Copper Industry Gains Labor Costs Reductions

Monthly Labor Review, September 1986 | Go to article overview

Copper Industry Gains Labor Costs Reductions


Copper industry gains labor costs reductions

The copper mining and processing industry, plagued by severe financial problems resulting from worldwide overproduction, gained some reductions in labor costs in midyear settlements. Kennecott, the domestic industry's largest producer, indicated that lower costs would enable it to reopen its large Bingham Canyon, UT, mine and recall 2,000 employees who lost their jobs when operations shut down in 1985. The 14 unions attempted to tailor each of the copper accords to the condition of the company. The unions, led by the Steelworkers, comprised the Nonferrous Industry Coordinating Committee. About 8,000 active and 5,000 laid-off workers were covered by the settlements, compared with about 25,000 active employees in the late 1970's.

The first settlement, which occurred just before the contract expiration date for all the major companies, involved 3,000 employees of Newmont Mining Corp.'s Magma Copper Co. and Pinto Valley Copper Co. facilities in Arizona. It provided for a pay cut of 20 percent, resulting in hourly rate ranges of $9 to $12.60 at Magma and $8.88 to $13 at Pinto Valley. The cut, which reportedly averaged $2.82 an hour, could be alleviated or eliminated under a new bonus plan contingent on rises in copper prices. In 1987, the quarterly payments will be calculated at 10 cents per hour for each one-cent rise in the price of a pound of copper above 70 cents, an extra 15 cents for each one-cent rise above 80 cents, and an additional 25 cents for each one-cent rise above 90 cents, up to $1. In 1988, the formula will be 15 cents for each one-cent rise from 71 to 90 cents and 25 cents for each one-cent rise from 91 cents to $1. Employees may take the money in cash or in a 401(k) savings plan, or a combination of the two. At the time of settlement, the price of copper was 63 cents a pound.

Other wage terms included termination of the provision for automatic cost-of-living pay adjustments, which had provided the only pay increase under the prior contract.

Benefits also were standardized at the two companies, resulting in pension improvements at Magma and health insurance improvements at Pinto Valley. A new health insurance cost containment plan requires deductible and co-insurance payments by the workers.

Newmont estimated that the employee sacrifices would cut labor costs to less than 50 percent of production costs, from 52 percent. …

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