Asarco Is Unlikely to Offer Concessions to End Copper Strike
2005-08-12 07:34 (New York)
By Claudia Carpenter
Aug. 12 (Bloomberg) -- Asarco LLC, which filed for
bankruptcy three days ago, probably won't make concessions in
labor talks today, extending a five-week strike at Arizona copper
mines and a Texas smelter.
``In light of the bankruptcy filing, I just don't see Asarco
giving anything,'' James C. McBrearty, an arbitrator and
professor at the University of Arizona in Tucson, said in a
telephone interview. ``The real question is: What can the union
do, if anything, to save Asarco?''
Asarco, the U.S. copper-mining unit of Grupo Mexico SA,
filed for Chapter 11 protection from creditors because of
environmental clean-up costs and reduced production from the
strike. The Tucson-based company meets the United Steelworkers of
America today in Phoenix for the second time since 1,500 workers
walked off the job in early July.
``Do the members value their jobs enough that they're
willing to take substantial pay and benefit cuts to save their
jobs?'' said McBrearty, who has followed labor relations for 37
years. ``It would be hard to see a bright future in mining for
the unions.''
Most workers won't return to their jobs until a ``fair''
contract is offered, Terry Bonds, the union's lead negotiator,
said in a telephone interview. Asarco is proposing to freeze
wages and ``gut'' pension and health-care coverage, he said.
A copper worker in Arizona makes an average $52,000 a year,
up about $1,000 a year since 2003 because of rising copper
prices, said George Leaming, owner of the Western Economic
Analysis Center, a mining-research company in Marana, Arizona.
Record Prices
Copper prices have soared to records as global mine
production fell short of growing demand, exacerbated by the
strike at Asarco, which accounts for about 1 percent of output.
Asarco said about 100 workers have crossed the picket line. The
union says it's closer to 35 people.
``More and more employees will come back to work'' following
the bankruptcy filing, Asarco Chief Executive Daniel Tellechea
said in an interview on Aug. 10. ``In the meantime, we will
continue negotiations with labor.''
Clean-up and other environmental liabilities of as much as
$1 billion and $500 million to $900 million for product and
premises liabilities related to asbestos helped trigger the
Chapter 11 filing, Asarco said.
``Our strike didn't put them into bankruptcy,'' Bonds said
yesterday. ``They put themselves there. What they need to do is
get our people back to work, and we need a contract that reflects
the price of copper, not their dodging their environmental
liabilities.''
Asarco had net income of $11.1 million in the first half, up
56 percent from a year earlier, Grupo Mexico said in a July 21
statement.
`Listen to Reason'
``You don't make $11 million in the first six months and
then say you need to go into bankruptcy after a five-week
strike,'' Bonds said. ``If they listen to reason, they will
realize that the way out of bankruptcy is to put our people back
to work and negotiate a fair contract with us.''
The union's negotiating committee is set to meet at 9 a.m.
in Phoenix today followed by a 10 a.m. meeting with the company.
The Chapter 11 filing ``puts everything on hold'' because
any contract changes are subject to approval of the bankruptcy
judge, Leaming of the Western Economic Analysis Center said.
Copper-industry jobs in Arizona, the biggest U.S. producer
of the metal, dropped to 6,400 last year from a peak of 28,000 in
1974, Leaming said.
``The feeling I get from the workers is `let's get this over
with, and go back to work','' he said. ``Some are just taking
other jobs. There's a boom in construction in Arizona.''
Phelps Dodge Jobs
Some striking workers may find jobs at Phoenix-based Phelps
Dodge Corp., which is building a mine in Safford, Arizona, and
reported record profit of $682.3 million for the second quarter.
About 250 workers at Phelps Dodge's Chino open-pit mine in
New Mexico have been working without a contract since 2002,
Phelps Dodge Chief Executive Steven Whisler said. Phelps Dodge
doesn't have any other unionized workers at its U.S. locations,
Whisler said on a July 28 conference call with investors. ``We're
in pretty good shape,'' he said.
The Asarco strike covers workers at five locations in
Arizona and a refinery in Amarillo, Texas. Workers at the Mission
and Silver Bell mines had stayed on the job without a contract
since July 1, 2004. About 750 workers at the Ray copper mine and
Hayden mill were the first to walk out on July 2.
Copper futures for September delivery rose 1.25 cents, or
0.8 percent, to $1.647 a pound yesterday on the Comex division of
New York Mercantile Exchange. Prices have climbed 29 percent in
the past year.
Copper on the Comex reached $1.674 a pound, the highest
ever, on Aug. 4. Supplies monitored by the Comex have tumbled to
the lowest since December 1995.
A futures contract is an obligation to buy or sell a
commodity at a set price by a specific date.
--Editor: McKiernan |
