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Q: What is the status and likelihood of an Alcoa strike ( Answered,   0 Comments )
Subject: What is the status and likelihood of an Alcoa strike
Category: Business and Money > Economics
Asked by: nybusinessresearcher-ga
List Price: $50.00
Posted: 30 May 2006 06:37 PDT
Expires: 29 Jun 2006 06:37 PDT
Question ID: 733615
Need someone who is up to date on the current Alcoa strike situation.
Someone with a good look into the issues surrounding the current labor
situation, willing to put a probability on the occurrence of a strike
and can walk through implications of a strike.  In addition to giving
a detailed text answer, this person will recieve a $50 tip if they
perform a 30 minute phone consultation on the topic

Clarification of Question by nybusinessresearcher-ga on 30 May 2006 06:45 PDT
Please provide your contact information so that I may follow up for
the phone consultation
Subject: Re: What is the status and likelihood of an Alcoa strike
Answered By: adiloren-ga on 30 May 2006 09:58 PDT
Thank you for the question. Researchers are prohibited from having
contact with clients outside of this forum- so the phone consultation
for a tip will not be possible. I apologize for that.

However, I will try and provide as exhaustive a response as I can
without flooding you with information and will update my response as
more information about the negotiations is known (the deadline is
12:00 tonight).

From the information I have gathered, it seems that a strike is more
likely than not. But, this strike will likely be short lived, as Alcoa
has reserve workers trained and has more leverage overall according to
many analysts.

As a result, the impact of a strike won't be huge on either the
industry or the market- but it will surely have some effect. Aluminum
prices will spike and shipping will be inhibited.

I have provided information from media sources below which augment
these claims and offer some competing contentions.

I will update this response as soon as I come across breaking news
from the negotiations. Please request clarification if necessary.

Thanks and good luck in your pursuits. 


UNSW Alcoa Negotiations- official site

Most Recent Official Update


Strike is most likely
Smart Money  5/26/06

<<Analysts have said a strike is more likely than not. 

The negotiations, which have been going on since May 18 at a suburban
St. Louis hotel, involve 15 U.S. plants covered by the master
contract. Those plants produce 30% of Alcoa's aluminum and employ
9,000 workers, about 7% of Alcoa's global work force of 129,000.

The four main issues of disagreement are health-care costs for current
employees, a cap on retiree benefits, proposed changes to benefits for
new hires, and work that can be contracted out.

The company's proposal to have union workers pay a share of their
health-care costs, as other Alcoa employees do, is particularly

Alain Belda, Alcoa's chief executive, has said he won't mortgage the
company's future with runaway health-care costs. In 2006, Alcoa
expects health-care costs for U.S. workers will total $700 million to
$800 million.

"We've had this health-care package for decades, and now they want
changes that we feel are clearly unwarranted," Dickey said. "Why would
we entertain those proposals when Alcoa is experiencing record

Union unhappy with Alcoa proposals 
MSNBC  5/29/06

"The United Steelworkers union has expressed displeasure over proposed
changes to its master agreement.

Alcoa has proposed changes to benefits for new hires and retirees. It
also has proposed continuation of outsourcing of some work at the

But none of the points has been more controversial than proposed
changes to the workers' and retirees' health insurance plans"

Alcoa-union dispute involves four areas of benefits, hiring processes 
MSNBC  5/29/06
"Areas of difference between Alcoa and the United Steelworkers center
largely around four areas: a proposal for workers to pay a portion of
their health insurance premiums; a proposal for retirees to pay a
greater share of their premiums; a proposed reduction in benefits for
new hires; and the question of which jobs may be outsourced."

Union members would pay part of premiums 
MSNBC  5/29/06
"Alcoa has asked workers to pay a portion of their health insurance
premiums. The company has previously paid the entire premiums.
Under the proposal, union employees would be covered under Alcoa's
Select Benefits plan. Employees enrolled in the plan pay graduated
amounts based on the amount of coverage they select."

Flexibility in outsourcing at issue 
MSNBC  5/29/06

"Job outsourcing, which has been an issue in various industries, also
has been a point of contention during these talks.

Alcoa wants the flexibility to continue hiring outside contractors to
perform various tasks at the 15 plants. The union acknowledges that
outsourcing is justified in some instances, but it contends that Alcoa
outsources some jobs that could be done by union workers.

The union is seeking greater input concerning which jobs can be outsourced." 

Alcoa is training outside labor in case of a strike
MSNBC 5/17/06

"Belda also said the company was preparing for the possibility of a
strike by training outside workers and taking other similar measures,
but added he hoped there would not be a strike"

Market signs point to concerns over the strike and the potential
supply issues that could arise as a result
Mining Weekly  5/30/06

" LME aluminium was at $2 840/$2 845 a ton against Friday's London
close of $2 800, supported by supply concerns as the expiry of labour
contracts at 15 of Alcoa Inc.'s plants in North America is due on

On May 17, United Steelworkers (USW) union members voted to authorise
strike action if talks failed."

