Unions push back as U.S. refiners shunt aside longtime trade workers

5 minute read

Locked-out refinery workers protest outside of the Marathon St. Paul Park plant in St. Paul Park, Minnesota, U.S. March 18, 2021. Picture taken March 18, 2021. Kevin Pranis/Handout

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May 4 (Reuters) - Operators of U.S. Midwest refiners, including BP, Marathon Petroleum Corp and Cenovus, are hiring lower-cost subcontractors to handle massive, months-long maintenance projects, setting aside longtime unionized workers, six sources familiar with the projects told Reuters.

Refiners have sold assets and closed facilities and now are trying to cut labor expenses in response to the pandemic, with seven U.S. plants closed since the coronavirus lockdowns crushed fuel demand.

Unions, however, claim that shifting to less-trained workers undermines long-established refinery safety standards, and takes high-paying jobs away from locals who have served the industry for decades.

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Labor's efforts are having some success in state legislatures like Ohio and Minnesota, which are considering bills that require certain levels of training that favor unionized workers.

"This is the first time I remember something like this happening in our community," said Shaun Enright, business manager for the Building Trades in Northwest Ohio, whose members work in two Toledo-area refineries.

Even though U.S. union membership is waning, building trade unions still have clout in the refining industry, with thousands of workers trained to work in hazardous facilities for higher pay than most careers for which a college degree is unnecessary.

Of the 11.4 million workers in that industry, 15% are unionized, the U.S. Bureau of Labor Statistics shows, compared with 11% of all employed U.S. workers.

In Wyoming, Hollyfrontier Corp (HFC.N) bypassed local labor in favor of subcontractors to decommission a Cheyenne petroleum refinery that will become a renewable diesel facility, said two sources familiar with the matter.

Labor leaders say thousands of jobs for boilermakers, pipefitters, carpenters and others are threatened by the shift. Unionized building trade workers across the Midwest make around $40 an hour, plus pension and benefits, about $15 an hour more than non-union contractors.

Enright said BP (BP.L) decided to break precedent and bring in mainly Gulf Coast contractors for half of the 2022 maintenance at its 160,000 barrel-per-day Toledo refinery.

"BP-Husky has a long history of providing thousands of good-paying jobs to union and non-union workers, and can only continue to do this if we maintain a competitive business, which has been particularly challenging during the pandemic," a BP spokesperson said in a statement.


In some places, the coronavirus accelerated a trend of reducing unionized workers, such as in St. Paul Park, Minnesota, where Marathon Petroleum (MPC.N) began phasing out trades workers in autumn of 2019, according to union workers.

In January, Marathon locked out nearly 200 Teamsters employees from the 104,000-bpd refinery. Kevin Pranis, marketing manager at Laborers' International Union of North America in Minnesota, said no members of his union work at the refinery now, from about 60 in 2019.

Marathon said in a statement that it has presented comprehensive offers to the Teamsters union in March that do not include layoffs and only seeks to subcontract one "non-safety sensitive job". A Marathon spokesman told Reuters the company does not make decisions on service providers based on their union status or non-union status.

The union contends they want to add duties to safety sensitive positions and contract out 42 maintenance positions.


In Ohio and Minnesota, labor leaders have been picketing outside of plants and holding press conferences to rally support, and statehouses are responding.

Ohio's bill requires operators of facilities such as refineries to employ at least 80% of their the contractors high-hazard contractors.

That bill, along with Minnesota's bill, is similar to legislation passed in California in 2013 after a task force investigating a fire at a Chevron refinery near San Francisco found that refiners' use of unskilled construction workers increased the risk of deadly incidents.

"If you don't leave a good quality product behind, what you leave behind could kill people," said Ed Lee, an independent refinery safety consultant who now works as a private contractor, who said union workers tend to be more specialized than subcontractors.

He said over the years refiners have gone from using union tradespeople for 80% to 90% of turnarounds to now using non-union contractors for the majority of the work.

In late 2020, building and construction trades in Lima, Ohio were told that they would not be used for the refinery's autumn 2021 turnaround after Canada's Cenovus (CVE.TO) took ownership of the plant in January from Husky Energy.

"There’s no excuse for Cenovus-Husky to look for employees elsewhere," said Ohio Senator Sherrod Brown, in a statement to Reuters.

A Cenovus spokesperson said contractors were picked based on several criteria, including safety, technical expertise and experience.

"We hired the contractors who best met our criteria," the spokesperson said, adding that the company is working with local unions to identify ways "to be more competitive on all criteria for future work."

Mike Knisely, secretary and treasurer of the Ohio State Building and Construction Trades Council, said his union estimates union trades will lose out on 2,000 to 3,000 jobs and $5 to $6 million in wages for that two-month period.

“If we are the ones that have been breathing in the pollution for years, and given the volatility of these time bombs, our community should be the ones that get to have the opportunity for jobs," he said.

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Reporting by Laura Sanicola Editing by Marguerita Choy

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Thomson Reuters

Reports on oil and energy, including refineries, markets and renewable fuels. Previously worked at Euromoney Institutional Investor and CNN.