From Staff & Wire Reports

MUSCATINE, IA -- In a series of moves to reduce its operating costs, Bandag has “closed” its pension program to new hires in North America, and also said it will freeze its existing pension program for current employees in the U.S. and Canada, and is seeking to cut its U.S. employment.

Under the pension moves, any new hires will be excluded from Bandag’s current pension program. The company did not say if any alternatives will be offered. The freeze, which will impact salary and hourly workers in the U.S. and salary workers in Canada, will take effect Dec. 31, Bandag said.

The retread product manufacturer and marketer said it may also terminate all of its pension plans within the next 18 months. No decision has been reached regarding plan termination, though.

Bandag has also launched programs to cut its U.S. workforce by some 15 percent. The company is offering an early retirement program to 170 employees who will reach age 55 by the end of the year. Those accepting the offer will get five years of service added to their service time to determine their pension benefit.

Bandag is offering a “voluntary separation program” to salaried U.S. employees, but said if fewer than 175 employees accept the program, the company will terminate staff to reach the planned 175 cuts.

The company said the pension freeze “will allow us to better control retirement benefit expenses going forward, while at the same time preserving employees' retirement benefits earned to date.”

“The North American markets for commercial replacement tires have changed irreversibly over the past several years, a situation exacerbated by record-high raw material prices and intensified competition,” said Bandag Chairman and Chief Executive Officer Martin Carver. “To stimulate growth in Bandag's traditional retread business, we are taking steps to simplify our operations and lower our operating costs.”

Bandag estimates pre-tax cost savings from the early retirement, voluntary and involuntary separation programs to be $5 million to $7 million.

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