Strike Averted

The negotiations went down to the wire on Jan. 31 as the United Steelworkers union and Royal Dutch Shell reached a tentative agreement on a new three-year contract averting a possible strike that could have idled as many as 69 refineries in the United States, including many of the petrochemical facilities in Southeast Texas.

The union negotiated with Royal Dutch Shell, which operates as Shell Oil in the U.S. and operates Motiva as a joint venture with Saudi Refining. The negotiations were also conducted on behalf of Valero, Exxon Mobil, BP, ConocoPhillips, Chevron, Marathon, Sunoco, Tesoro and PBF Energy. The Jan. 31 agreement was subject to ratification by USW local unions whose members work for those companies.

The USW represents 30,000 workers at 168 production, refining, marketing, transportation, pipeline and petrochemical facilities nationwide, including the aforementioned 69 refineries representing about 64 percent of U.S. refining capacity.

For most of the 20th century, refinery workers were represented by the Oil, Chemical and Atomic Workers Union (OCAW). In 1999, OCAW merged with the United Paperworkers International Union to form the Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE). In 2005, PACE merged with the United Steelworkers to form the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union.

The merged union is still more commonly known as the United Steelworkers. Overall, the USW is the largest industrial union in North America with 850,000 members in the U.S., Canada, and the Caribbean. It represents workers employed in metals, rubber, chemicals, paper, oil refining, renewable and atomic energy, plus the service sector.

Thus it fell to members of USW locals to ratify the tentative agreement reached on Jan. 31. In Beaumont, Local 13-243 represents workers at the ExxonMobil plants here.

Local 13-243 President R.A. “Pet” Petkovsek was on the USW National Bargaining Council that guided the union during the negotiations.

Although officials were tight-lipped about releasing some details of the proposed three-year contract prior to ratification, the Business Journal learned it includes pay increases of 2.5 percent in the first year and 3 percent in the second and third years.

“This contract negotiation wasn’t really about those small pay increases,” said Petkovsek. “We were more concerned with health and safety issues.”

The union rejected four earlier contract offers from Shell that didn’t include changes on safety the union wanted.

“The plant manager sitting in his office is not going to get anything worse than a paper cut; it’s our guys on the firing line that face real danger,” said Petkovsek, noting that 18 workers died while working at U.S. refineries between 2009 and 2011.

The union sought – and won – a provision mandating a full-time employee for overseeing safety standards for each bargaining unit representing more than 150 people at a plant. Petkovsek said this was important because it guaranteed workers would have a place at the table when safety measures were being determined.

The last nationwide strike by refinery workers was in 1980 and lasted three months. A strike could have boosted prices for gasoline, jet fuel and other refined products at a time when crude oil prices above $100 a barrel have been a drag on the global economy.

In 2009, refiners agreed to a 9 percent pay increase over three years in the last round of talks with the union. In 2011, however, it was health and safety standards that were the main obstacle to a deal, but the parties were able to reach a compromise.

The timeline was tight, with many contracts due to expire at midnight on Jan. 31. The 11th-hour agreement averted a strike, pending approval by USW members. At 1:30 p.m. on Feb. 2, Local 13-243 recommended approval of the deal to its members.

On Tuesday, Feb. 7, they gathered at the Union Hall at 2490 S. 11th in Beaumont. Three meetings took place that day after the shift changes at the plant. The last meeting at 6:30 p.m. saw hundreds of men and women in blue coveralls and Nomex suits pack the hall for discussion and a vote. Their mood appeared serious but upbeat before the meeting started. Reporters left before the doors closed.
In a phone call after the meeting, a weary but relieved Petkovsek told the Business Journal that the members had “overwhelmingly approved the contract.” He said it was not unanimous, but that was to be expected from a diverse membership.

And there is peace in the petrochemical valley today – and for the next three years.

Business Journal editor James Shannon offers a weekly column of business news for readers of The Examiner. For more details, see the editions of the Business journal published monthly in Beaumont, Port Arthur and Greater Orange. Check out the blog at setxbiz.blogspot.com or e-mail james@beaumontbusinessjournal.com.