I am making a note to keep an eye on CTB. The company has a bit more debt than I would like and is clearly in a cyclical / commodity type business and a quick glance at gross margins does not seem to indicate that it is a low cost producer which I would also like to see. However, with the stock down more than 50% from its 2011 highs and an on going labor struggle, this may be a good place to sniff around for value.
WSJ: Labor Brawl Hits Cooper Tire >CTB (Dow Jones 12/07 15:33:29)
By Jeff Bennett Of THE WALL STREET JOURNAL
FINDLAY, Ohio (Dow Jones)–Cooper Tire & Rubber Co. (CTB) workers, embroiled in a contract dispute that recalls old-style labor brawls, huddled this week around fire barrels outside the company’s plant here. Unusual at a time of high unemployment and labor peace in the auto industry, the scene has taken on the trappings of a 1960s battle: failed mediation, a lockout, sign-waving picketers, replacement workers and accusations flying on both sides. The clash between Cooper and its 1,050 union workers may signal a return to a more combative tone in the America’s industrial heartland as manufacturers look to lock in the wage cuts negotiated during the last recession and workers seek to recoup what they ceded. (This story and related background material will be available on The Wall Street Journal website, WSJ.com.) Three years ago, as the company tried to dig out of a financial hole, Cooper workers represented by the United Steelworkers union agreed to forgo raises and accepted a two-tiered wage system that started new hires at lower wages. Now, with Cooper profitable again, the union has pushed for a return to a single wage rate for all workers and lower health-care costs. “They have to understand that people are not going to keep working for less and less,” said Rodney Nelson, president of the USW local at the plant. “We are not asking for more, we are asking to get back the concessions we gave them.” Management offered signing bonuses and some wage increases, in exchange for productivity improvements, tighter vacation caps and more flexibility on pay. It also wants to keep the two-tier wage system, which pays entry-level workers about $13 an hour, about half what veteran workers make. Tiered wages were a centerpiece of the agreements reached across the auto industry during the crisis years. Whether they represent a temporary concession or a permanent fixture of labor contracts remains a contentious issue. “The bottom line is we need a competitive agreement,” said Chris Ostrander, president of Cooper’s North American tire operations. The company also has asked to restructure some job categories. “Not all jobs are created equal, nor should there be an expectation to pay an amount higher than what the market determines is fair,” he wrote local residents. The USW contract for Findlay expired Oct. 31. Union members rejected the company’s final offer the day before Thanksgiving, and Cooper locked out the workers the following Monday. In contrast, to the angry talk here, Cooper Tire’s top competitor Goodyear Tire & Rubber Co. (GT) has kept the peace with the United Steelworkers by exchanging worker concessions for investments in its North American plants and training workers to build more complex and pricier tires. As negotiations with a federal mediator stalled for Cooper this week, the company brought in replacement workers, who are making $17 an hour, plus a meal allowance, according to the union. The union filed charges Tuesday against the company with the National Labor Relations Board, alleging unfair labor practices. Mr. Ostrander declined to say how many replacements have been hired or discuss their pay. But he said he will keep them here as long as necessary to keep the plant running. Such workers are easy to find following years of layoffs in Central Ohio’s tire industry. “This stinks,” said Teresa Brown, 41, who has worked at the plant for the past 12 years and spent a rainy morning this week, hollering to passing motorists on Lima Avenue. “My husband and I both work in there. We have a kid in college, and I don’t know how I am going to pay for college– all because they want to be greedy. They are just trying to bully us.” Halfway up the block at another picket encampment, Chico Ramirez, 62, said he has worked at the plant for 25 years and vowed to stay out on the picket line. “We have to fight for the younger people,” he said between sips of coffee. “The thing that bothers us is that we gave them concessions to help them get back on their feet, and they are paying out bonuses instead of paying back the backbone of the company.” Cooper, which makes replacement tires under its own brand and supplies tire shops with private-label brands, lost $219.4 million in 2008, but has been profitable ever since, recording income of $83.6 million in 2009 and $163.9 million last year. This year, earnings for the first nine months were down 53%. The company blames high raw-material costs and slower sales. Mr. Ostrander said executives have taken concessions, including the loss of a pension plan, which was replaced with 401(k) plan, and higher health-care costs. “This is not a corporate greed story,” said Mr. Ostrander, noting that his father and brother were both union steelworkers. “We want to protect these folks from themselves. We want to make this plant competitive for the long term.” He suggested that there’s more at stake at Cooper than just wages and work rules. If the labor battle continues, “I have a concern for the future of this facility,” he said, “not only for the manufacturing, but it could affect what we decide to do with our headquarters.”