June 9, 2006

Excerpts from Jim Pecorelli’s remarks to open USW Negotiations

• I am committed to driving growth, profitability and competitiveness in this region. These three business components must be linked, and locked, together. The glue is a competitive manufacturing cost structure.

• Before I talk about our business performance, let me quickly touch on the company’s exploration of the sale of Goodyear Engineered Products. We’re not allowing it to affect operations. We’re conducting business as usual and staying focused on safety, quality and customer service. So, these contract talks will be conducted with Goodyear Engineered Products as an active participant and ongoing part of the company.

• Goodyear Engineered Products is certainly different in many ways from North America Tire, including the fact that we are a global SBU with plants on six continents. But we also have similarities. We certainly enjoy strong brand awareness in North America, but our products face a variety of competitive challenges coming from many directions.

• We look for opportunities to grow through more sales of existing products to existing customers, as well as new sales from new products, new customers, markets and regions. We look for pricing opportunities and product supply opportunities to help offset inflationary raw material, energy and labor costs. Our division also looks for investment opportunities that take advantage of evolving market conditions.

• We're similar to North America Tire, as well as other American manufacturers, because we face a global arena filled with aggressive, formidable competitors seeking marketing advantages in every facet of their operations. They are unrelenting in their quest to lower their cost structure, as they try to drive us from various markets and channels.

• Quite frankly, the contract negotiated three years ago provided some initiatives that successfully improved our competitive position, while other initiatives disadvantaged us along the way.

• In the past three years, the globalization of information technology and logistic systems has made the world smaller — some say flatter. And the future will only bring the world closer together, creating an instant community with an escalating competitive environment within our industry.

• To win, we need to move forward together — combining our energy and thoughts, while positioning them in a collaborative direction to help us win against the competition.

• The division is healthy. International regions are generating impressive returns on revenue. In North America, we have generated considerable revenue growth in industrial markets, as strong demand for iron ore, copper, zinc, aggregate, oil and other commodities have driven the demand for our products.

• During the past few years in North America, we’ve enjoyed a significant amount of military tank track business, due to world events. But that won’t happen again in 2006. Projections show that the level of military business is dropping.

• In spite of Goodyear Engineered Products’ global manufacturing footprint, we still have more plants in the United States than any other country. But we haven’t lost sight of the outside forces threatening our position in this country.

• Following our last negotiations, action was taken to allow us to stop some of the bleeding at Lincoln. Our local agreement allowed us to take tough, but positive steps to address chronic issues... steps that are helping the plant to survive today. The plan is the right one for Lincoln. We just need to continue to execute it; and we need to get the job done.

• To have a fighting chance against our competitors, our labor agreement must have flexibility built into it. It must be designed to respond proactively - and rapidly - to the fast-paced changes in markets and global sourcing.

• Each of our plants has a unique set of challenges and opportunities. Some compete with products that have high material content and low labor content, while others require high labor content. Some of our plants enjoy technical advantages, while others must compete with adversaries across oceans. But I still believe that each plant can play a role to help Goodyear Engineered Products in North America.

• If we are to win, we must work together to develop a creative agreement that capitalizes on our strengths, skills and ingenuity, as well as our close proximity to customers. We have worked together in the past to creatively address our challenges. But as global competition becomes more fierce, our mission becomes more clear.

• To win in North America, I believe we must take our product supply capabilities to new levels of performance and flexibility. We must translate our initiatives into performance levels that are unmatched in all regions of the world and among all competitors.

• We’ve demonstrated that we can work together for change. A cooperative initiative is underway to steadily improve the safety performance of our plants, and I personally thank the union leadership for your support and involvement.

• This same kind of cooperative effort is needed, in order to win in a faster and flatter global arena. To beat our competition, our supply chain must be the quickest — with plant lead times less than seven days, attained with the lowest inventory level required to reliably serve customers.

• Our plants must be the most productive, with year-over-year productivity gains greater than 8 percent and exceeding the competition. We must be the lowest in overall waste – the lowest defect rate with the least amount of handling, while constantly eliminating non-value-added manufacturing steps. Our plants also must be the most flexible operations, with non-restrictive work rules... low levels of indirect non-value-added labor content... and built-in agility and responsiveness to ever-changing market demands. It all adds up to the lowest possible cost structure in the industry.

• In North America, speed and world-class performance can win! Our United Steelworkers-represented plants can play a role in the future of Goodyear Engineered Products. It will take management and labor — working together with innovative thinking — to redefine and reinvent our future.

• It’s through discovery, realization and collaboration, that real security is born. Our facilities must create and maintain competitive advantages, or our customers will look elsewhere.

• If we do only one thing together, it must be to become competitive. I trust the negotiations process that we are entering. And I believe that if we focus on beating the competition, we can find workable solutions that are best for the majority of the membership.