-------------------------------Impacts of a Strike-------------------------

Industry impacts:

Strike would have minimal impact
The Associated Press State & Local Wire
May 15, 2006 (Lexis)

" Alcoa Inc. 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 percent of the
company's U.S. employees, but only about 7 percent of its
129,000-strong global work force."
Alcoa has the resources to deal with a strike
The Associated Press State & Local Wire
May 15, 2006 (Lexis)

<<"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 also are less reliant on labor because of technology
and more-efficient processes, Brooks said.>>

Market Impact will be minor
The Associated Press State & Local Wire
May 15, 2006 (Lexis)

Could hurt shipments and drive up the price of aluminum
The Associated Press State & Local Wire
May 15, 2006 (Lexis)

<<"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.">>

<< 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.
"With prices this high, it's not going to happen too fast, but the
handwriting's on the wall if any of these plants aren't competitive,"
he said.
A strike would probably hurt Alcoa's shipments, but could also drive
up the price of aluminum as supply tightens, said Bill Selesky, an
analyst at Argus Research Corp.>>

Alcoa strike may have peripheral impacts on connected industries
The Wichita Eagle (Kansas)
May 26, 2006

<<A strike "will just create havoc within the industry," Excel
Manufacturing vice president and general manager Marwan Hammouri said
Thursday. Sixty to 70 percent of Excel's aluminum supply comes from
Alcoa through its distributors.
A Spirit AeroSystems supply chain official issued a memo to employees
about what might happen should a protracted strike occur.
"We are doing everything we can to prepare for the worst," said the
recent memo. "But we will be shutdown if a prolonged strike occurs and
impacted significantly if any work stoppage occurs."

<<But a bigger concern is the potential impact on Cessna's supply chain.
"We buy and inventory more aluminum than the individuals who are
making small-piece parts," Pelton said. "The trickle down would
certainly have us concerned."
Besides its length, the strike's impact could also depend on what
measures Alcoa is taking to prepare itself.
"Any company that has organized labor also prepares themselves
internally to continue to work at a lower efficiency," Pelton said.>>

Unions affected by Alcoa Inc. contract discussions 
MSNBC  5/29/06

United Steelworkers of America locals affected by master contract negotiations: 

*	Local 155, Louisville 
*	Local 104, Warrick, Ind. 
*	Local 303, Badin, N.C. 
*	Local 400, Richmond, Va. 
*	Local 450, Massena, N.Y. 
*	Local 4880, Bauxite, Ark. 
*	Local 5073, Gum Springs, Ark. 
*	Local 310, Wenatchee, Wash. 
*	Local 105, Davenport, Iowa 
*	Local 309, Alcoa, Tenn. 
*	Local 420, Massena, N.Y. 
*	Local 4370, Point Comfort, Texas 
*	Local 4895, Rockdale, Texas 
*	Local 7972, Hot Springs, Ark. 


Louisville Alcoa facilities 
MSNBC  5/29/06

*	Extruded automotive products plant at 4301 Produce Road 
*	Reynolds Wrap aluminum foil production plant at 2827 Hale Ave. 
*	Packaging lamination plant at 1212 W. Burnett St. 
*	Kawneer Co. fabricated aluminum products service center at 2641
Technology Drive in Jeffersontown

Market Impacts:

The price of Aluminum will surge if there is a strike
Smart Money 5/26/06

"The union has authorized a strike if an agreement isn't reached by
midnight Tuesday, and the near-term price of aluminum, already in a
rally, is expected to surge if a strike occurs." (subscription)
May 26, 2006

"Increased aluminum price forecast due to recent strength-Attract@GSCO
- With Alcoa's master contract expiring on May 31st, a potential
strike at their U.S. facilities provides a N-T catalyst. The firm
advises buying Alcan--AL/IL ahead of Aloca--AA/UP's labor contract
expiration given AA's cost competitiveness, higher earning leverage to
price changes in aluminum and valuation discount. The firm continues
to stay cautious in the L-T as aluminum fundamentals continue to be
weaker than nickel and copper, given the big overhang of Chinese idle
capacity and increase alumina supplies."


-Google News Search

-Lexis Nexis Industry and Market Search

-Personal contacts consulted

-search terms
Alcoa strike

Request for Answer Clarification by nybusinessresearcher-ga on 30 May 2006 10:37 PDT
Hi Anthony-

What are your expertise that allow you to make the assessment or are
you simply deriving your insights from newspaper articles?  Does any
google researcher have expertise in this area?  Otherwise your
response is in no way of an "expert" informed nature...


Clarification of Answer by adiloren-ga on 30 May 2006 11:32 PDT
I am a political scientist and consultant who specializes in the study
of social movements, especially labor movements. I had been following
these negotiations. I am not an insider in regards to this situation,
but nothing in your question led me to believe that you required that
I be.

I provided supporting claims from experts to further aid in your
assessment of the situation.

If you would like me to further qualify my opinion I will. Let me know
what specific questions you have.

Clarification of Answer by adiloren-ga on 30 May 2006 23:08 PDT
There has been a good deal of progress. A strike is still possible but
it looks increasingly like a compromise will be reached.

Alcoa made some surprising concessions on the biggest issue of
contention- the health care plan.

If things continue in this way- a strike may be averted. I think, as
of now, a compromise is more likely to be agreed to.

Press Release
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