Watch CBSN Live

Goodyear: 3-Month Strike Cost $350M

Goodyear Tire & Rubber Co. lost more than $350 million during a three-month strike by some 14,000 union workers, the world's third-largest tiremaker said Tuesday.

"Despite the financial impact, it is clear the strike achieved our required outcome," Goodyear's chief financial officer Richard Kramer told investors and reporters during a conference call.

Kramer said the Akron-based company estimates the strike by the United Steelworkers union representing workers at 12 plants in 10 states and in Canada drained between $30 million and $35 million a week, mostly because of lower production and lost sales.

At 12 weeks long, that means the work stoppage could cost Goodyear between $360 million and $420 million.

Most of that hit will be absorbed in the fourth quarter, which ended Dec. 31, Kramer said. He warned that "we will see an additional strike impact in the first half of 2007."

Analysts surveyed by Thomson Financial on average predicted Goodyear will post a fourth-quarter loss of 40 cents a share. Revenue estimates were not available.

Annual earnings were predicted to be down 35 percent at 92 cents a share on about $2 billion in sales.

Kramer and Goodyear Chief Executive Robert Keegan cushioned the news by saying the company plans to save $610 million over three years because of the agreement reached with the union two weeks ago and annual savings of about $300 million after that.

That message was well received by Wall Street as Goodyear shares hit a new multiyear high, rising 31 cents to $24.35 in trading Tuesday morning on the New York Stock Exchange. Shares had been as low as $9.75 over the last 52 weeks.

Most of the savings will be through job cuts, lower wages and benefits and more efficient tire production in North America, the executives said.

The strike that began Oct. 5 ended last week when USW workers returned to plants after overwhelmingly approving the three-year labor deal that includes plans to close a Texas tire factory and creates a $1 billion health care fund for retirees.

The contract allows the Tyler, Texas, plant to be closed by the end of 2007 and provides for buyouts to about 1,100 workers there who make unprofitable wholesale private label tires.

The deal also requires Goodyear to put $1 billion in cash and stock into the fund for retired union workers' medical benefits, which was higher than the company's previous $660 million offer but less than the union's call for roughly double that amount.

During the strike, Goodyear made tires at some of its North American plants with nonunion and temporary workers as well as some managers. The company counted on production at its international plants to help supply North American customers but some dealers said there was a shortage of some specialty Goodyear tires.

Keegan said Goodyear lost no customers during the strike and has already gotten production levels back on track since union workers returned last week.

Goodyear has about 80,000 employees and makes tires, engineered rubber products and chemicals in 29 countries.

View CBS News In