Sherwin Alumina Fact Sheet © THE UNITED STEELWORKERS October 13, 2014 Sherwin Alumina Contract Proposal and Lockout Despite profitability and rising aluminum prices and productivity, Sherwin Alumina has demanded its employees accept substantial cuts in earnings and benefits. The Company’s October 1, 2014 proposal: 1. eliminates overtime pay for hours worked on your scheduled days off; 2. pays a $1,500 bonus instead of a wage increase in the first year; 3. has lower wage increases than in the recent contract covering Alcoa Point Comfort; 4. increases employee contributions for health care from $100 to $175 per employee per month – the equivalent of a wage cut of $0.31 per hour; 5. eliminates health care coverage for Medicare-eligible retirees and eliminates funding for the retiree health care VEBA; and 6. fails to increase pensions for current employees and eliminates pension coverage for new hires – with no adequate replacement. New hires would have no disability protection, early retirement or widow’s benefits. On October 10th an overwhelming majority of the members of USW Local 235A voted to reject the Company’s last proposal and return to the bargaining table to reach an agreement. On October 11th, Sherwin Alumina locked out the members of USW Local 235A in an attempt to force them to accept the Company’s proposed contract. Sherwin Owned by Glencore, Global Commodities Trading Firm Sherwin Alumina is 100% owned by Glencore, a publicly-owned, multinational commodity trading and mining company headquartered in Baar, Switzerland. As of 2014, it is ranked tenth in the Fortune Global 500 list of the world's largest companies. Glencore’s shares are listed on the London, Johannesburg and Hong Kong Stock Exchanges. Sherwin Alumina does not report its financial or operating results. Glencore is so large and diverse that Sherwin Alumina is not a material portion of Glencore’s business. Sherwin Alumina’s results are combined with other interests in the Aluminum and Alumina portion of Glencore’s Metals and Minerals segment. Glencore has revenue of $233 billion in 2013 and net income of $4.6 billion. By comparison, Alcoa has revenue of 23 billion in 2013. According to Glencore’s 2013 Annual Report, it owns over 150 mining and metallurgical facilities, offshore oil production facilities, farms and agricultural facilities and has a global network of more than 90 offices located in over 50 countries. It employs approximately 200,000 people, including contractors. Sherwin Alumina Corpus Christi Alumina Refinery The Sherwin Alumina refinery processes bauxite to produce smelter and chemical grade alumina (aluminum oxide), which is smelted to produce aluminum metal. Alumina is also widely used by the abrasives, chemicals and refractory industries. The plant was constructed in 1953 by Reynolds Metals. It was owed by Reynolds Metals until 2001, when it was sold following Alcoa’s acquisition of Reynolds Metals. It was purchased by Glencore in 2007. Sherwin Alumina produced 1.6 million metric tons of smelter and chemical grade alumina in 2013 – up from 1.38 million metric tons in 2012. Sherwin Alumina Workforce and Wages Sherwin Alumina has approximately 450 hourly employees represented by United Steelworkers and its Local 235A. The average Sherwin Alumina hourly employee is 47 years of age, has worked for the Company 14 years and is a wage grade 20, with a wage rate of $23.19 per hour. The average hourly employee works over 2,500 hours per year – many of the employee work 12-hour shifts. Much of the overtime hours are voluntary but much is compulsory or forced. Wages increased by an average of 1.4% per year under the 2011-2014 Sherwin Alumina- USW labor agreement, compared to an increase in consumer prices during the same period of 7.8%. Commencement of Master Agreement Bargaining Negotiations between Sherwin Alumina and the USW for a new contract began on July 8, 2014. The contract was scheduled to expire on July 31, 2014, but was extended through September 30, 2014 to provide additional time for the parties to reach an agreement. The Last USW Strike at Sherwin Alumina There has not been a labor dispute or work stoppage at Sherwin Alumina, since it purchased the plant in 2007. There has not been a labor dispute at involving the plant under prior ownership for over 30 years. Alumina and Aluminum Prices Alumina is currently trading for $355 per metric ton on the spot market, compared to averages of $322 per metric ton during the third quarter 2014 and $327 per metric ton for 2013. Analysts forecast alumina prices at $350 per metric ton in 2015 and $370 for 2016. Aluminum averaged $0.90 per pound on the London Metal Exchange during the third quarter of 2014, compared to $0.084 per pound in 2013. Sherwin Alumina’s Production Costs Sherwin Alumina does not report its financial or operating results. However, a May 2014 presentation made by Alumina Ltd. citing figures from Harbor Aluminium, estimated Sherwin’s cash production cost as among the lowest 25% of global producers (i.e. ranked from lowest to highest cost). Sherwin Alumina’s Retiree Health Care Proposal The company’s proposed contract would eliminate all medical and drug coverage for all current and future Medicare-eligible (i.e. post age 65) retirees, surviving spouses and dependents. There are currently 135 retirees, surviving spouses and dependents who would lose medical and drug coverage effective January 1, 2015, under the Company’s proposal. Another 63 retirees have retired but are not yet eligible for Medicare. Medicare-eligible retirees and dependents pay premiums of $50 per month per person. The expired contract contained a cap on the Company’s cost for retiree health care benefits. In 2011, the parties negotiated a trust fund to help pay the cost of retiree health care benefits above the caps. The Company proposal also eliminates any additional funding for the retiree health care trust fund. For More Information: www.usw.org
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