Alcoa Strike Will Have Minimum Impact Analysts Say May 22, 2006
DJ Analysts: Alcoa US Strike Would Have Mininmal Impact PITTSBURGH (AP)--
Alcoa Inc. (AA) is facing a possible strike by thousands of U.S.-based unionized workers, but the effect on the world's largest aluminum maker would be negligible, analysts say. The 9,000 workers are threatening a walkout over contentious issues such as health care benefits. They represent about 20% of the company's U.S. employees, but only about 7% of its 129,000-strong global work force. Alcoa says its managers have been shadowing the workers in recent weeks and are poised to take over their jobs at 15 plants nationwide, a tactic used by the company during its last strike two decades ago. The move comes ahead of talks between Alcoa and the United Steelworkers starting May 18 in St. Louis to negotiate a new five-year contract. The current one expires at the end of the month. "I think Alcoa has the upper hand here and I don't see how they could come out of it in any bad way," said Robert E. Brooks, editor of the Cleveland, Ohio-based trade journal Metal Producing and Processing. "The trend is for the corporations to have the advantage in these types of negotiations." Alcoa's expansion abroad and labor's diminishing role over the past 20 years have left the unionized workers at a disadvantage and the fate of costly U.S.-based primary aluminum operations uncertain, he said. The facilities are also less reliant on labor because of technology and more efficient processes, Brooks said. The relationship between productivity and manufacturing operations is "a completely different metric than it was in 1986," Brooks said, noting that Alcoa's position is further strengthened by its current profitability. Alcoa earned $1.2 billion on sales of $26.1 billion last year, with profit more than doubling in the first quarter of this year compared with the same period last year because of strong demand and high aluminum prices. "I doubt it (a strike) will have any significant impact on Alcoa's operations," Brooks said. "I doubt it will have a very significant impact on the market either because there are lots of other suppliers of those products." Alain Belda, Alcoa's chief executive, has said health care costs will be the key issue at the upcoming talks. He has defended a plan to cut costs by requiring workers to pay a portion of their health insurance, just as union members do at 11 plants outside the national contract. Alcoa's proposal also includes replacing pension plans with a company-administered savings plan for newly hired union workers and allowances for the company to outsource more work. James Robinson, the union's chief negotiator, said he opposes offering different wages and benefits to new workers and that Alcoa should pay its fair share of health care cost increases. He said the shadowing of union workers by managers has "been a cause of some friction," and warned that Alcoa once had managers capable of running the facilities, but that's "a lot less true today." Charles Bradford, an analyst at Bradford Research/Soleil Securities in New York, said Alcoa has "changed a lot in the past five years - a huge number of acquisitions, a bigger company." The domestic plants are much less important today and could be phased out, Bradford said. The proposed strike would affect plants from Indiana to North Carolina to Texas, facilities where there are fewer salaried and union workers than there were 20 years ago, according to Alcoa spokesman Kevin Lowery. On the Net: Alcoa Inc.: United Steelworkers: (END) Dow Jones Newswires
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