AUGUST 1984 - VOLUME 5 - NUMBER 8
Hess Locks Out Refinery Workers
by William Stief
The largest oil refinery on U.S. soil is going into its seventh month of a union lockout that shows no sign of abating.
The refinery is owned by Hess Oil Virgin Islands Co. (HOVIC), a subsidiary of the New Jersey-based multinational, Amerada Hess. It's situated on the western end of St. Croix in the U.S. Virgin Islands and has a through-put capacity of about 600,000 barrels of crude oil daily. At the heart of the dispute is job security for 377 members of United Steelworkers Local 8526, locked out by HOVIC's management last April 15. Ever since, the refinery has been processing an average of 347,000 barrels of crude daily, admittedly using 28 employees from the small Amerada Hess refinery at Purvis, Mississippi, and from corporate headquarters at Woodbridge, New Jersey.
The dispute centers on two job security issues, says John Coon, the union local's lawyer. When the latest, three - year union contract ended in April, HOVIC insisted on retaining the right to continue:
There was little argument about wages, which run from just over $8 to just over $13 an hour. The union agreed to a 30-cents-an-hour raise, though this averages almost $1.50 an hour less than a new Oil and Chemical Workers contract Hess has signed for the Purvis refinery.
The union essentially has caved in on the right to subcontract jobs, says Coon, but is hanging tough on the testing issue because tests are given verbally by supervisors, workers aren't told if their answers are right or wrong, and there are serious questions whether the tests have anything to do with job performance. In four years, the number of unionized workers employed at the refinery fell from 700 to 377.
"Hess treats the Virgin Islands like a colony," says Coon. "Workers are regarded as people from the Third World, even though they're U.S. citizens."
The union concedes that 1984 hasn't been a good time for a contract dispute with Hess because the oil industry has been relatively depressed, sapping union bargaining power. Alexander Moorhead, a former territorial legislator who is HOVIC's personnel director, responds to questions with "no comment."
Union appeals to the National Labor Relations Board have been fruitless.
The Steelworkers have started a national boycott of retail Hess Oil products but have met rebuffs on that front, too. When the union sought to distribute handbills urging a boycott at a New York Jets pro football game at the Meadowlands in New Jersey, a local judge issued an injunction against the pamphleteering. (The injunction was later lifted, and Steelworkers leafletted at a game in October until they were stopped by stadium authorities.)
Leon Hess, in his mid-70s, owns the Jets. He also owns 15 percent of Amerada Hess stock. His shares are worth about $12.4 million. He is president and chief executive officer of Amerada Hess, whose net before taxes in 1983 was $747 million on a gross of $8.4 billion. The multinational gets its crude oil from Abu Dhabi, Libya, and the British and Norwegian sectors of the North Sea. In the first quarter of 1984 Amerada Hess gross revenues rose 32 percent over the same 1983 period.
Hess originally built the St. Croix refinery in 1965 under an agreement with the appointive Virgin Islands governor, Ralph Paiewonsky, to get a "tax holiday" for 16 years. The refinery was designed to be a major processor of heating oil and in the 1960s had a through-put capacity of 700,000 barrels.
In 1981, after interminable wrangling, Hess and elected Governor Juan Luis signed a new 16-year agreement under which some HOVIC tax exemptions were continued but Hess agreed to pay the territorial government $10 million a year until Hess built a new fluid catalytic cracking unit ("cat cracker") costing "no less than $200 million." Then the payment to the territorial government would go to $12 million yearly. In the same agreement, Hess declared "its intention" to build a second "cat cracker" augmenting the territory's revenues further.
The reason for the "cat cracker" provision was that the heating oil market had soured and Hess wanted to manufacture gasoline and other products at the high end of the oil spectrum. The territorial government wanted the jobs that such a major construction would entail.
Hess also agreed to build a $3 million vocational school to train Virgin Islanders.
So far, however, there is neither a "cat cracker" nor vocational school on the island. Instead, "Amerada Hess is building a 'cat cracker' in New Jersey and intends to ship feedstock from the Virgin Islands to New Jersey for processing," according to Steelworkers International President Lynn R. Williams. He wrote to Governor Luis this August saying, "the Virgin Islands Government is deprived of what it bargained and compromised for. It agreed to accept lower tax revenues from HOVIC especially because of the promised `cat cracker.' You are losing tax revenues and jobs for your territory and of course our members are losing job opportunities."
Luis has never responded to the Steelworkers' president.
Hess probably can build its "cat cracker" more cheaply in New Jersey than in the Virgin Islands, and if its gets a semifinished product in New Jersey, it won't face environmental problems. The finished product then will be much closer to the retail outlets.
Hess is also a big federal contractor-it recently won a large Navy contract-and is eager to avoid problems of compliance with federal contracting standards. That's easier to do in New Jersey than in the Virgin Islands.
Tom Clancy, the Steelworkers' international representative who's been trying to negotiate with Hess in St. Croix, says "settlement can be reached in a matter of hours if they (HOVIC) take their unreasonable demands off the table."
But the situation seems to be summed up by what the Steelworkers' Williams wrote Governor Luis: "Hess Oil suffers from the arrogance of many multinational corporations. It believes it is accountable to no country, government or people."
Meantime, the economy of St. Croix - an 82-square-mile Caribbean island with 50,000 residents-has been hurt, and the island's unemployment rate is nearly 11 percent, low for the Third World but high for this U.S. territory.
William Steif is a freelance writer currently based in the Virgin Islands.