Undercurrent of unrest at Stillwater Mine
On the heels of Stillwater Mining Company announcing a $23 million first quarter profit and a pay raise for CEO Mike McMullen, the mood among its union workforce is less than jubilant.
Contract negotiations with United Steelworkers local 11-0001 began in March and as of Tuesday afternoon were continuing.
With just 11 days left on the four-year contract, Union President Scott McGinnis said Tuesday the two sides were still working to bridge a gap of about 20 percent..
McGinnis said SMC had proposed a cumulative 25 percent cut in pay, incentives, benefits and retirement.
SMC Public Affairs Manager John Beaudry that while he could not get into specifics, the “current proposals represent less than 5 percent reduction from the current contract with an opportunity to make that back and more with productivity improvements.”
Beaudry and McGinnis to comment further, citing the pending negotiations.
Signs of problems between the union and the company surfaced publicly in March with the unfavorable reaction to an advertising campaign launched by the company intended to promote the company and its community involvement.
In one television ad, a graphic shows the average total compensation of an hourly worker at $126,000. That amount actually includes all benefits and not just base salary, which is noted in small print under the graphic. Union members felt it was a bit misleading and made them look greedy during what was then the start of contract negotiations.
This past weekend seemed to be a boiling point as several wives stood on the corner of Pratten Street and Pike Avenue -- across from company offices -- holding signs reading “If Provoked We Will Strike” and “CEO Gets Rasie! Miners Take Paycut? Unfair!”
A matter of money
Early this month, SMC released its 2015 first quarter results which revealed a $23 million net income. That was up from $19.6 million one year ago. Factors in this profit were listed as lower costs and increased mine production “offset by lower realized prices and a $4.8 million decline in foreign currency” mostly attributable to the Argentine assets, according to SMC’s investor relations report.
At the annual shareholder’s meeting in May, McMullen’s base pay was bumped from $660,000 to $712,000. With stock awards, a non-equity incentive plan and all other compensation, McMullen’s total compensation for 2015 has the potential to hit around $3.5 million. A large portion of the CEO compensation is at risk and he does not get the bonuses and other incentives, if established performance targets are not met.
SMC employed 1,773 at the start of the first quarter in 2014. Currently it employs 1,603 people. McMullen said the following during the Q1 2015 Earnings Call recently:
“We have achieved that through voluntary and involuntary programs as well as through natural attrition. I do note that for a variety of reasons our attrition rates of the Company are some of the lowest ever seen in the history of the Company. And we have had a minimal impact on line production. And, again, we have seen that like-for-like year on year production was actually up this quarter relative to the last year.”
McMullen also noted that the company is “continuing to evaluate our optimal staffing levels” and will do so continually in order to assure appropriate staffing. He also linked staffing reductions with “PGM (precious group metals) basket price is, at the lowest level in five quarters, the cost structure has got to be adequate to withstand that volatility. And, again, the core focus of this business at this stage is not on producing more ounces. It is on producing more profitable ounces.”
SMC is the largest primary producer of PGMSs outside of South Africa and the Russian Federation and is the only U.S. miner of PGMs.
PGMs are rare precious metals used in a wide variety of applications, including automobile catalysts, fuel cells, hydrogen purification, electronics, jewelry, dentistry, medicine and coinage.