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Continental Tire North America, Union Face Off Over Plant

Tensions in Charlotte, NC, are rising as the head of Continental Tire North America (CTNA) is saying the company may close its headquarters plant and the United Steelworkers (USW) is claiming the tiremaker hasn’t provided information to allow it to “develop a plan to salvage manufacturing at the Charlotte plant.”

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From Tire Review

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CHARLOTTE, NC — Tensions in Charlotte, NC, are rising as the head of Continental Tire North America (CTNA) is saying the company may close its headquarters plant and the United Steelworkers (USW) is claiming the tiremaker hasn’t provided information to allow it to “develop a plan to salvage manufacturing at the Charlotte plant.”

Alan Hippe, CTNA president and member of Continental AG’s management board, told the Associated Press that CTNA has not ruled out closing the plant should the union not agree to reduced wages and benefits.

CTNA told the union in November that it wanted to cut worker pay and benefit costs by 35%. Hippe told the AP that the company has not received a response from the USW, but that the company is “definitely prepared for every alternative. There’s nothing to be excluded, but we’re still positive because so far the talks with the union have been very professional.”

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When asked by the AP if the alternatives included closing the plant, he said “Yes.” “Our company has a very clear and transparent strategy, especially in areas where the labor cost is a major factor,” he said. “In tires – just to give you an idea – in Germany about 30% of the total production cost is labor. Move that to Romania and then it is about a tenth of that.”

CTNA said it wants the plant’s estimated 1,000 hourly workers to accept pay cuts from an average $40 per hour to about $26 an hour, the AP report said. Earlier this year, CTNA cut production at the Charlotte plant, which produces passenger and light truck/SUV tires, by 30% in a cost-saving move.

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“So far we are still in hope that we get this thing resolved without serious action,” Hippe said. “We have told the union that not achieving an agreement until the year-end would lead to an additional reduction of capacity in the first quarter. “Hippe also said that CTNA would likely post a loss of between $83 million and $177 million for 2005.

Meanwhile, USW Local 850, which represents the troubled Charlotte plant, criticized CTNA “for failing to adequately respond to repeated proposals by the union to provide critical information the union needs to develop a plan to salvage manufacturing at the Charlotte plant.”

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In a prepared statement, the union said the two sides met on Nov. 17, at which time the tiremaker made its cost reduction demand, and “expressed a sense of urgency” that the union respond quickly. “The USW, in return, has made a number of requests for information vital to crafting a response,” the statement said.

The USW statement included a copy of a Dec. 9 letter to Rick Ledsinger, CTNA’s director of human resources and plant operations, complaining about the lack of information. “I am disappointed in the company’s actions,” wrote Ron Hoover, USW’s executive vice president, in the letter. “At the Nov. 17 meeting, the company was very quick to point out its view that it is up to us to save the facility. You also gave no indication that our request for meetings with company managers would not be met. We have tried to build our knowledge base and work with you in a sincere attempt to save the Charlotte plant. In the face of the company’s actions, I question whether the company is truly willing to engage in that effort.”

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“Experience has shown us that traditional bargaining is not an adequate solution in these types of situations,” Hoover said in the union’s statement. “Innovative approaches are required, but that requires the full disclosure of information and sincere dialogue.”

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