Engineering News

USW, Shell Reach Tentative Deal
February 03, 2009

Royal Dutch Shell PLC (RDSA) and the United Steel Workers union reached a tentative agreement Tuesday on a labor contract, averting a strike by 24,000 oil refinery and chemical plant employees in the U.S.

"These were tough negotiations given the economic conditions of an economy still in a total freefall," USW International President Leo W. Gerard said in a statement. "The oil companies were not willing to work with us fully to improve process safety."

The current contract remains in place until local bargaining groups ratify the new deal. "We are optimistic agreements will be ratified at the local level in the near future," Shell spokesman Stan Mays said in a statement.

A resolution of the tense standoff would allay fears of a strike, which could have resulted in curtailed gasoline supplies and higher prices ahead of the summer. These talks are a test of labor's mettle during the worst economic slump in decades, albeit with a relatively labor-friendly presidential administration settling in. The contract renewal occurred at an inopportune time for refinery workers, whose industry is reeling from a plunge in profits while memories of boom times are still fresh.

Details of the agreement haven't been made public.

Under a pattern bargaining agreement, Shell's deal will set the tone for other oil companies that own refineries with unionized workforces.

Now, the contract will be sent to a Shell refinery for ratification. After that, the proposal will be placed on the table at the local level of other oil companies. It's up to companies like Exxon Mobil Corp. (XOM), Valero Energy Corp. (VLO) and LyondellBasell to decide whether to follow the pattern.

For more than a week, two high-level members of USW and Shell officials have been meeting at an undisclosed location in Austin, Texas. The union rejected a number of proposals from Shell before agreeing to the current settlement.

Earlier this year, workers authorized the union to call for a strike as a way to strengthen their position during negotiations.

However, other companies had planned to operate with contract or management employees. The contingency plans, coupled with the fact that refineries are currently below capacity due to weak fuel demand, undermined the threat of a strike.

These negotiations were more of a try-out for the USW, said Arthur T. Carter, a partner with Haynes and Boone, LLP in Dallas.

It was the first time USW has negotiated on behalf of oil refinery workers. The international labor group represents about 850,000 people in industries such as steel and paper. USW members are also nurses and university employees.

"They are well-advised," Carter said. "They are forward thinking."

Source: Dow Jones Newswires

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