- Four-year labor contract builds on progress of prior agreements
- Obtained right to freeze pension plans, eliminating volatility of earnings, cash flow
- Maintains overall wage and benefit costs at prior-contract levels
- Profit-sharing plan percentage, maximum annual payments reduced
AKRON, Ohio, August 27, 2013 – The Goodyear Tire & Rubber Company today said the four-year master labor contract ratified by members of the United Steelworkers union on August 22 meets the goals established prior to the negotiations and helps the company continue its business momentum in North America.
“Our goal for these negotiations was to build on the structural cost improvements and progress made in the 2003, 2006 and 2009 contracts and reduce the potential future impact of legacy pension obligations on our North America business,” said Richard J. Kramer, chairman and chief executive officer.
“Over the past decade, these four ground-breaking contracts have enabled us to reduce high-cost capacity, establish a VEBA (Voluntary Employees’ Beneficiary Association) to eliminate legacy retiree medical benefit obligations, create a tiered wage structure, improve productivity and now, cap our legacy pension obligations,” he said.
“These changes have been key factors in the turnaround of our North America business,” Kramer added. “This new contract provides the opportunity to take away the volatility that pension obligations have historically had on our earnings and cash flow, enhancing our long-term competitiveness and supporting our goal to be profitable through the economic cycle.”
The new contract gives Goodyear the ability to freeze its defined benefit pension plans and replace them with a defined contribution plan at any time during the four-year contract once full funding is achieved. The agreement also reduces the percentage of North American earnings paid out under the company’s profit-sharing plan and reduces the maximum annual payouts during the contract. The contract provides flexibility to reduce staffing and continues medical benefit cost sharing. Wages and benefits remain in line with the prior agreement.
The master contract covers about 8,000 associates at plants in Akron, Ohio; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; and Topeka, Kan.
Goodyear will hold a conference call to discuss details of the contract at 9 a.m. today.
Participating in the conference call will be Richard J. Kramer, chairman and chief executive officer, and Darren R. Wells, executive vice president and chief financial officer.
Approximately 45 minutes prior to the commencement of the call, the company will post the financial and other information about the contract that will be presented on its investor relations Web site: http://investor.goodyear.com.
Investors, members of the media and other interested persons can access the conference call on the Web site or via telephone by calling either (800) 895-1085 or (785) 424-1055 before 8:55 a.m. and providing the Conference ID “Goodyear.” A taped replay will be available by calling (800) 688-9459 or (402) 220-1373. The replay will also remain available on the Web site.
Goodyear is one of the world’s largest tire companies. It employs about 69,000 people and manufactures its products in 52 facilities in 22 countries around the world. Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry. For more information about Goodyear and its products, go to www.goodyear.com/corporate. GT-FN
Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, that affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: our ability to implement successfully strategic initiatives; pension plan funding obligations; actions and initiatives taken by both current and potential competitors; increases in the prices paid for raw materials and energy; a labor strike, work stoppage or other similar event; deteriorating economic conditions or an inability to access capital markets; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital expenditures; our failure to comply with a material covenant in our debt obligations; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.