Local 11 contract protects workers from NWN’s cost-cutting plant

On Aug. 3, the company introduced a “new operations model” to cut costs and remain independent. The model includes eliminating as many as 150 jobs over the next two to three years.

NWN has about 1,300 employees. Local 11 represents about 850 workers, including office staff and outside gas and construction workers.

The new model will centralize operations now spread out in 14 district facilities and service centers (in Albany, Astoria, Coos Bay, Eugene, Lincoln City, Salem, The Dalles, Vancouver and elsewhere in the Portland metro area), and outsource more construction work.

The facilities outside Portland and Salem will be at minimum staffing. But because of the no-layoff language in their contract, Local 11 members impacted at any of those facilities can, if they choose, relocate to Portland or Salem, said Mike Richards, executive secretary-treasurer of Local 11.

The union contract also contains language stating that the company cannot outsource work if it results in a layoff.

“Quite a bit of the new construction work is contracted out already,” Richards said. “Conversion work, the more difficult work, will remain in-house. It’s a safety issue. I doubt the PUC (Public Utility Commission) would allow it.”

The union contract also requires NWN to use union contractors when outsourcing work.

Workforce reductions, Richards said, will come primarily through attrition and voluntary severance packages.

Local 11 negotiated a severance package that will give any union employee who wants it, one week’s pay for every two years of service. That breaks down to about $10,800 for a 25-year employee earning $21 an hour (based on a 40-hour workweek).

Normal retirement age at NWN is 60, so in addition to the severance money, employees who will be 60 years old by the end of 2007 can take the cash buyout and still be eligible for all fringe benefits in the joint accord.

Richards said about 60 employees in the bargaining unit will turn 60 by the end of 2007.

NWN also agreed to conduct counseling sessions for impacted employees as part of the severance deal. Each eligible employee will receive a packet of information from the union and company explaining their retirement status.

“People were nervous at first,” said Richards. “But once it was explained, most felt that the new model would not impact them as dramatically.”

Richards said the new operational model shouldn’t impact individuals too harshly (although having to relocate or possibly change jobs can be difficult). Over the long-run, it will impact the union in terms of its membership. The 150-plus jobs won’t be filled.

Richards said there was no way of knowing how many people will accept the severance offer. Normal attrition at NWN, he said, is about 80 employees a year. Do the math and that’s 240 positions over three years — more than enough to cover the company’s stated goal of 15 percent.

In its most recent financial report, NWN said it expects to incur severance costs in the fourth quarter of $1.5 million to $2 million related to workforce reductions of an estimated 50-100 people.

Union employment at the gas company has been on the wane for years. In 1997, when the first joint accord guaranteeing no layoffs was ratified, Local 11 represented more than 1,000 workers. In 2004, when the current five-year accord was finalized, there were 900 union members.

Today, the gas company employs about 850 union workers.

Meanwhile, business continues to grow. Customer growth is on pace for a 20th consecutive year at 3 percent or more and net income and earnings per share of publicly-traded stock through the first six months of 2006 are up 5 percent, according to financial reports.