May 26 (Bloomberg) -- Mike Nicholas, a six-year employee at Alcoa Inc.'s aluminum rolling plant in Davenport, Iowa, says he will fight the company over its plan to triple health-care costs for families like his.
Nicholas will lead an "informational picket" at Davenport from 2 p.m. to 3:30 p.m. local time today. Nicholas, the action coordinator for United Steelworkers union Local 105, says the protest will draw as many as 500 people in opposition to Alcoa's proposal.
"This is the worst proposal we've seen for benefits," said Nicholas, 30, who has a wife and two children. "We're not going to accept their choices without a big health-care fight."
Alcoa, the country's largest aluminum maker, and the union are in talks to replace a labor accord covering almost 6,000 workers at 11 plants across the U.S., which expires May 31. Failure to do so may lead to the first strike at the factories since a 31-day stoppage in 1986, according to the union. The plants account for more than a quarter of Alcoa's worldwide smelting capacity.
The union is also resisting New York-based Alcoa's proposals for new employees, including reductions to overtime pay and the elimination of defined-benefit pension plans and retiree medical benefits, Jim Robinson, the union's lead negotiator for the talks, said in an interview yesterday.
The health plan proposed to union workers offers "excellent coverage" and is the same as that available to 14,000 salaried and hourly employees in the U.S., Alcoa spokesman Kevin Lowery said. The current union health plan costs Alcoa about 45 percent more per employee than the one for salaried workers, according to the company's website.
Price Slump
The company revised its initial health-care proposal to bring down the cost of comprehensive family coverage to about $272 a month, Lowery said. Comprehensive family coverage will rise to about $315 a month under Alcoa's plan, from $87 now, the union's Robinson said. Robinson and Lowery both declined to comment on the likelihood of reaching an agreement by May 31.
Aluminum prices have dropped 11 percent this month amid concern that Europe's debt crisis may slow global economic growth. The slide in prices may weaken the union's position, said Charles Bradford, a partner at New York-based consulting firm Affiliated Research Group LLC.
"I'm not so sure Alcoa cares about operating these plants," said Bradford, who tracks metals companies. "If these plants close, the price of the metal might go up and that would help their operations in Brazil, Australia and Canada."
Idled Capacity
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 shows. Plants in Tennessee, Texas, New York and Washington with a combined capacity of about 700,000 tons, are already idle because of market conditions, Lowery 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, refinery 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 of capacity as of the end of 2009, according to a company filing.
Alcoa rose 12 cents, or 1.9 percent, to close at $11.30 in New York Stock Exchange composite trading yesterday.
Possible Strike
"The end goal is to get an agreement that everybody is happy with," Lowery said. "Until you have that in hand and it's ratified, everything else is pure conjecture."
While working toward an agreement, both sides said they're preparing for the possibility of a strike. Alcoa is "making plans to ensure that our customers, shareholders, employees, and communities are protected in case of a work stoppage, it said on its website.
For Nicholas and his coworkers in Davenport, their picket will serve as a dry run should they need to strike later to maintain their benefits, said Gerald Dickey, a union spokesman.
"The company has been saying it will be ready if there is a work stoppage," Dickey said. "If that happens, our membership is prepared too."
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