Feb. 1 (Bloomberg) -- The United Steelworkers union and Royal Dutch Shell Plc averted a potential strike that would have idled as many as 69 refineries by tentatively agreeing to a new three-year contract.
The proposal includes pay increases of 2.5 percent in the first year and 3 percent in the second and third years, along with some of the improvements in safety language sought by the union, according to three labor representatives with direct knowledge of the negotiations.
No details of the agreement were provided in separate statements yesterday evening from the Steelworkers and Shell, which represented industry in the talks. The proposal is subject to a vote of the union members. Talks started Jan. 14 in Austin, Texas, between the union representing 30,000 workers and Shell. The old contract expired at midnight Houston time.
Other companies involved include Valero Energy Corp., Exxon Mobil Corp., BP Plc, ConocoPhillips, Chevron Corp., Marathon Oil Corp., Sunoco Inc., Tesoro Corp. and PBF Energy Inc.
The proposal also includes the provision of a full-time employee for overseeing safety standards for each bargaining unit representing more than 150 people at a plant, according to one of the union representatives.
The union rejected four earlier contract offers from Shell that didn’t include changes on safety the union had asked for, three union representatives said yesterday. The fourth contract proposed a wage increase of 2 percent in the first year and 2.5 percent in each of the next two, the people said.
If no deal were reached, the union could have called a strike or agreed to extend negotiations in 24-hour increments.
Valero would have continued to run its Port Arthur, Texas, refinery, though it would have shut its facility in Memphis, Tennessee, Chief Executive Officer Bill Klesse said on an earnings conference call. Valero received a notice of intent to strike at the Port Arthur plant if there was no national agreement by the deadline.
Management at Conoco’s Los Angeles and Ferndale refineries and Exxon’s Torrance, California, refinery requested contractors to help operate their facilities in the event of a strike.
Exxon received a strike notice for its Billings, Montana, refinery, Rachael Moore, a spokeswoman based in Fairfax, Virginia, said in an e-mail.
The union hasn’t struck since 1980, when a stoppage lasted three months. A walkout would have affected almost two-thirds of U.S. refining capacity, according to the union.
The majority of local contracts expired yesterday and most of the rest later in the winter and spring.
If approved, the agreement becomes the pattern that companies will use in negotiating local contracts. The national agreement addresses wages, benefits and health and safety. The local agreements cover such areas as job duties.
Local units may still decide to strike if other companies offer terms that don’t mirror the terms of the national agreement.
Contracts between the companies and the local Steelworkers members must incorporate the terms of the national agreement.
--Editors: Dan Stets, Margot Habiby
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