February 4, 2015 / 11:09 AM / 3 years ago

Shell and union to talk on day four of U.S. refineries strike

HOUSTON (Reuters) - Negotiations will resume on Wednesday between Royal Dutch Shell Plc (RDSa.L) and union leaders as they haggle over a new wage contract for striking U.S. refinery workers, the company said.

Members of the United Steel Workers union picket the Tesoro refinery in Carson, California February 2, 2015. REUTERS/Bob Riha, Jr.

The two camps have been in a stalemate since the United Steelworkers union (USW) called walkouts early on Sunday at nine plants with about 10 percent of U.S. refining capacity, saying Shell, the lead negotiator for the oil companies, left the negotiating table when talks broke down.

The talks have been tougher than in years past. A drop of more than 50 percent in oil prices since June has eroded profits of major oil companies, prompting executives to say they cannot afford to lift wages for workers.

“Talks are scheduled for today,” Shell spokesman Ray Fisher said.

The union said in a text message that talks late on Tuesday made no progress and that they would resume on Wednesday. Shell called Tuesday’s talks productive.

Further walkouts may be ordered at some of the other 63 refineries and chemical plants it represents if advances are not made, the union has said.

Neither side has said when on Wednesday they will meet.

Shell has declined to detail the nature of the negotiations.

Marathon Petroleum Corp (MPC.N) Chief Executive Gary Heminger, whose company owns two of the refineries with workers on strike, deferred to Shell as the lead negotiator regarding any comment, calling the talks a “delicate situation.”

Since bargaining first started on Jan. 21, the union has rejected five offers from Shell.

The union is seeking annual pay increases of 6 percent, double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to USW members, a tighter policy to prevent workplace fatigue and reductions in members’ out-of-pocket payments for healthcare.

While acknowledging that upstream businesses have been hurt, labor leaders say independent refiners and the refining units of integrated companies have been posting big profits thanks to cheap prices for U.S. crudes they turn into gasoline and diesel.

The walkouts are in support of a nationwide pact that would cover 30,000 workers and mark the industry’s first big strike since 1980.

Most affected refineries are being run near normal by trained managers, retirees and others from non-union plants brought in to replace workers.

“We were very well prepared,” Heminger said on a results call. “We would expect to have very strong operations.”

One plant, owned by Tesoro Corp TSO.N, was shutting down due to maintenance work already under way.

While refiners are promising little or no disruption to production, wholesalers and others have snapped up supplies.

The strike helped lift gasoline futures RBc1 early in the week, though prices were down about 6 percent on Wednesday below $1.51 a gallon.

Additional reporting by Jessica Resnick-Ault in New York and Kristen Hays in Houston; Writing by Terry Wade; Editing by Alden Bentley

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