Lockout costs for Cooper could top $40 million

ERJ staff report (TB)

Findlay, Ohio --Cooper Tire & Rubber Co.'s efforts to keep dealers supplied with tyres during the 11-week lockout of union workers at its Findlay plant could result in $40 million or more in increased costs, the company said in its fiscal 2011 results review.

Commenting on the Findlay-based tyre maker's reasons for the lockout, Cooper CEO Roy Armes said: “Our priority during the lockout has been to protect the supply of tyres to our customers. In order to do this, we will incur premium costs during the first quarter, which include additional overtime, the costs of mobilising and training a temporary workforce and operating below capacity during the quarter.”

These costs potentially could be as high as $30 million in the first quarter, he said, and would be in addition to $11 million in costs the company booked in the fourth quarter.

The company spent $3 million to mobilise and train a temporary workforce at the plant after it locked out more than 1,000 United Steelworkers Local 207L members last Nov. 28 after the local voted down Cooper's proposed new contract.

The lockout resulted in the plant's being idled for 14 days, followed by a period of weeks during which Cooper ramped up production as the temporary workforce trained on Cooper's manufacturing and quality systems. Cooper did not disclose the number of temporary workers hired nor what will happen to them now that the union ratified a new contract Feb. 27.

These efforts led to $8 million of unabsorbed overhead costs, Cooper said.

Despite the expected higher costs in the quarter, Cooper expects its first quarter operating profit to be similar to the first quarter of 2011.

From Tire Business (A Crain publication)