Goodyear Tire & Rubber Co, North America's largest tiremaker, broke off talks for a new contract with the United Steel-workers of America, raising the possibility of a strike by about 19,000 employees.
The union rejected the company's latest offer and the talks in Cincinnati have stopped, said Wayne Ranick, the union spokesman. Union negotiators are leaving to go back to inform the membership why they rejected the company's offer.
No new talks are scheduled, Ranick said.
The company's latest offer made no guarantees about plant closings, and no commitments to restructure the debt or to eliminate "excessive layers" of management, he said.
The Goodyear offer to the union also sought to slash healthcare and pension benefits for workers and retirees, Ranick said.
"We're disappointed that we were unable to reach an agreement in the late stage of discussions," said company spokesman Chuck Sinclair.
"We need to bring this process to a close so the company can continue its recovery," Sinclair said.
He said today that "the lines of communication are open and we are willing to further discuss the company's offer."
Goodyear didn't immediately respond to voice mails left seeking comment on the union statement.
Goodyear is pushing to reduce costs after a US$163.3 million net loss in the first quarter and a decline in its North American tire sales.
The company wants to close three US factories and cut wage and benefit costs by US$305 million, said John Sellers, the union's executive vice president, in an interview last month.
The union sought guaranteed job security for workers at all 14 factories covered by its contract, plus a promise that the company would ask its banks to restructure US$2 billion in loans set for repayment in 2005, spokesman Ranick said in an interview earlier this month.
Neither Goodyear nor the union has given the 72-hour notice required for a strike or lockout. The employees have been on the job without an agreement since their contract expired April 19.
The union also represents about 3,000 workers on indefinite layoff and those who are injured, Ranick said.
A strike could reduce production by 150,000 to 200,000 tires a day. That would cost Goodyear US$10 million to US$13 million a day in revenue and US$2 million to US$4 million a day in profit, said Fitch Ratings analyst Scott Lee, who covers the tire industry.
The Steelworkers union represents about 17 percent of the 92,000 employees at Goodyear, which has 33,000 employees at 39 North American plants. The last time the Steelworkers struck Goodyear, in 1997, the 17-day walkout cost the company about US$50 million.
Chief executive Robert Keegan told analysts in April that Goodyear needs to cut labor expenses and import more low-cost tires to counter a decline in North American sales.
Goodyear has slashed 20,000 jobs and closed six plants since 1997.
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