United Steelworkers rejects Marathon's recent contract terms for US refinery staff

The United Steelworkers union rejected at midnight Feb. 1 the most recent contract terms for refinery workers put forth by Marathon Petroleum, the union said in a Feb. 1 statement.

"The United Steelworkers union (USW) announced today that it rejected Marathon Petroleum's most recent proposal for a pattern settlement on wages, benefits and working conditions for approximately 30,000 USW members in the oil and petrochemical industry. The union then offered rolling 24-hour extensions of the current labor agreements," said the statement.

Marathon spokesperson Jamal Kheiry said on the evening of Jan. 31 the company presented the union "with a comprehensive final settlement offer that includes substantial wage increases in each year of a proposed three-year agreement, and maintains other economic and non-economic provisions of the previous pattern labor agreement, including those related to employee benefits, health and safety, and job security."

The USW has been in talks since Jan. 13 with Marathon, the lead negotiator for the refining industry. The current national agreement expired at midnight on Feb. 1. Under the extension, everything in the previous contract remains in place with a 24-hour notice required to terminate the extension.

"USW members were on the front lines of the pandemic, ensuring that our nation could meet its energy needs while company executives were safely tucked away, working from home," said USW International President Tom Conway. "Management needs to finally come to the table ready to negotiate a deal that reflects our members' hard work, commitment and sacrifice."

Wages and inflation

On Jan. 13, USW's National Oil Bargaining Program began bargaining with Marathon on a local and national level, led by Conway and Mike Smith, NOPB chair.

Citing inflationary pressures on the economy, the USW said via text it was looking for "improvements in successor language, our severance packages, our health and safety coverage and, in particular, our wage demands."

Initially, Marathon offered 1% per annum raises for each of the new contract's three years, which was increased in its most recent offer, according to sources familiar with the situation.

"The terms outlined in our final settlement offer are in addition to economic, health and welfare, and safety commitments that are provided to our employees under local agreements at our eight facilities subject to the United Steelworkers pattern agreement. We hope the union will reconsider our offer as our employees continue to work under the mutually agreed upon contract extension," said Marathon's Kheiry.

Heavy turnaround season expected

Refiners are expecting a heavy turnaround season this year, given that many delayed planned work at their plants in 2020 and 2021 due coronavirus pandemic concerns. This includes Phillips 66, which has said it plans total plant turnarounds at its Billings, Montana, and Ferndale, Washington, facilities in 2022.

Turnarounds usually require additional workers and most refiners bring in contract workers to supplement refinery staff. Given the propensity for problems to arise, particularly when restarting units, turnarounds are deemed more hazardous than day-to-day operations even with the use of experienced workers.

According to S&P Global Platts Analytics, current indications are that 2.7 million b/d of US refining capacity will be offline in February and about 3 million b/d offline in March and that could rise further.

"The downtime is seen among both independent and integrated refiners such as HollyFrontier, Exxon, Shell, Valero and Marathon," Platts Analytics said, adding "it would not be surprising to see the outage level increase from our baseline as refiners experience turnaround season."

For the first quarter, Platts Analytics expects US refinery operating rates of about 15.5 million b/d out of the 17.7 million b/d of total US operating capacity as reported by the Energy Information Agency in 2021. According to the EIA's Weekly Petroleum Status Report for the week ended Jan. 21, US refiners processed an average of 15.6 million b/d of crude over the past four weeks.