OPINIONS FROM THE PLANT

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Positive outlook

In the wake of the job layoff announcement of the Goodyear hose department, I and many other workers of the Lincoln plant would like to point out who is committed to the business staying in Lincoln.
The hose department made impressive profits through the '70s and early '80s. The company decided to expand salary management staff and overhead which makes up our middle management overhead which we refer to today as management overstaff or "fat." Hourly workers were laid off in massive numbers because of an economic downturn in late '70s and early '80s but management staff was never reduced.

The economy and the hose business had a rebound and the company decided to expand the hose department, add new technology, which we refer to as the automated robotic age, and ask the hourly workers for their commitment in making this happen. In 1984, the company asked the workers for a wage concession and C.O.L.A. freeze package, which was agreed to in 1985. The package consisted of a commitment of $63 million to the plant. After the five years the company could only prove less than $25 million was invested to the Lincoln plant while the remainder lined the pockets of management staff.

Today almost all of the expansion and automative robotic operations has been destroyed or pulled out of the Lincoln plant and is rusting away at a salvage yard somewhere. During this time the company also added several tiers of management staff within the Hose Center. The company did not ever even give an apology to its workers for this misrepresentation and misuse of the hourly workers' money. Note - the workers of the Lincoln plant are still paying for those bad decisions today.

After this five-year agreement was over the company asked for more. In 1990, the company demanded $4 per hour for all warehouse workers to remain competitive. The workers agreed again to save jobs. Before this the company enjoyed a turnover rate of almost zero at the distribution center; now the turnover rate is so high the company has doubled its workforce to make up for the labor pool that they have created.

Many workers of the Lincoln plant demand a commitment out of salary for the hose business to remain in Lincoln. The workers request a voice as to how this business is managed and would suggest an impartial mediation between the United Steelworkers and Goodyear Tire and Rubber to enforce a monetary commitment from all local salary management staff. If these requirements are not performed by a committed management staff, then many of the workers of the Lincoln Goodyear plant will not be willing to look at the company's concession package for the hose department.

Jeff Cooley

Bad strategy

Once upon a time there was a successful company that made hot dogs and buns. Like all successful businesses they improved on their product and tried to expand. So one day they decided to give their buns away for free to a large grocery store chain, hoping it would entice them to also buy their hot dogs. When this did not work they continued to give away buns at a ridiculously low price.

Their books showed a loss in the bakery department. So rather than charge what the bun was worth, they told the bakers they must take a 30 percent cut in pay. The bakers in return said, "Before we talk pay cuts, can you give us a guarantee that you will not close the bakery?" The bakers were turned down. Now the decision to close the bakery has been made. Does this shortfall of money sound like it is the baker's fault? Or his wages? No, it was the corporation's fault, with the decisions they made.

This is a true story, but instead of hot dogs and buns it is Goodyear Tires and Hose. They have given companies such as Ford Motor Co. our hose products for dirt cheap prices, hoping for a tire deal. That failed and we the employees are told it is our fault that a profit is not realized. They sandwich our product with another but the books are kept separate. So the bottom line isn't the whole story.

If the hoses in your car were made here in Lincoln, I bet that hose will last longer than your car.
That says a lot for the workers at Goodyear, don't you think?

John Kortum

Slashing workers

Don Walton's Dec. 3 column on the state of the economy tells it like it is. The local workers at Goodyear have got to witness first hand how Goodyear top management has subscribed to the same way of doing business as Walton wrote about in his column.

The hose department in Lincoln will lose 200 jobs because the workers can't afford to take a $5 an hour pay cut. Workers in the belts division of the plant continue to see the business they helped to develop sent off to plants in Mexico (thank you, NAFTA) and Canada. Lincoln has always been known to be world-class in waste savings and a quality product and this seems to mean nothing to the top decision makers at Goodyear headquarters, who look only at the wages and benefits paid to local workers.

The union and local management at the plant have worked hard over the years to make the Lincoln plant a place that's a viable operation, but it's all about the people that make millions every year wanting to take more and more away from those that make $30,000 to $40,000 a year. The people at the Lincoln plant over the years have not only shared their wages with local charities but volunteered their time to help others in need.

In 28 years at Goodyear I have seen a flow of plant managers come through the plant, each trimming away at the work force. The first 15 years at Goodyear we had one plant manager who seemed committed to the plant. But that was before the new wave of big business and their effort to make the American work force all end up on welfare.

Anyone that has purchased a new car, tires or v-belts and hoses over the last 15 years, I have just one question. Did you notice that the price of these products has not gone down? Just so you understand, it's not going into the workers' pockets. The question for big business is who is going to purchase these overpriced products when all that is left in the U.S.A. is workers making $5 an hour?

