the ability to reduce excess high-cost manufacturing capacity, lower legacy costs, improve productivity and source product globally, according to a company statement. As a result the Tyler, Texas plant will be closed after December 31, 2007. Goodyear says this will save $50 million by thereby eliminating 9 million units of high-cost tire capacity.
The issue of improved productivity was covered in the agreement as it provides for investment of $550 million over three years in the company's USW facilities to make them more efficient and productive in manufacturing high-value-added branded products.
Goodyear will invest $550 million over three years to modernize its North American plants.
"Reaching agreement on a contract that competitively positions Goodyear for the future is a huge achievement for everyone involved in the negotiation process," said Robert J. Keegan, CEO on Dec. 29. "The end result is Goodyear will be a stronger company, a stronger employer and a stronger overall global competitor."