The Goodyear Tire & Rubber Company · NASDAQ:GT
The Goodyear Tire & Rubber — Corporate Update (September 2009)
23 slides from The Goodyear Tire & Rubber's corporate update, Sep 29, 2009
Slide 1: USW Contract Conference Call
USW Contract Conference Call September 29, 2009
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information contained in this presentation may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, which affe
Slide 3: Agenda
Agenda • Introduction • 2009 Agreements – Overview & Savings Summary • Q&A 3
Slide 4: Purpose of Conference Call
Purpose of Conference Call • Exclusively focused on 4-year master contract and pre- bargain agreements with the United Steelworkers (USW) – Alignment to strategy – Objectives and goals – Financial details • Out of scope – Third quarter results – Other business updates 4
Slide 5: 2006 Agreement Provided Solid Foundation
2006 Agreement Provided Solid Foundation • 2006 contract milestones – Groundbreaking $1 billion VEBA for retiree healthcare – Two-tier wage and benefit structure – Addressed excess capacity – Enabled complete sale of Engineered Products business • Significantly improved ability to address changes in
Slide 6: 2009 Agreements Aligned to Strategy
2009 Agreements Aligned to Strategy 7 Strategic Drivers Leadership Leadership • Win-win outcome for Product Product Leadership Leadership Goodyear and USW • Logical evolution from Leveraged Leveraged Distribution Distribution 2003 and 2006 contracts Build Build Brand Brand Strength Strength • Exempl
Slide 7: 2009 Agreements Aligned to Strategy
2009 Agreements Aligned to Strategy Top Line Cost Actions Cash Initiatives • Benefit from the flexibility that enhances ability to improve customer fill rates despite demand shifts and added product complexity • Significant savings over contract term – Productivity improvements through revised outpu
Slide 8: 2009 Agreements – Overview & Savings Summary
2009 Agreements – Overview & Savings Summary
Slide 9: 2009 Agreements
2009 Agreements • Industry conditions created unique set of challenges and opportunities – Impacted strategy and goals for both parties – Recognition of new business realities – Focused on shared goals and common ground • Outcome a win/win for Goodyear and USW • Thanks to all involved 9
Slide 10: Building on Past Agreements
Building on Past Agreements Continue Continueto toDrive DriveEfficiency Efficiencyinin 2009 USW USWFacilities Facilities 2009 Master Agreement • Eliminated grandfathering for voluntary job classification changes to move to lower market- based wages 2006 • Improved performance standards to drive high
Slide 11: Savings Summary
2009 Agreements Savings Summary ($ in millions) 5-Year 2009 2010 2011 2012 2013 Total Pre-Bargain Agreements Confirmed (a) Plant Shift Reductions $ 40 $ 75 $ 75 $ 75 $ 75 $ 340 (Akron, Buffalo, Danville, Topeka and Union City) 2009 Master Agreement Increased Productivity $ - $ 20 $ 30 $ 35 $ 35 $ 12
Slide 12: 2009 Agreements
2009 Agreements • USW benefits – Commitment to invest $600 million in manufacturing facilities over life of contract – Protected status for six USW plants – Modest wage increases for post-2006 new hires – Increased profit sharing level – Pension changes 12
Slide 13: 2009 Agreements Address Competitive Drivers
2009 Agreements Address Competitive Drivers 7 Strategic Drivers Top Top Line Line Leadership Leadership Cost Cost Actions Actions Product Product Leadership Leadership Cash Cash Initiatives Initiatives Leveraged Leveraged Distribution Distribution Build Build Brand Brand Strength Strength •• Increas
Slide 14: 2009 Agreements: Increased Productivity
2009 Agreements Increased Increased Productivity Productivity Standards Individual Performance Efficiency Drivers • Updating and maintaining • Establishes performance • Vacation scheduling competitive output expectations: – Schedule up to 80 hours standards – Attendance of vacation shutdowns • Abili
Slide 15: 2009 Agreements: Wage & Benefit Savings
2009 Agreements Wage Wage & & Benefit Benefit Savings Savings • Elimination of grandfathering for voluntary moves • Increased healthcare cost sharing to offset medical inflation • Standardize and minimize job posting across plants • No wage increases, except for new hires (modest) ($ in millions) 5-
Slide 16: Wage & Benefit – Grandfathering
2009 Agreements Wage & Benefit – Grandfathering • Background: Grandfathering permits associates to keep wage rate even if moved to lower-paying job classification • Contract eliminates grandfathering for voluntary moves to new job classification – Supports transition to market-based wages at USW pla
Slide 17: Wage & Benefit – Other Items
2009 Agreements Wage & Benefit – Other Items • Medical plan changes – Increased cost sharing for all associates from 6.5% up to 12.5% – Modified plan designs (e.g., increased deductibles and office visit fees) – Reduced dental benefits • Standardized job posting procedures – Limit number of job post
Slide 18: Wage & Benefit – Pension / Defined Contribution Plan
2009 Agreements Wage & Benefit – Pension / Defined Contribution Plan • Pension plan frozen to new entrants – Substantially all associates hired after Dec 2006 not included in plan – Liability favorably impacted over time(a) • Defined contribution plan for majority of post Dec 2006 new hires – Reduce
Slide 19: 2009 Agreements: Flexibility
2009 Agreements Flexibility Flexibility • Confirmed pre-bargain staffing flexibility at Akron, Buffalo, Danville, Topeka and Union City • Ability to buyout 600 associates (only portion included in contract savings) at 6 protected plants • Union City unprotected status • Permits outsourcing of certai
Slide 20: Savings Summary
2009 Agreements Savings Summary ($ in millions) 5-Year 2009 2010 2011 2012 2013 Total Pre-Bargain Agreements Confirmed (a) Plant Shift Reductions $ 40 $ 75 $ 75 $ 75 $ 75 $ 340 (Akron, Buffalo, Danville, Topeka and Union City) 2009 Master Agreement Increased Productivity $ - $ 20 $ 30 $ 35 $ 35 $ 12
Slide 21: Summary Comments
2009 Agreements Summary Comments • Key takeaways • Win/win for Goodyear and USW • Significant savings achieved • Innovative agreements drive efficiency by changing the way we run our USW factories • Continued cooperation required to drive improved performance 21
Slide 22: Appendix
Appendix
Slide 23: Wage & Benefit – Grandfathering
2009 Agreements Wage & Benefit – Grandfathering Grandfathering Example • Forklift operator earning $24 per hour, chooses to voluntarily tender grandfathered status in first year of contract lowering wage rate to $14 per hour Contract ($ in 000) 2010 2011 2012 2013 Total Annual Wage Savings $ 25 $ 25
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