Larry D. Craig

Talk is cheap

Goodyear again Tuesday showed a shining example of corporate America's way of saying thank you to the workers that made it the world power it is today. Last week it was Ford Motor Company and this week the Goodyear Lincoln plant is given another big dose of reality. I found it interesting to hear Todd Turner refer to the remaining workers as highly regarded and will continue to be well paid.

This is the same Todd Turner who held his first meeting with plant employees when he arrived from a Goodyear plant in China, by making them stand in what used to be the second floor flip department on a hot summer day for more than 40 minutes while he lectured us about Goodyear economics. He learned well in China how to deal with workers. We will see how well we are respected and paid come April 2003, when we negotiate the new contract.
It's also kind of strange that he seems to not be able to speculate on where the jobs are going. Try anyplace there is not a union to represent the rights of workers.

Goodyear made a point when I was hired in 1974 of preaching "protect our good name." Too bad they have failed to practice with the employees the same thing they preached.

The president spoke at a John Deere plant the other day about American workers being the best in the world and protecting workers and their jobs. Talk is cheap, Mr. President; so obviously are American workers' incomes. As Mr. Turner proved back in August with the local union, the only talking the company wants to hear is less pay, fewer benefits and fewer workers.

Larry D. Craig

Buy American

I took great joy in witnessing the newfound patriotism that swept this country in the wake of Sept. 11. Even on the road, car owners tried to make their allegiance clear through display of miniature flags and "United We Stand" bumper stickers.

However, it was heartbreaking to see 80 percent of these flag-carrying cars were made in Japan or Germany. Does a patriot drive a Honda or similar import? I think not.
My heart aches for the 500 Goodyear employees who lost their jobs as a result of a probable move to Mexico, where the company can exploit workers at $1.25 an hour.

I hope more people realize that support of their country goes a lot farther than waving a flag.
Buy American. The job you save may be your own. Otherwise, there won't be an America to salute.

Brice Sullivan

Goodyear blunder

In the 30 years I have invested at Goodyear, I have seen employees and management work through lots of problems. It was always all right to work together as a team through critical times. We worked together to devise a yardstick to measure and correct the problems. When we got the problems fixed, management always went back to business as usual. Forgetting the lessons learned, being too busy to pay attention to the everyday problems involved with running the business.

Through the years businesses became more competitive for their share of the market, not ours. Upper management became more competitive for wages to achieve a successful lifestyle. In November 2000, the corporation decided to ask hose department employees for a $5 cut in pay per hour so they could have money for the CEO's yearly bonus. We declined because this represented 20 years of raise negotiations. Since then the corporation has decided to move 480 hose jobs out of Lincoln. They have decided there are other people they can exploit.

Dale E. McReynolds

No excuse for finances at Goodyear

Poor leadership led to slide in debt rating
If you respect the Goodyear name, you must hate to see the company's debt rating relegated to junk bond status.

Goodyear, a junk bond company? Come on.

In part, the cautiousness of the day may explain why Standard & Poor's downgraded Goodyear to a subinvestment grade status. But that is still no excuse for Goodyear.

Goodyear's financial performance has been terrible. It's obvious by now that the company's leadership hasn't kept a close enough eye on fiscal responsibility. That responsibility rests squarely with company Chairman Samir Gibara and the Goodyear board of directors.

Yes, this is a recession and the tire industry is in a slump. But this is also a time for Goodyear to be winning back investor confidence.

Look at the things in Goodyear's favor:

The cost of oil is down, and oil accounts for about 25 percent of the cost of making a tire. Other raw material costs are down, too.

Goodyear is increasing its sales of higher-priced tires. In its last quarterly report in October, the company boasted of a 3 percentage-point gain in market share in North America, following the Firestone debacle.

Goodyear also raised prices, by 5 percent in June and 7 percent this month.
So why isn't Goodyear making a profit? Why is it that financial analysts soon expect the company to report its first annual loss in nine years? As of the first nine months of 2001, Goodyear reported a net loss of $30 million.

Meanwhile it's been three years now since Gibara has been promising a turnaround and failing to deliver.

Whether we're talking about a household budget or a global corporation, a healthy bottom line requires tight control of spending.

How much debt to acquire is a critical decision. Standard & Poor's specifically pointed to concerns about Goodyear's high debt. Goodyear borrowed $900 million two years ago to buy Sumitomo's Dunlop operations in Europe and North America. It recently announced a $120 million expansion of a plant in China. Throughout 2000, the company had $444 million in capital expenditures. Wise investments, or too much at one time?

Inventory is another critical issue. Regardless of economic conditions, management must control inventory, or money is lost when products sit in warehouses. Goodyear saw its inventories off balance again last year, making it difficult for dealers to get tires customers want.

The downgrade by Standard & Poor's only makes Goodyear's recovery more difficult. Experts I spoke with last week had faith in Goodyear's long-term viability. But Goodyear could be stifled by higher interest.

