Sector News

Tough talk from Shell, union as U.S. refinery pay talks resume

February 5, 2015
News
(Reuters) – Negotiations made no progress on Tuesday as Royal Dutch Shell Plc and union leaders haggled over a new wage contract for U.S. refinery workers who have been on strike for three days, the union said.
 
The two camps have been at an impasse since the United Steelworkers union (USW) called walkouts early on Sunday for the first time since 1980 at nine plants with about 10 percent of U.S. refining capacity, saying Shell left the negotiating table when talks broke down.
 
The meeting on Tuesday evening was held as both sides use increasingly strident language about the dispute, ramping up their rhetoric in private and public.
 
Executives have made clear they will try to hold firm, saying they cannot afford to lift wages because crude prices have sunk 50 percent since June, eroding their profits.
 
Other executives have suggested Shell, acting as the lead negotiator for oil companies, gave away too much in negotiations held in years past.
 
Meanwhile, the union has said further walkouts may be ordered at some of the other 63 refineries and chemical plants it represents if progress is not made.
 
“Bargaining continued today, no progress to report, will resume tomorrow,” read a text message the union sent to its members that was seen by Reuters.
 
Going into the talks, Shell aimed to come to “a satisfactory agreement for both parties,” company spokesman Ray Fisher said. The company, which has declined to detail the nature of the talks, did not immediately provide an update on the outcome of the negotiations on Tuesday.
 
Late on Monday, Shell reopened communication with the union.
 
Since bargaining first started on Jan. 21, the union has rejected five offers from Shell.
 
The union is seeking annual pay increases of 6 percent, double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to USW members, a tighter policy to prevent workplace fatigue and reductions in members’ out-of-pocket payments for healthcare.
 
The strikes were the first ordered in 35 years in support of a nationwide pact that would cover 30,000 workers.
 
Most affected refineries are running near normal, with operators having called on trained managers, retirees and operators from non-union plants to replace workers.
 
But one plant, Tesoro Corp’s 166,000 barrel-per-day Martinez, California, refinery, was being fully shut down as part of it was already in the middle of maintenance work, the company has said.
 
While refiners are promising little or no disruption to production, wholesalers and other buyers have snapped up supplies.
 
Traders have said the strike contributed to higher prices for gasoline futures, which were around $1.60 a gallon late on Tuesday.
 
Refinery outages can reduce purchases of crude, and U.S. oil prices slipped 2 percent to below $51.90 after a string of sharp gains.
 
(Writing by Terry Wade; Additional reporting by Jessica Resnick-Ault; Editing by Alden Bentley, Bernard Orr and Lisa Shumaker)

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