Refinery workers mull strike against PES in Philly

NORWOOD » Approximately 750 union workers at Philadelphia Energy Solutions refinery in South Philadelphia will be making a decision this week at special emergency meetings whether or not to strike because of pension and health care changes mid-contract.

“It’s to explain where we are in the process of preparing for a strike and a strike vote the following week,” said Ryan O’Callaghan, president of the United Steelworkers Union Local 10-1. “They suspended our pension ... They increased the cost of our medical to our members and they changed the plan in its entirety. We are paying more for less coverage ... It’s breaking a national oil bargaining unit policy.”

A large part of the USW contract is negotiated at the national level with representatives from refineries across the country bargaining with representatives from industry. Then, minor issues are determined at the local level. O’Callaghan said the pension and the medical provisions are in the national agreement.

Cherice Corley, public affairs and communications director for PES, declined to comment.

O’Callaghan said the company notified the union in September that the pension was going to be frozen in January. Union officials filed a grievance and a hearing is scheduled for August.

As company officials were talking about financial challenges at the time, O’Callaghan said union officials offered for refinery employees to be placed on the less expensive United Steelworkers’ plan. He said they talked about it several times.

O’Callaghan said he asked a senior vice president to consider it and he said the response was, “I don’t see why not, but I can’t give you the definitive answer now.”

In the meantime, the leadership changed at PES and O’Callaghan again approached the new administration.

“He basically said no,” the union leader said. “It became obvious that they were disingenuous.”

He said these changes to the pension and the health care plan are in direct violation of what was agreed upon in 2015. The contract doesn’t expire until September 2019.

In addition to the grievance, a Fair Labor Standards Act charge has been made, O’Callaghan said.

Issues of some financial challenges began to surface in September when the company had reduced or suspended two of its employee benefits and offered buyouts to non-union employees. PES officials linked the problems to Renewable Identification Numbers.

RINs are a number given for each gallon of ethanol made in relation to the federal regulations for biofuels in gasoline. Refiners cannot blend the ethanol into the gasoline, only blenders can so refiners must buy the RINs from blenders.

In September, company officials said RINs cost the company about $2.50 per barrel of gasoline. With PES producing more than 300,000 barrels a day, the RINs cost the company $250 million annually, or about twice the payroll of the entire company, PES officials said.

To address that, maintenance turnarounds were postponed and other projects delayed while departments were asked to reduce spending. A Voluntary Separation Plan was offered to qualifying salaried employees and the company’s share of the health care premiums was cut from 80 to 70 percent.

In addition, the company’s Cash Option Plan, placing 7 percent of employees’ base salaries into tax-deferred savings plans, was suspended.

O’Callaghan questioned the severity of the RINs effect.

“We have information that the RINs might not be impacting them as stated,” he said.

Now, the union is considering going on strike.

Two informational meetings will be held this week, both at 7 p.m., one on Wednesday and the other on Friday, at the USW Local 10-1 hall, 26 W. Winona Ave. in Norwood.

“We’ve done what we could,” O’Callaghan said. “We’ve done everything we

can to prevent this.”

He said the company needs to uphold their end of the bargained agreement.

“We’re cognizant that the oil business is a rough business but they are smart men,” O’Callaghan said. “We did everything to prevent a strike and all they did was sit on their hands.”

Of the changes to the benefits, the union president said, “They agreed to it and we’re going to hold them to it.”