May 5, 2015 / 5:05 AM / 4 years ago

UPDATE 2-Century Aluminum braces for Kentucky lockout as USW reject deal

* Some 84 pct of union members vote to reject offer

* Smelter produces just under 15 pct of total U.S. capacity

* Temporary employees trained at smelter -union representative (Updates throughout)

By Luc Cohen

NEW YORK, May 5 (Reuters) - Unionized workers at Century Aluminum’s Hawesville, Kentucky smelter rejected the company’s proposed labor agreement late on Monday, taking one of the biggest U.S. aluminum plants a step closer to industrial action, the first for the sector in years.

Some 84 percent of members voted against the company’s offer, which included a 15-percent wage increase over five years and would replace the deal that expired on March 31, according to a notice on the local United Steelworkers (USW) website.

It was the third time union members have vetoed a tentative labor deal reached between Century, controlled by Glencore , and the union’s bargaining committee.

Following the news, Century issued a legal notice on Tuesday confirming plans to lock out union-represented staff on May 11.

“We are fully prepared for the lockout and expect that the plant will continue to operate safely and at full production,” Kenny Barkley, Century spokesman and labor relations manager, said in an email, adding the company was “disappointed” with by the vote.

If workers go on strike, it would be the first industrial action at a U.S. aluminum smelter in more than a decade.

The strained negotiations reflect tough market conditions, as plant operators try to cut costs to battle low London Metal Exchange prices and high power prices amid lackluster demand and a big global surplus.

The labor talks come at a tense time for Century’s management too as it hammers out power deals at two of its other U.S. smelters.

Chief executive Mike Bless last week signaled for the first time the company may give up on negotiating a power rate that would allow it to reopen the Ravenswood, West Virginia smelter, which has been idled for the past six years.

In a statement on Tuesday, Century said it will guarantee “uninterrupted operations” to prevent damaging the 244,000-tonne-per-year facility, including hiring personnel if workers down tools.

Temporary employees have been trained at the Hawesville smelter in recent days and the company has set up trailers to house them, a union representative said on Monday before the voting had finished.

At issue in the negotiations are health insurance and wages. Century said last week that Hawesville employees’ contribution rates would be below average for employees at other manufacturing companies.

Hawesville is the fourth-largest of eight U.S. smelters, producing just under 15 percent of the country’s total 2015 smelting capacity of 1.7 million tonnes. (Reporting by Luc Cohen; Editing by Josephine Mason and Andrea Ricci)

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