Meanwhile, shareholders are left to suffer and so are employees. Right now, for example, Goodyear is threatening to lay off about 100 people in Akron in maintenance jobs to save money. The work would be outsourced.

You would think a company of Goodyear's size and stature could afford to pay its own maintenance crew. This is just one example of how individuals end up paying for the company's poor fiscal management.

Gibara is nearing retirement. The clock is ticking.

Diane Evans' column appears on Sundays, Wednesdays and Fridays. She can be reached at 330-996-3587.

Posted on Wed, Feb. 06, 2002

Putting off bills unlike Goodyear

 

A woman with a deep voice called this week, saying she thinks she knows why Goodyear Chairman Samir Gibara is boasting of ``ample cash flows.''

Her theory: that Goodyear is making cash flow look good for the short term by forcing suppliers to wait three months to get paid.

Now, I don't want to get too technical. But cash flow refers to the difference between the amount of money paid out and the amount of money that comes in. In other words, let's say you have a salary of $500 a week. If you then pay out $450 in weekly expenses, you would have a positive cash flow of $50.

The idea of Goodyear having a high cash-flow balance at year end is especially interesting, considering the company's annual earnings report is due out on Friday. The company's stated objective had been to end the year with cash-flow balance of around $350 million -- up nearly $100 million from the previous year.

Improved cash flow would give Goodyear something to crow about in an otherwise dismal year. Financial analysts expect the company to report its first operating loss in nine years.

But it is possible that Goodyear is making its cash- flow numbers look better by delaying payments to suppliers -- many of whom are small manufacturers here in Akron who are already having enough trouble making ends meet in this recession.

The woman who called me works for a small manufacturing company that supplies equipment to Goodyear. She said that until recently, Goodyear had paid its bills in 30 to 40 days. But around September, she said, Goodyear noted on a purchasing order that payment would be made in 90 days.

I checked with several other Goodyear suppliers around town and all told the same story: Early in the fall, Goodyear unilaterally decided to delay payments on orders. The suppliers said they were notified of this by notations on their purchase orders from Goodyear.

Needless to say, the suppliers -- people with mold companies and engraving and printing shops and the like -- were pretty upset. No one wanted to speak out publicly, for fear of losing Goodyear as a customer.

But small-business people live and die by cash flow. They need money coming in to pay their own bills and pay their employees.

One supplier told me that it takes him two months to fill a Goodyear order. So having to wait three months after that to get paid creates a big cash-flow problem for him. He said he didn't know how long he could survive in business this way. Another supplier felt he was doing OK because he had avoided debt on new equipment. Still another said he was getting by as best he can, because he can't afford to lose his Goodyear account.

One mold maker said that in the past, any changes in the payment schedule were negotiated (a point confirmed by Goodyear insiders). He and others said that Goodyear previously paid interest to suppliers when payments had to be delayed. (That sounds more like the Goodyear we know and respect.)

Goodyear officials declined comment on issues relating to Friday's earnings report, saying that the Securities and Exchange Commission imposes an information blackout on finances just prior to the release of an earnings report.

However, on the point of delaying payments to suppliers, Goodyear spokesman Chris Aked said: ``We have a variety of terms, depending on the size of the supply. Certainly 90 days is not across the board for everybody. It varies a great deal.''

Common practice

Throughout industry, the practice of delaying payments to suppliers has been increasingly common.

``I'm seeing companies take as long as they can to pay,'' said C. Britt Beemer of America's Research Group, a Charleston, S.C., firm that tracks trends in retailing. ``They can invest that money and turn it into profit. But at some point, people have to be paid or they can't pay their employees.''

An accountant from a major firm told me that companies are often encouraged to delay payments to suppliers to take full advantage of free money. (Hey, just squeeze the suppliers and don't worry about it.)

This may be the direction many businesses are heading. And Goodyear, as a supplier to the auto industry and such mass retailers as Wal-Mart and Sears, may face similar delays in payment. But using its market strength to squeeze its suppliers in this manner is a departure for Goodyear, from everything I hear from those close to the company.

Benefit of the doubt

Until we hear from Goodyear on Friday, we still need to give the company the benefit of the doubt. The independent accountants I spoke with this week told me it would be possible for a company to experience a surge in cash flow by delaying payments that previously had been made within a shorter time span.

If that happened, however, there would be a corresponding surge in the amount of money the company owed, they said, and that would have to be reported in a separate category.

Surely investors know by now that it is important to look beyond the surface of company reports to try to figure out what the numbers really mean, how healthy a company really is, and especially how effectively the top management really is performing.

Do the numbers really justify the bonuses top executives are often awarded?

The immediate challenge for Goodyear watchers may be to figure out what's behind the numbers in Friday's year-end report.

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Diane Evans' column appears Sundays and Wednesdays. She can be reached at 330-996-3587.