June 9, 2006

Excerpts from Jon Rich’s remarks to open USW Negotiations

• We are standing at a crossroads in the history of The Goodyear Tire and Rubber Company. While the challenges we face are not unique to the Steelworkers or to Goodyear, they are unprecedented. We are under attack as never before by foreign competitors whose labor costs are lower than ours, and whose governments provide for health care, retirement pensions and other benefits that we sustain.

• Is this foreign competition unfair? No. If we are to survive and prosper manufacturing tires -- or anything else -- in America, we must be able to compete and win against everyone in the world.

• As we start this negotiation, it is critically important that we both understand and agree on our ultimate goal: To win with customers.

• Customers want a great product that meets their performance expectations. Customers want a great experience when they buy that product. They want courteous and knowledgeable assistance in selecting the right product for their vehicle. They want the product available and installed quickly. And they want the product to be an excellent value for the money. They don’t care where a tire is made. Americans have no loyalty to buy American made products just because they are manufactured here. That lesson has been learned in other industries.

• To succeed will require the complete commitment of management, salaried and hourly associates everywhere. To stand alone and win in North America... will require a total commitment to the plan by everyone, everyday, if we are going to make it work.

• We have developed a clear strategy to win in our North American business. There are three key components:

1. Win and grow our branded consumer replacement tire business
2. Win in our truck business with cradle to grave product and service offerings and,
3. Win where we can leverage our technology to achieve premium margins for our products and services

• We must have a significantly lower cost structure in North America. In our plants, we must constantly improve on our cost structure with the highest productivity in the industry.  Make no mistake; we must solve our cost and productivity problems.

• While it is true that we have stabilized and made significant progress in improving our profitability since 2003, our profitability is not sufficient to sustain the investment the business needs for growth. The reality is that today we are not winning in some significant segments of our industry.

• In 2003 the company and the union saw the need to restructure Goodyear’s debt and we successfully created the time to stabilize Goodyear by extending debt maturities until 2010. We made some difficult choices in 2003, but we deferred many others. We cannot put off the difficult choices.

• To win in North America we must see reality. We must significantly reduce our overall cost structure here. To be clear, we are not going to be lower cost tire producers than competitors in China, Eastern Europe and Latin America. But we must be substantially lower than we are today. Additionally we can no longer survive with future legacy liabilities for pensions and healthcare that are uncompetitive and unpredictable.

• If we are to succeed in North America, we absolutely must have the highest productivity in the world. We must eliminate the roadblocks that prevent us from achieving maximum productivity and responding to customers. Work rules, job classifications and inflexible work schedules must be dealt with effectively.

• We must change the basic model between the company and associates for post retirement healthcare benefits. Healthcare costs are rising more rapidly than our sales or profits. This is not sustainable. In the future we cannot afford to be the primary provider of retirement healthcare. For active employees we must continue to strive to find the most cost-effective plans that can contain our costs and provide the security we all want for our families and ourselves.

• Getting a labor agreement only provides the opportunity to achieve productivity; it does not actually accomplish it. If we are to win in North America, every Goodyear associate… management, salaried and hourly employees must be dedicated to that goal. We must have the best-trained, most engaged workforce in the world.

• The commitments required to win with customers and fix Goodyear are too crucial to tolerate people who are not 100% dedicated to winning. We cannot tolerate coworkers who don’t show up for work, who don’t give a day’s work for a day’s pay, who don’t care about quality and workmanship and who are willing to abuse the worker’s compensation system.

• As we start this bargain I realize that the task in front of us is daunting.

• There is a lot at stake. More than 35 thousand Goodyear North America associates and their families are depending on us. Beyond that thousands of our dealers, their families and ultimately the millions of Americans who turn to Goodyear tires are counting on us. So are the rest of our associates around the world.

• This company has endured for more than 100 years. It has survived natural disasters, economic depressions, take-over attempts and world wars. In every case, extraordinary Goodyear associates found a way to persevere. It is imperative that we summon the courage to do our duty now so that in another 100 years Goodyear and its associates will still prosper.