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Investors in Goodyear Tire & Rubber (GT
) face a rough ride as the Akron company struggles with the United Steelworkers over retirement and health benefits. Ever since labor contracts expired in July, negotiations have been deadlocked. Conventional wisdom is that a strike is imminent, and the stock, now at 14.70, will hit the skids. But some analysts think Goodyear has the advantage, and they advise riding out the volatility. That's because the company is aggressively outsourcing production to Latin America and Asia. "Right now they are at an impasse, but they can tell the union to buzz off," says Ivan Feinseth of Matrix USA, a New York research shop. "The biggest leverage a manufacturing company has is the ability to outsource." The stock, says Feinseth, is "easily" worth 18. "If they get a deal, the stock is going to rip," agrees William Smith of Smith Asset Management in New York, who owns 48,000 shares and expects the stock to hit 20. Smith says cheaper oil and raw materials will boost the bottom line, although there is a risk that recent price declines are temporary. Restructuring has already helped Goodyear beat Wall Street's second-quarter estimates. Net income was $2 million for the three months ended June 30 -- way below last year's figure of $69 million. Sales inched up from $5 billion to $5.1 billion. Smith figures plant closings will make next year's earnings pop to $1.95 a share, rather than current estimates of $1.40.Gene Marcial is on vacation.Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Mara Der Hovanesian