August 10, 2006

Michelin North America to reduce costs through new union agreement

Greenville, South Carolina – Local memberships of the United Steelworkers at three BFGoodrich tire manufacturing plans in Alabama and Indiana have ratified a new labour agreement with Michelin North America, Inc. The company says that the 20 per cent reduction in the wage rate structure and increases in employee health care cost-sharing are critical to the long-term viability of the plants.

“The North American tire market is one of the most competitive in the world, with increasing price pressure from vehicle manufacturers, unprecedented raw material and energy costs, and a surge of replacement market tires from competitors in lower-cost countries,” says Jim Micali, chairman and president of Michelin North America. “Getting our labour costs in line with market rates and limiting our long-term liabilities are crucial to securing the future viability of our North American facilities.”

Under the agreement, the facilities will adopt a simplified, five-level job hierarchy with a 20 per cent lower wage structure, an employee cost-sharing program that will save the company US$5 million annually, lower hourly pay for new employees, and an annual cap of US$5,000 in retiree healthcare. In return, Michelin has agreed to a modest pension increase consistent with inflation, a US$10 million contribution to a trust to assist retirees, capital investments of US$100 million in the three facilities through 2009, and no plant closures or significant employee reductions during the contract term, beyond those already announced and negotiated.

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