(Bloomberg) – Alcoa Inc., the largest U.S. aluminum producer, reached a tentative agreement with the United Steelworkers union today that may avert a strike by almost 6,000 workers across the U.S.
Union members still must ratify the accord in a vote, Kevin Lowery, a spokesman for New York-based Alcoa, said in a telephone interview. The agreement would replace a four-year contract that expired at 1 a.m. New York time. He provided no terms of the accord.
Alcoa is trying to cut expenses after reporting combined net losses of $1.23 billion in 2008 and 2009 as the global recession reduced demand for the metal used in cars and beverage cans. The company initially proposed putting union workers on the health plan offered to 14,000 salaried and hourly employees in the U.S., which Alcoa said was 45 percent cheaper than the union plan.
“Alcoa has been pretty steadfast in wanting to reduce costs and the union has been steadfast in wanting to keep the benefits they are used to,” Charles Bradford, a partner at New York-based consulting firm Affiliated Research Group LLC, said before the announcement. “Still, nobody wins a strike when you get down to it.”
The union has said the initial proposal would have tripled health-plan costs for some families.
Timetable Being Developed
Gerald Dickey, a union spokesman, confirmed the tentative agreement in an e-mail. He declined to comment on the terms. A timetable is being developed for voting, and details of the agreement will be released after summaries are printed and informational meetings held with the membership, Dickey said.
The plants covered by the labor accord account for 1.29 million metric tons of Alcoa’s aluminum smelting capacity, or 27 percent of the 4.81 million-ton total, a company filing showed. Plants in Tennessee, Texas, New York and Washington, with a combined capacity of about 700,000 tons, are already idle because of market conditions, the company has said.
The labor agreement also covers Alcoa’s only U.S. refinery for alumina, the primary raw material for making aluminum. The Point Comfort, Texas, plant has a consolidated capacity of 2.31 million tons, or 13 percent of Alcoa’s 18.1 million-ton total. The plant was running at about 65 percent capacity at the end of 2009, according to a filing.
Alcoa fell 17 cents, 1.5 percent to $11.47 at 12:36 p.m. in New York Stock Exchange composite trading. The shares dropped 28 percent this year before today.
–Editors: Steven Frank, Simon Casey.
To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net
To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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