Home > Summer of Labor Discontent in Mining Industry
by Steve James
NEW YORK - They’re on strike at Becancour and Labrador City in Canada, and last month they downed tools at La Caridad in Mexico and Nye, Montana.
With high metal prices driving up company profits, miners and smelter workers are looking for a bigger slice of the economic pie and sometimes taking tough action to get it.
In a spate of mine and smelter strikes across North America this summer, several operations are threatened as both sides appear to be taking a hard-nosed attitude at contract talks.
"To put it very bluntly, people are looking at higher commodity prices and saying ’I should be getting a piece of the action. I was asked to take less when prices were down and had to tighten my belt. now I want what’s due,"’ said Victor Flores, a mining analyst at HSBC Securities.
Douglas Rae, a professor at Yale University’s School of Management, agreed there was evidence of workers wanting more as they see company profits soar. "In general, especially where there is relative success, as opposed to a general economic boom, unions tend to think that way.
"The extractive industry is very hot and will get hotter. We are consuming metals faster than we can get them out of the ground," he said, explaining the demand driving mining stocks.
That, in turn, has led to a dispute-scarred landscape, where Alcoa Inc., the world’s largest aluminum producer, is the most involved. It just shut its Wenatchee, Washington, smelter, laying off 400 workers, after union leaders rejected a contract. Rank-and-file members are trying to re-open talks.
The company also faces possible strikes over outsourcing work at plants in Indiana, Texas, Iowa and Tennessee, while the strike that has shut down two-thirds of production at its aluminum smelter in Becancour, Quebec, since July 7 is costing Alcoa 1-1/2 to 2 cents per share per month.
REJECT A DEAL
Stillwater Mining Co., the only U.S. platinum and palladium miner, shut down one of its two Montana mines last month after 900 workers voted 70-30 to reject a deal and go on strike. But a week later, work resumed after miners voted again - to accept a new three-year contract.
Cleveland-Cliffs Inc. has reached tentative labor deals with the union that represents 2,000 of the iron ore pellet producer’s workers. If ratified, the deals with the United Steelworkers of America would avert strikes at the company’s four iron ore mines in Minnesota and Michigan.
South of the border, operations just resumed at Grupo Mexico’s La Caridad mine copper mine after a 17-day strike, which the government had declared illegal. And in Canada, a strike last month by more than 1,400 workers at the Iron Ore Co. of Canada, which supplies about 4 percent of the world’s iron ore pellets, shut down production at an open pit mine, concentrator and pellet-making plant at Labrador City in Newfoundland. The company is a unit of minerals giant Rio Tinto .
Asked if the increase in these labor disputes will have an effect on company earnings, HSBC’s Flores said "absolutely.
"It’s what the industry is facing in general - rising costs across the board, not just labor but energy and transportation etc.," he added.
"TAKE A HIKE"
"You can’t move the mines and theoretically, you would think that in America a company would be able to say ’If you don’t like it, take a hike.’ But the problem is getting people who are skilled and trained."
Flores said unlike manufacturing companies who might threaten to move a factory overseas, mining skills are not transplantable. "If the guys walk, who the heck do you hire?
"If you hire someone else, by the time you’ve trained him, it’s probably better off paying the union guy what he wanted."
Peter Cappelli, professor of management and director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, said the situation reflects changes in labor relations over the past two decades.
"Long periods of Republican administration and labor law changes have been as big a factor as economic conditions," Capelli said. "What we have noticed in U.S. mining labor relations over the years is the willingness of the unions not to engage in what we call ’job control unionism.’
"The unions have been willing to sell jobs. In other words, to let jobs run down at the expense of wages."
With a general decline in union membership and bargaining power, employers have had the upper hand in the last 20 years and expected unions to give back more, "even when the employer was not in a strong bargaining position," said Cappelli.
"But that is not true in the mining industry. Unions have been able to draw the battle lines and expectations have changed enormously. Unions came to expect increases and management, when confronted with a strike, would not shut down," he said.