Several thousand ExxonMobil Baton Rouge workers will see company contributions to a major retirement benefit halted in October in a decision that impacts the entire U.S. operations as the oil giant tries to cut costs, drawing anger from a union representing workers.
ExxonMobil matches a 6% minimum employee contribution with 7% of the participant’s pay. The matching contribution will be suspended Oct. 1. The company did not say how much money that will save.
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Several thousand Exxon employees work at Exxon's Baton Rouge refinery and related petrochemical facilities at the complex and local area.
ExxonMobil's business has been hit hard by a disruption in the global travel economy and record low demand for gasoline and jet fuel that are major refinery products. The company lost $1.1 billion in the second quarter, and the Irving, Texas-based oil producer brought in $32.6 billion in revenue, less than half of what it brought in at the same time last year.
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The Baton Rouge chapter of the United Steelworkers Union, which represents fewer than 1,000 workers at the ExxonMobil facility, expects to have a membership meeting next week to discuss the company's decision.
"Our union has the right to bargain," the union said on its Facebook page. "The request to bargain applies to this change (of retirement benefits) under Article 1181, and this request is being made locally and at other sites."
"The USW ExxonMobil Council is consulting with the USW international experts that are knowledgeable regarding benefit changes by corporations and actions that can be taken," the post said.
The United Steelworkers Union national office had a stronger sentiment.
“We are angered and disappointed in Exxon’s decision to suspend the matching contribution to our members’ 401(k) plans," the United Steelworkers Union said. "Our members have continued to operate and maintain the facilities through the Covid-19 pandemic as essential workers. They deserve to be treated with respect. We are assessing our options and will be doing all we can to protect our members’ benefits.”
The company's total benefit package "remains competitive despite the suspension," ExxonMobil said in a statement.
"ExxonMobil is continuing to significantly reduce spending as a result of market conditions caused by the COVID-19 pandemic and commodity price decreases," the statement said. "The company match contributions suspension is part of the company's effort to reduce costs in response to the impact of the pandemic."
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The company declined comment regarding any union negotiation.
In April, ExxonMobil decided to slash capital expenditures by 30% this year and cash operating expenses by 15%, and has been on track for those goals, according to earnings conference calls with analysts.
“Simply put, the demand destruction in the second quarter was unprecedented in the history of modern oil markets,” Neil Chapman, senior vice president at Exxon, said on Friday. “To put it in context, absolute demand fell to levels we hadn’t seen in nearly 20 years. We’ve never seen a decline of this magnitude and pace before, even relative to the historic periods of demand volatility following the global financial crisis and as far back as the 1970s oil and energy crisis.”
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