For striking U.S. refinery workers, Shell shows a new face

BY ERWIN SEBAHOUSTON Tue Feb 3, 2015 11:24pm GMT

(Reuters) – At tense meetings just days before the first major U.S. refinery strike in 35 years was called on Sunday, union leaders grew increasingly pessimistic about getting a new labour contract and a sizable wage increase.

“The chances of there being an agreement are that of a snowball in hell,” one of them complained as the deadline imposed by the expiring contract loomed.

Officials from Royal Dutch Shell Plc (RDSa.L)(RDSa.N), the lead negotiator for the oil companies, were repeatedly saying it would be too hard to meet the union’s demands for a new three-year contract to lift pay and tighten safety practices, several union officials told Reuters.

But what most frustrated the United Steelworkers union (USW) was something they had never seen before: an intransigent Shell.

The USW had always viewed Shell as the most flexible of the big oil companies, much easier to negotiate with than Exxon Mobil Corp (XOM.N) or Marathon Petroleum Corp (MPC.N). In fact, the union picks the company to head up negotiations and specifically chose Shell this year for its perceived flexibility .

“We were very, very shocked,” USW International President Leo Gerard said about Shell’s decision to cut off talks on Sunday.

“Shell has been a responsible lead company in years past. We have been able to have rational, reasonable negotiations with them,” Gerard told Reuters on Monday.

A Shell official declined to comment on the details of the labour negotiations. Before it suspended talks, Shell had made five offers that were all rejected by the union.

Late on Monday, Shell said it had resumed contact with the union “in hopes of coming to a mutually satisfactory contract agreement.” The USW said on Tuesday that no meetings have been scheduled for new contract negotiations.

Oil industry executives said they were surprised at how tough going the talks were, adding that representatives from the national union appeared to be taking a harder line than local union leaders.

Disagreements over how to monitor worker fatigue, which is tied to accidents, were especially thorny, they said.

Unlike in previous negotiations, there is a “big disconnect” between the locals and the national union, according to two refining executives.

A text message seen by Reuters sent by the union to its members on Jan. 25 said companies were “play(ing) games” at local negotiating tables.


Shell had forged deals with the union in 2006, 2009 and 2012. Those contracts were considered successes, especially after a months-long walkout in 1980, a time people still talk about as a low point for disputes in the sector.

This year, however, was different. John Abbott took over as Shell’s refining chief in 2013 and Ben van Beurden became chief executive officer in 2014.

This time, there were new faces on the negotiating team from Shell, and a 50 percent slide in oil prices CLc1 LCOc1 since June cast a shadow over the talks as companies slashed spending.

Feeling they had no other option, the union called a strike at nine plants with a combined 10 percent of U.S. refining capacity.

Mystified by Shell’s change in tone from previous contract talks, some striking workers on Monday said they think that oil companies, seeing that many older refinery workers are retiring, are trying to test the strength of younger union members.

Cutting off talks that began Jan. 21 may have just been a ploy, they said, so that the companies can push for a deal that limits new costs – a move that would please shareholders.

Indeed, some people picketing on Monday near Houston said Shell may have given the union a big head fake and that the company would soon reopen talks.

The union is seeking annual pay raises 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.

(Additional reporting by Jessica Resnick-Ault)

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