16 Oct 2006
Robert Sherefkin | | Automotive News
Detroit, Michigan - The strike that began on 5 Oct. at Goodyear Tire & Rubber Co. didn't sit well with General Motors.
Weeks after GM settled a dispute with Goodyear that threatened to interrupt tyre supplies, the tyre maker failed to warn GM that it faced a strike from its union. Now 15 000 members of the United Steelworkers of America are striking 16 Goodyear plants in North America.
Goodyear is GM's second-largest North American tyre supplier, shipping about 8 million tyres a year to assembly plants. GM's annual purchase from Goodyear is valued at about $350 million. Only Bridgestone does more business with GM (see table below)
GM is down to a 25-day supply of Goodyear tyres, says GM spokeswoman Deborah Silverman.
"The important point is that we have a contingency plan in place to cover the Goodyear tyres and production is not at risk," Silverman said.
Kari Kuvaja, GM's executive director in charge of tyre purchases, says GM purchasing chief Bo Andersson was never given an indication that there was a possibility of a strike. "GM does not like surprises from its suppliers," Kuvaja says.
In Goodyear's defense, he says, "They never interrupted any production."
Goodyear spokesman Ed Markey says the tyre maker is in daily contact with GM purchasing, and "we're not aware of any concerns."
GM can do little if Goodyear cannot meet the automaker's tyre demands. Substituting another tyre brand requires more than six months of rigorous testing before the tyres can be validated for production vehicles, GM says.
Other North American automakers are exposed to Goodyear as well. DaimlerChrysler AG gets 72 percent of its tyres in North America from Goodyear, according to ERJ's sister publication, Tire Business.
Markus Mainka, a spokesman for DaimlerChrysler in Auburn Hills, said: "It has have no immediate impact on our production. We're working with Goodyear to prepare for a prolonged strike. We expect them to come up with solutions in case of a prolonged strike."
Rolling right along
Goodyear is using salaried workers to operate all 16 of its plants being struck by the union. That includes all eight plants that produce tyres. Three plants were not struck, the company says.
GM's Kuvaja says he sympathises with the difficulties Goodyear faces. The automaker will work with Goodyear until the strike is settled, he says.
But he says suppliers that "disappoint" GM with potential production problems get scrutiny from the automaker. Through a spokesperson, GM's Andersson said, "Goodyear will resolve their issues and come out a stronger company."
This is GM's second public issue with Goodyear in recent months.
The automaker filed a lawsuit against Goodyear on 31 July, claiming the tyre maker was improperly withholding some shipments in a dispute over prices and threatening GM with "catastrophic, irreparable losses."
The lawsuit was filed in suburban Detroit. A Goodyear spokesman at the time characterised the lawsuit as unfounded and said it mischaracterised the relationship between the two companies.
GM also alleged that Goodyear timed its actions to cause the most harm to GM. The halt in the production and shipment of tyres came on the eve of the start of production at the new Lansing Delta Township assembly plant in Michigan.
The lawsuit was settled out of court in September, GM says.
No end in sight
It's unclear how long the strike could last, and no negotiations were taking place last week.
Analyst Glenn Reynolds of CreditSights, of New York, says the problem facing Goodyear is that the Steelworkers union is scrambling to protect jobs and its membership ranks. But Goodyear faces foreign competition, massive pension liabilities and higher raw material costs.
Goodyear, he says, is reportedly interested in having the flexibility to close as many as three plants. The union says no.
The United Steelworkers is striking 16 Goodyear plants in North America.
General Motors' largest tyre-brand suppliers in 2005, by percentage share of GM's business
Source: Tire Business
From Automotive News (A Crain publication)
Subscribe for unlimited access. A subscription to European Rubber Journal includes:
Already a subscriber? Log in here
