Muscatine-based Bandag, citing increased overseas competition and higher material costs, plans to cut 175 employees from its U.S. work force. They will also freeze their traditional pension program to reduce expenses.
Bandag, a manufacturer of equipment and products to retread tires, will first offer early retirement to workers 55 and older as well as voluntary separations before laying off workers.
They employ 1,200 workers throughout the United States. It is not known how many of Bandag's 500 employees in Muscatine will be affected, according to spokesman Bill Block.
Beginning Jan. 1, Bandag will freeze its defined-benefits pension plan. New employees will not be covered under the traditional plan. Current employees will see future retirement benefits based on where their wages and tenure are frozen at this year.
Bandag is also considering terminating the pension plan over the next 18 months. Pension costs have been "extremely volatile," increasing $11 million from 2001 to 2005, said Bandag.
They will initially save about $2 million with the pension changes; staff reductions will initially cost up to $17 million, but save up to $20 million annually.
Block said Bandag is seeing increased competition from new companies in tire retreading as well as an influx of new tires from low-cost manufacturers from Asia. Higher prices for oil-based materials also are pressuring the company to cut costs.