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Copper industry gains labor costs reductions.

Copper industry gains labor costs reductions

The copper mining and processing industry, plagued by severe financial problems resulting from worldwide overproduction, gained some reductions in labor costs in midyear settlements. Kennecott, the domestic industry's largest producer, indicated that lower costs would enable it to reopen its large Bingham Canyon, UT, mine and recall 2,000 employees who lost their jobs when operations shut down in 1985. The 14 unions attempted to tailor each of the copper accords to the condition of the company. The unions, led by the Steelworkers, comprised the Nonferrous Industry Coordinating Committee. About 8,000 active and 5,000 laid-off workers were covered by the settlements, compared with about 25,000 active employees in the late 1970's.

The first settlement, which occurred just before the contract expiration date for all the major companies, involved 3,000 employees of Newmont Mining Corp.'s Magma Copper Co. and Pinto Valley Copper Co. facilities in Arizona. It provided for a pay cut of 20 percent, resulting in hourly rate ranges of $9 to $12.60 at Magma and $8.88 to $13 at Pinto Valley. The cut, which reportedly averaged $2.82 an hour, could be alleviated or eliminated under a new bonus plan contingent on rises in copper prices. In 1987, the quarterly payments will be calculated at 10 cents per hour for each one-cent rise in the price of a pound of copper above 70 cents, an extra 15 cents for each one-cent rise above 80 cents, and an additional 25 cents for each one-cent rise above 90 cents, up to $1. In 1988, the formula will be 15 cents for each one-cent rise from 71 to 90 cents and 25 cents for each one-cent rise from 91 cents to $1. Employees may take the money in cash or in a 401(k) savings plan, or a combination of the two. At the time of settlement, the price of copper was 63 cents a pound.

Other wage terms included termination of the provision for automatic cost-of-living pay adjustments, which had provided the only pay increase under the prior contract.

Benefits also were standardized at the two companies, resulting in pension improvements at Magma and health insurance improvements at Pinto Valley. A new health insurance cost containment plan requires deductible and co-insurance payments by the workers.

Newmont estimated that the employee sacrifices would cut labor costs to less than 50 percent of production costs, from 52 percent. The company lost $34.2 million in 1985.

The second settlement in the bargaining round involved 1,650 ASARCO employees who agreed to a 3-year contract that called for an initial wage cut of $3.50 an hour. In the second year, there will be a 75-cent-an-hour wage increase, followed by a $1 increase in the final year. As at Newmont, the cost-of-living provision was terminated. Benefits were unchanged, except for adoption of annual health insurance deductibles of $100 for single employees and $300 for families. The ASARCO operations are located in Texas, Arizona, Washington, and New Jersey.

Kennecott Corp. took the firmest stand against the unions, contending that it required a larger cut than the other companies because its compensation levels were $4-$5 an hour higher. Kennecott said its wage and benefit costs averaged $24 an hour, and asked for an $8 reduction.

Under the 4-year contract, compensation was reduced by $5.40 an hour or about 22 percent. The wage portion of compensation, which averaged about $13.50, was cut an average of $3.22. Cost-of-living adjustments also were terminated. The terms for the 1,500 active and 5,000 laid-off employees included a $1,000 lump-sum payment to active employees within 60 days.

Employees will now be required to pay 20 percent of health insurance premium costs and $350 annual deductibles if they are single and $700 if married. Deductibles also were instituted for dental coverage, vision coverage was eliminated, vacation pay was reduced, and a number of local contracts were consolidated to cut costs by eliminating or changing work rules. At the time of settlement, Kennecott reportedly had 1,500 contracts with 41 local unions.

Another major producer, Phelps Dodge Corp., was not involved in the negotiations because the unions were decertified as bargaining agents earlier in the year. The events leading to the employee vote to terminate union representation began in 1983, when Phelps Dodge refused to accept the settlement pattern of the other companies, leading to a strike that eventually proved unsuccessful as the company moved toward full output by hiring replacement workers.
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
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Title Annotation:collective bargaining
Publication:Monthly Labor Review
Date:Sep 1, 1986
Previous Article:Auto Workers, Caterpillar agree on concessions.
Next Article:Strike against Weyerhaeuser ends.

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