Newspaper article THE JOURNAL RECORD

Firestone to Invest in Okc Plant Future/aucott:plant to Remain Open If Competitive

Newspaper article THE JOURNAL RECORD

Firestone to Invest in Okc Plant Future/aucott:plant to Remain Open If Competitive

Article excerpt

With an investment of more than $14 million this year, Firestone Tire & Rubber Co. will keep its Oklahoma City plant open as long as the products can compete effectively, Firestone Executive Vice President George W. Aucott said Wednesday.

Firestone's pledge in its agreement with the United Rubber Workers union to keep the plant open at least until the end of 1988 was not intended to turn that date into a "climax" that would set up new negotiations, Aucott said.

"We have faith that, with the changes being implemented as part of our recent agreements here, Oklahoma City tires will be important to us for many years to come," he said. "The 1988 date in the labor agreement was purely an arbitrary one.

"There is also concern that the entire process we have gone through here since October will be repeated in December 1988. That definitely is not our intention."

Plant "changes," following a $20 million-a-year savings package worked out with the rubber workers and others, include:

- The $14 million investment, which includes $7 million for general maintenance of business projects throughout the plant and a previously-announced $7.4 million for new equipment. The new equipment, which is part of the agreement, is expected to save about $2 million a year.

- A proposed $75 million cogeneration plant to produce electricity and steam, saving about $2 million, or 10 percent of the agreement.

"That is a key factor in the long range future of the plant," Aucott said, "because the cost of energy is so important in the production of tires."

- The possibility of moving production of about 3,000 to 3,500 "temporary spare tires" a day to Oklahoma City if a plant is closed in Des Moines, Iowa, where workers have refused a concessions package.

"If this can be worked out within the same costs, it would improve the return on tires from this plant," he said. "The return can then be used for further investment in the plant.

"The bottom line is the return."

The Oklahoma City plant produces low-priced replacement tires for passenger cars and light trucks, with the primary competition in price. The plant had been "losing money" or had been "only marginally profitable" in recent years, he said.

The $20 million package amounts to about a savings of about $3 per tire, said Plant Manager Barry Kadechuk.

Aucott applauded the "community effort" to keep the plant open in Oklahoma City. The joint effort of the United Rubber Workers union, plant management, maintenance and janitorial workers, Oklahoma City leaders and vendors to keep a plant open is rare, he said.

"When I told Firestone Chairman John Nevin about the effort," said Aucott after his address, "he said: `You can't do it.' In most cases, a plant is closed, and then a white knight is needed to come in and operate the plant."

In his address to the chamber, he said:

"Never, and I emphasize `never,' has a community become so actively involved in helping us accomplish our objectives."

While unconditional guarantees "can not" be offered to keep a plant in operation for extended periods in "these days of uncertainty about markets in automotive-related industries," said Aucott, the $14 million investment is "evidence" of Firestone's commitment.

"We would not be investing this major amount of our shareholders' money in this operation," he said, "if we were not confident that the Oklahoma City plant has a future."

The new equipment will include a multi-million dollar creel calender system.

"This will allow the plant to calender its own steelcord materials," said Aucott, "thus reducing inventory investment and shipping costs. …

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