A new union contract at Michelin North America Inc. will cut 20 percent of the labor costs associated with its BFGoodrich Tire Manufacturing unit in the United States and Canada.
The agreement with the United Steelworkers of America will change wages and work rules at Michelin's four unionized plants to be more in line with its 17 nonunionized plants in North America. Jim Micali, CEO of Michelin North America, says the changes eventually will save the company $300 million a year.
The contract derails the U.S. tire industry's tradition of signing pattern union contracts. Last year's contract with Goodyear Tire & Rubber Co. gave the United Steelworkers a seat on Goodyear's board. That deal also pledged that management would not try to thwart efforts to organize Goodyear's nonunion plants.
Micali said the supplier will spend as many as two years evaluating whether the cost savings are making the Goodrich plants competitive enough to warrant new capital investments.