Refinery Union Seeks Bigger Wage Hike in 2019 Contract Talks

(Bloomberg) -- The United Steelworkers International will seek a wage increase more than double what workers received in the last labor deal as the agreements with U.S. oil refiners begin to expire Feb. 1.

The head of the union’s oil bargaining program said the recovery in oil prices, corporate tax breaks and fatter profit margins will fuel a push for higher wages and better benefits for more than 30,000 workers at about 220 U.S. refineries, oil terminals, pipeline companies, transportation facilities and petrochemical plants. The union will begin talks in mid-January with Royal Dutch Shell Plc, the oil company again tapped to represent the oil industry at the bargaining table.

The union is seeking an 8 percent yearly pay increase, according to a person familiar with the plans, more than double what they received in 2015.

The union is seeking a three-year contract to replace the current four-year pact, Kim Nibarger, chair of the USW’s national oil bargaining program said. He declined to comment on the size of the pay raise the union is seeking.

“You don’t have to be very bright to see the price of crude, the crack spread, that this administration gave them big tax cuts,” Nibarger said in a phone interview. "They spent all their tax money in buying their own stock back. But they’re in better shape than they typically are.”

San Diego

Union members gathered in San Diego beginning Saturday to hammer out their bargaining platform. The 2019 contract will replace a four-year deal reached in 2015 after the union went on its first widespread strike since 1980. At that time, talks stalled over similar demands as this time around. The work stoppage shut down 12 refineries, almost 20 percent of total U.S. capacity.

"We look forward to a productive set of talks with the USW and will bargain in good faith to reach a mutually-acceptable agreement," Shell said in an emailed statement. "Our goal in the bargaining process will be to reach an agreement with the USW which ensures that our employees continue to receive competitive pay and benefits while keeping the industry competitive in the global marketplace."

The existing national agreement expires Feb. 1.

“I am thoroughly convinced the oil companies will plead poverty at the outset,” said Nibarger, a former refinery worker at Shell’s Anacortes facility in Washington who said he characterizes himself as “an extremely optimistic individual.” Since the last negotiations, he said the union has been able to convince some companies to use fewer maintenance contractors and to address the issue of worker fatigue. The union and also some companies have been quicker to address potential controversies, Nibarger said.

The policy for the 2019 negotiations, hammered out over several days of talks, now goes to USW locals and units for a vote within 45 days. The policy must be approved by 75 percent of those groups.

Local Deals

Any national agreement, once approved by the union and Shell, will be subject to ratification by local union chapters, which bargain with companies for the local component of their work contracts. The current labor deals are a mixture of local and national agreements.

The 2015 national agreement included yearly wage increases, language addressing worker fatigue and performance of routine maintenance by contractors as well as maintaining the current cost-sharing ratio of the union’s health-care plan.

“We’re expecting to be able to get raises this time,” Nibarger said. “Health and safety are paramount with our workers. These are damn dangerous jobs. You are just managing a risk.”

To contact the reporter on this story: Barbara Powell in Houston at bpowell4@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers, Catherine Traywick

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