AKRON, Ohio, Aug. 27, 2013 /PRNewswire/ -- The Goodyear Tire & Rubber Company (NASDAQ: GT) 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.