Tire strike predicted to last until one side ruined

September 26, 1994|By Knight-Ridder News Service

AKRON, Ohio -- Almost 10 weeks into a strike that could set a record for the industry, Bridgestone/Firestone and the United Rubber Workers haven't budged. No talks are scheduled.

"This is an end game," said University of Akron economist David Meyer. "There will be one entity that will be dead when the smoke clears."

Not everyone sees the strike in such cataclysmic terms. One insider even believes that both sides are trying to find a way to save face and get back to the table. But all agree this strike is costing both dearly.

Moreover, the strike and its aftermath could hurt not only the tire industry, but American industry as a whole, some observers believe.

The 4,200 striking Bridgestone/Firestone workers are losing pay that averages $17 an hour. Many face the prospect of being permanently replaced. The $14 million strike fund is down by half.

The fund also has to cover strikers at Pirelli Armstrong and Yokohama Tire and had been supporting strikers at Dunlop Tire Corp. Dunlop workers approved a new contract Friday after the company threatened to close the Huntsville, Ala., plant if the offer wasn't approved.

Mr. Meyer said workers face a larger threat: Bridgestone/Firestone could break the union. And that might encourage Goodyear and Uniroyal Goodrich to take a harder line when contracts expire three years from now.

From the company's standpoint, the strike couldn't have come at a worse time, particularly if the URW's attempts to paint Bridgestone/Firestone as un-American and unfair are successful.

For a year, the company has been trying to revive the once proud Firestone brand. It has adopted a new slogan: "America's Tire Since 1900." And it dropped its sponsorship of professional bowling to mount a return to the Indianapolis 500.

Goodyear has had a lock on the quintessential American race -- and its marketing value -- since Firestone left in 1974.

But Bridgestone/Firestone's race tire builders are on strike, too, part of the 163 URW members participating in the walkout in Akron. Salaried employees are filling in and company spokesman Trevor Hoskins said parent Bridgestone Corp.'s tire development team in Tokyo is helping out.

For the newly profitable Bridgestone/Firestone, the strike will mean a return to losses for the year. Bridgestone/Firestone built up an undisclosed stockpile of tires before the strike began, but many in the industry believed the stockpile would dwindle after Labor Day.

The struck tire plants are working at 25 percent to 30 percent of capacity with salaried workers and the few new permanent employees.

Meanwhile, the company's four nonstriking tire plants have been operating full throttle, supplying their key customers, the automakers.

Privately, some company executives said they were surprised the strike lasted more than six weeks, which may indicate the stockpile soon could be exhausted.

Bridgestone/Firestone may soon have to rely on imported tires from Japan, where that country's recession has left Bridgestone plants with unused capacity.

Preserve market share

"We can get all the tires we need from Japan to keep market share," Mr. Hoskins said. Given the dollar's weakness against the yen and the cost of shipping tires to the United States, however, such a strategy will result in a loss on every tire the company imports, he added.

But if supplies falter, competitors will be quick to step in. And analysts say market share lost is hard to regain.

The strike already has given archrival Goodyear a chance to expand into the farm tire market, one area where Bridgestone/Firestone said it is experiencing shortages.

But Goodyear, and its subsidiary, Kelly-Springfield, aren't positioned to encroach on Bridgestone/Firestone's passenger tire market. They already are making as many tires as their plants can handle.

Michelin and its Uniroyal Goodrich subsidiary are in the same position, though the latter could soon boost its plants' output. Uniroyal Goodrich production has been curtailed by a changeover to new schedules at its plants.

Why are the tire plants straining? Strong auto sales and a decent replacement market. Industrywide, passenger tire shipments were up 7.8 percent for the first six months of the year compared with 1993.

But these conditions could open the door wider to other foreign tire makers, especially Chinese and Korean companies hungry for a larger slice of the private brand replacement market.

The tire industry faces another repercussion. If Bridgestone/ Firestone loses market share, it may be tempted to win it back by using incentives. That could renew a price war which would cut into all tire companies' profits, said Harry Millis, an independent industry analyst.

Mr. Millis' fears don't end there.

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