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Goodyear Sued by French in Ohio

By Rich Duprey - Apr 10, 2013 at 8:40PM

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French factory workers sue tire maker to prevent plant closure in France.

Since this country's discovery, France always had a large presence in the Ohio River Valley, until its defeat by American colonials and the British during the French and Indian Wars.

Today it's back again, declaring war on U.S. tire maker Goodyear (GT 3.09%), by suing it in Ohio courts over the announced closing of its French tire factory earlier this year because it was no longer profitable. Despite losing money there for five straight years, the plant's workers are suing in U.S. courts because they say that's where the decisions emanated from.

Taking a siesta
Time magazine labeled the French factory in Amiens as Goodyear's "nightmare." Despite trying to work with the unions over the years to change work hours or eliminate redundancies and prevent just such an outcome, the unions thwarted every entreaty. The government has a heavy-handed way of dealing with closures and layoffs, for example castigating ArcelorMittal (MT 4.11%) for also having the temerity to want to close down an unprofitable facility. So just because Goodyear says it wants to end the bloodletting doesn't mean it will happen anytime soon.  

It probably didn't help any when the French government approached the CEO of tire maker Titan International (TWI 2.51%), Maurice "The Grizz" Taylor, to see if he would be interested in buying the plant and was greeted with a giant guffaw instead.

"How stupid do you think we are?" he wrote to the French industry minister. "The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three, and work for three." He concluded by saying, "You can keep the so-called workers."  

Getting while the getting's good
France is a worker's paradise and, as Time aptly put it, a business owner's nightmare. Look no further than a bill making its way through the French parliament that would grant union members amnesty for pillaging corporate offices and threatening executives with bodily harm. With violent protests breaking out at Goodyear offices and protesting union workers battling with French police, it's quickly become clear that France is not a place where you want to do business.

In addition to factory closings by Goodyear and Arcelor, Ford, Coca-Cola, Renault, Samsonite, Sanofi, Sony, and Merck Serono are among some 1,500 firms looking to get out of Dodge. Or France, anyway.

Locking the gate
Because French courts have actually upheld the business' right to close, the French are seeing a mass exodus at a time when their unemployment rate is approaching 11%. That also probably informed the unions' decision to try their luck in American courts. In addition to stopping the closure, the union is seeking $4 million in damages.

It took nearly a decade for the French and Indian War to come to a conclusion, and analysts expect Goodyear will have to go nearly as long before it's able to finally close the French factory. The bloody battle will hardly serve as an enticement for other companies to locate to France in the future.

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Stocks Mentioned

The Goodyear Tire & Rubber Company Stock Quote
The Goodyear Tire & Rubber Company
$12.68 (3.09%) $0.38
ArcelorMittal Stock Quote
$33.15 (4.11%) $1.31
Titan International, Inc. Stock Quote
Titan International, Inc.
$18.38 (2.51%) $0.45

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