HOVENSA and the 430 refinery workers represented by the local chapter of the United Steelworkers of America agreed Monday to a new, three-year contract.
To accommodate HOVENSA’s plans to construct a $535 million coker facility in the next two years in order to make the refinery more competitive, the union proposed that wage rates would remain the same until the project is complete. According to the agreement, by no later than 2002 all workers will receive an 80 cents an hour increase.
Workers who will have been employed by HOVENSA from March 1 through Feb. 24, 2002 will be paid a $3,000 bonus. Those who work for the company a shorter length of time will receive a proportionate bonus.
Extending the current agreement and by implementing the lump-sum payments in two years will help HOVENSA through projected negative cash flows during construction of the coker, said Rene Sagebien, HOVENSA president and chief operating officer.
"The company will benefit by avoiding an increase in wage costs during the construction of the capital-intensive coker project when the company can least afford such an increase," Sagebien said. "And members of the bargaining unit will benefit by receiving a lump-sum cash bonus coupled with a substantial wage increase approximately two years from today."
USWA Subdistrict Director Frederick Joseph said the agreement won’t disrupt the union’s current agreement and members will be assured that in three years contract negotiations will already be complete.
"This is almost a guarantee there will be no layoffs," he said. "The company won’t have to worry about labor unrest and they can concentrate on the coker project."
Without the coker HOVENSA officials have said the crude the refinery is able to process is $2 to $4 a barrel more expensive than the crude processed by competitors with cokers. Sagebien said the coker will eliminate HOVENSA’s "competitive disadvantage that has been threatening the economic viability of the refinery and thereby the continued employment of approximately 2000 workers at the facility."
