No. 3 tire maker borrows 1 billion
Goodyear workers say they are determined to continue their strike.
AKRON (AP) -- Goodyear Tire & amp; Rubber Co. on Friday said it has borrowed nearly 1 billion to help shore up cash during a strike by more than 12,000 union workers in the U.S. and Canada.
The world's third largest tiremaker, which has been filling orders by using imports and staffing factories with nonunion workers and managers, said it borrowed 675 million Friday and 300 million last week from a 1.5 billion line of credit with U.S. First Lien Credit Facility.
"This action provides additional cash in the unlikely event of a prolonged strike," said Goodyear's chief financial officer Richard J. Kramer.
Kramer said that when the strike began Oct. 5, Goodyear had 1.3 billion in cash and cash equivalents and about 1.6 billion in available credit.
No new negotiations have been scheduled between the company and the United Steelworkers union, which represents Goodyear workers at 16 plants in 10 states and Canada.
Union workers walked off the job after a contract offer they say included pay and benefit cuts as well as plans to close plants in Alabama and Texas.
Goodyear refuses to discuss details of the offer but says it needs the union to help it cut costs so the Akron-based company can compete with foreign tiremakers that are doing business cheaper.
"We cannot accept a contract that creates competitive and cost disadvantages versus our foreign-owned competitors and imports," Kramer said in a statement released after the markets closed Friday.
Goodyear has been on fragile financial ground since flirting with bankruptcy in 2003. The company lost more than 1 billion, took on billions in debt and saw its shares dive from 20 in 2002 to below 4 on the New York Stock Exchange.
This year, it returned to profitability for the first time since 2000 and its stock has rebounded. Shares closed down 17 cents Friday at 14.56. The 52-week range has been between 9.75 and 19.31.
Analysts, shareholders and the union criticized Goodyear in the past for taking on so much debt, and much of its turnaround plan was focused on paying off loans.
The union says the company's recent financial success is partly because of concessions workers made in 2003, including pay cuts and the loss of some 6,000 jobs. Workers say they are offended by the company's latest contract offer.
Strikers "are primed and ready to roll," said Rick Niekamp, vice president of USW Local 200L in St. Marys, Ohio. "They're going to stay out there until we get what we need to get."