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Latest News - January 2015

January 30, 2015
Union, energy companies make strike preparations
By: L.M. Sixel

Members of the United Steelworkers union are preparing picket signs, while companies are training supervisors in case they're needed as replacements to keep plants operating as labor negotiations come down to the wire.  Against the backdrop of low oil prices, union leaders are calling this year's round of national oil bargaining the most difficult it has faced in years.  At 12:01 a.m. Sunday, labor agreements covering 30,000 workers at refineries, pipelines, oil terminals and petrochemical plants nationwide - including about 5,000 in Houston - are set to expire.

A team of union negotiators is meeting with representatives of Shell Oil Co., which is negotiating on behalf of the energy industry. The labor contracts cover 64 percent of the nation's refining capacity, according to the United Steelworkers.  "We're experiencing a perfect storm of events: Crude oil prices keep falling and are expected to briefly rise and then fall again; gasoline prices are low; there is more competition for oil products, such as diesel, from new refineries coming online from Saudi Arabia, Russia and China," according to a recent update to union members from Gary Beevers, international vice president and chair of national oil bargaining.

But union leaders say they're pushing back in an effort to get a good wage and benefit package, better protections from forced overtime, and agreements that limit the contracting out of jobs done by rank-and-file employees.  If a tentative deal is reached at the national bargaining table, local unions will vote on whether to accept it. If it gets a thumbs up, the agreement would then set the national standard for wages and benefits. It also may be that talks won't finish before the contract deadline. In that case, both sides often agree to what's known as a "rolling 24," which extends the existing contract a day at a time until negotiators reach an agreement orone side calls off the extension.

So far, union negotiators rejected two offers from Shell, the latest one on Tuesday. And the union, in a Friday night text to its members, said Shell's latest offer "fails to address issues that matter to USW members. “Shell is continuing negotiations with USW with the intent of reaching a mutually satisfactory agreement prior to contract expiration," spokesman Ray Fisher said in a written statement Friday afternoon.  But if no deal is reached, union leaders say they're ready for a work stoppage. An electronic sign at the United Steelworkers union hall in Texas City flashed a neon reminder: "Don't forget: Clean out your lockers on the last day before contract expiration." A small bus to ferry strikers from the union hall to the plants is also sitting at the parking lot of the union hall.

"Everything is prepared and ready to go," said Steve Lyle, financial secretary of USW Local 13-1. The local represents about 1,110 workers at Marathon Galveston Bay Refinery, about 150 workers at BP Texas City Chemicals and about 800 workers at Shell Deer Park Refining.

'Worst cycle'


After the last few rounds of contract talks were negotiated relatively easily - the last one three years ago was even wrapped up a few hours before the deadline - union leaders say negotiations are tougher this time. Lyle calls it "worst cycle" since he became a union member nearly three decades ago.  "The companies really seem to be testing the waters this time," he said, pointing to the announcement from BP Chemical that it would end its "Triangle of Prevention," a joint labor and management safety program launched after the 2005 explosion at the refinery in Texas City it once owned. The refinery is now owned by Marathon.

"Safety remains our highest priority," BP spokesman Scott Dean said in a written statement. BP Texas City Chemicals opted to end its "Triangle of Prevention" pilot program and will return to its "After Action Review" process that "allows employees to learn quickly from safety incidents and rapidly educate other workers about important safety matters."  In a show of unity, union leaders conducted protests across the nation earlier this week. About 150 employees lined the road in front of the LyondellBasell refinery in Houston, many still in their blue work jumpsuits. There were similar protests in front of the Marathon Galveston Bay refinery in Texas City.

The last time union members struck nationwide was 1980; for a year when oil prices surged to a then-record high. But the environment now is radically different as oil prices have fallen precipitously over the past few months.  "It would be a different story if oil was $100 and the economy was chugging along," said Andy Lipow, president of Houston-based consulting firm Lipow Oil Associates.  But it's less than $50, and the slowdown in the oil patch is already happening and will likely continue over the next few months, he said, pointing to the recent spate of layoff announcements and cutbacks in large capital projects.

Weaker position

The rapid change in fortune puts workers in a weaker position, Lipow said.  For the moment, though, companies are getting ready for a possible work stoppage.  "BP has trained and qualified replacement workers ready to take over operations in the event of a work stoppage," Dean said in a written statement. "The workers were trained and qualified to the same standards as the hourly workers they would be replacing. In many cases the people that would be operating the facilities as salaried employees were once operators themselves."

Lyle said that company negotiators from Marathon have told union officials that the company is bringing in replacements from other plants to work in the event of a strike.  Marathon officials, however, declined to comment on its contingency plans.  "As a matter of company policy, we do not comment on refining operations or pending/ongoing labor negotiations," Brandon Daniels, communications manager at Marathon Petroleum Corp., said in a written statement.




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