Goodyear Tire & Rubber Co. on Wednesday said it will freeze its pension plan for some workers and require them to pay more for medical benefits when they retire as part of a plan to slash overall costs by $1 billion by the end of 2008.
Goodyear plans to record a one-time, after-tax charge of about $65 million in the first quarter related to the changes that will affect about 14,000 salaried and retail employees and some 17,000 retirees.
Goodyear expects savings of as much as $290 million through 2009.
The cost for medical benefits for retirees will go up Jan. 1. The defined benefit pension plan that provides a fixed monthly check for current salaried workers will be frozen on Dec. 31, 2008, and the plan will be replaced with enhanced 401(k) savings accounts.
The actions are expected to reduce the company's pension obligation by approximately $100 million and its obligation for other post-retirement benefits by about $525 million.
Changes in benefits also were part of a contract that ended a recent three-month strike with workers represented by the United Steelworkers.
Goodyear employs more than 75,000 people.
Goodyear shares rose 21 cents to close at $24.62 on the New York Stock Exchange. The company's shares are just off a multiyear high of $26.43. The shares have been as low as $9.75 in the past year.
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