Separate Cooper contracts required before Apollo deal proceeds
As well as needing to sort out issues at the Cooper Chengshan plant, Cooper Tire & Rubber and Apollo Tyres now face an additional barrier to acquisition. Last Friday an arbitrator ruled that Cooper cannot sell its Findlay and Texarkana plants in the US until Apollo secures new collective bargaining agreements with the United Steelworkers union and the 2,500 or so unionised workers at the two factories. This agreement is separate from the existing contract the union has with Cooper Tire.
Arbitrator James Oldham’s ruling acknowledged that the “successorship clause” in the labour agreement between Cooper and the USW applied to the acquisition transaction. “Successorship clauses often are the only thing protecting workers’ rights when sales like this take place,” stated USW International president Leo W. Gerard. “Our union has gone to bat time and time again in numerous industries to protect the rights of our members and to make companies live up to their commitments.”
The ruling upholds two grievances filed by the USW addressing concerns amongst workers in Findlay and Texarkana about how Apollo’s purchase of Cooper would affect their job security and pensions. Both the USW and Cooper agreed to have Oldham, a law professor at Georgetown University, arbitrate their dispute.
Cooper has expressed disappointment in Oldham’s ruling, and says it is now reviewing its options and looks forward to working with Apollo and the USW to “continue discussions and resolve the matter.” The USW also says it looks forward to resuming bargaining with both tyre makers. “Our members are rightly concerned about the debt that will be placed on Cooper as a result of this merger,” said USW secretary treasurer Stan Johnson. “We intend to work out agreements that protect our members’ interest.”
Following the ruling, shares in Cooper Tire & Rubber fell from US$33.22 on 13 September to $30.74 on 17 September, a fall of nearly 7.5 per cent. Early on 19 September the shares traded for $31.32.