Oil Workers Victims of Complacent Union

The idea of giving workers virtually full paychecks even after they are laid off from their jobs was denounced as radical--even “communist”--when the late United Auto Workers President Walter Reuther proposed it more than 30 years ago.

A basic goal of corporations was, and usually still is, to “maximize profits.” And that goal hardly could be realized, Reuther’s critics said, if a company continued to pay workers who no longer were working.

The scheme “would put this country in such a state you won’t know it from socialism,” complained Henry G. Riter, who was president of the National Assn. of Manufacturers in 1955, when Reuther asked the auto industry to accept the idea.

The UAW and the auto industry long ago accepted Reuther’s “radical” idea and have continued to agree on other innovative ideas that make the original Reuther plan seem rather old-fashioned. But even that first idea still has not been widely accepted.

The 11,100 workers General Motors is laying off in its latest employment cutback are, or should be, thankful that Reuther and other UAW leaders were not deterred by the harsh criticism.

Under terms of their current contracts, the GM workers, like others laid off in the auto industry, get 95% of their regular pay and all of their benefits until they are recalled to their jobs or find other work.

The money comes from regular unemployment insurance benefits supplemented by benefits from a company-funded insurance program. At the current rate of layoffs, it would take years to exhaust the company’s fund.

In sad contrast, however, the system has not been adopted by all industries.

Thousands of oil industry workers being laid off by Chevron and other companies, for instance, have no such contract protections. They are entitled only to regular unemployment benefits, which in California are a maximum of $166 a week, unless their layoffs are permanent, and then they only get some severance pay, with the amount depending on length of service.

The UAW long has been one of the nation’s most innovative unions and even today is experimenting with new concepts in labor-management relations that well could set the pattern for it and other unions and their employers for decades to come.

None of the experiments, however, deals directly with a fundamental question that faces all corporations: how best to maximize profits?

The most successful companies, though they must earn profits in order to survive, are not those that worry more about short-term profits than about the welfare of their workers.

In some countries, such as Japan and Sweden, employers not only are willing to reduce profits, but some will accept losses for limited periods to avoid laying off workers. In this country, firms such as GM pay substantial sums of money through their guaranteed wage systems to keep their laid-off workers available in hopes of an economic upturn.

Some companies, either forced by unions or simply led by compassionate executives, remain profitable without losing sight of the welfare of their workers. Other companies, however, seem to feel almost no obligation to the workers they lay off in the quest for higher profits.

Chevron, for instance, announced last week that it is about to eliminate up to 9,100 jobs and sharply reduce new oil and gas exploration because of decreased oil prices.

But are those layoffs really essential to the company, as it contends, or would they be avoidable if company executives were at least as worried about their workers as they are about profits?

Unlike most other industries, labor costs in oil are relatively low, and some experts insist that Chevron could retain all of its present employees if it would accept a lower rate of profit.

Also, in its push for more profits, Chevron paid $13.3 billion in 1984 to buy Gulf Oil--a merger that ultimately could mean layoffs of up to 30,000 workers.

Jack Foley, a West Coast district director of the AFL-CIO Oil, Chemical and Atomic Workers, said in an interview that the “real problem” is that the relatively recent mergers and acquisitions in the oil industry have led to heavy debts at some companies.

“And the first place the merger maniacs look to get some extra money in a hurry and keep profits from dropping is the payroll. They often chop off thousands of jobs just to pay the interest on the debts they acquired.”

It is estimated that wages and benefits paid to oil refinery workers account for less than 2 cents a gallon of the price of gasoline. “In other words, if our members worked for absolutely nothing, as slave laborers, the consumer might save a penny or two on a gallon of gas,” Foley said.

Surprisingly enough, Michel T. Halbouty, a crusty, self-made, conservative Texas oil millionaire who heads Halbouty Energy Co. and has close ties to President Reagan, is not much less critical of the major oil firms than the union leaders.

He insisted in an interview that the industry could retain its current work force and continue exploration for new oil if it would accept lower profits--”not eliminate them, mind you, but just take some lower profits for a while.”

The industry’s cutbacks in personnel and oil exploration are “being done with a meat ax. And by practically doing away with new exploration, they are mortgaging the very future of the United States,” Halbouty charged.

“Instead of continuing to explore for oil and keeping it for the future of our country and themselves, they are cutting back on current costs so they can spend money to buy some companies that are having economic problems and they figure they can get on the cheap.”

For example, Halbouty said, “Exxon recently announced it will cut back $8 billion in capital and exploration expenditures in order to have ready cash to buy other oil properties.”

While he is angered by the cutbacks, Halbouty is convinced that “much of our current problem in the petroleum industry stems not from low oil prices but from those hostile takeovers by ‘raiders,’ causing huge debts that result in the cutbacks in jobs and exploration.

“The current oil price drop did not create the industry’s cutbacks, it only accentuated what the raiders caused,” he maintained.

The oil industry’s failure to offer much help to its laid-off workers is not due just to a lack of compassion by industry executives. While the auto workers’ union was finding ways to protect its members from the tragic economic impact of fluctuations in car sales, the oil workers’ union was complacent.

Oil long has been a growth industry. Generations of families worked in the industry, and neither union leaders nor members worried much about wage guarantees during any periods of layoffs. They seemed to feel that they had lifetime jobs and wanted relatively good pay (which now averages about $14 an hour, plus fringe benefits).

It may be too late to help the laid-off oil workers with some kind of Reuther-like plan. But the economic problems faced by them and other workers without such wage guarantees should encourage all unions to press for such a “socialist” scheme and even get industry leaders to rethink the need to expand the concept of maximizing profits so that it includes maximizing the protection of workers, too.

Showing True Colors

In their elation over a recent court victory, leaders of the National Right to Work Committee pretty well dispelled their claim that the organization is not anti-union.

Nearly 13 years ago, several unions went to court to try to force the committee to disclose the names of its contributors, arguing that the names would prove that the committee is really a front for anti-union employers who provide the bulk of the committee’s income.

The committee insisted that its only interest was combatting union shop contracts that require all workers in a company to pay dues or fees to help support a union backed by the majority.

The unions won some initial victories, but a federal appellate court agreed recently that the committee had the legal right to keep the names of its contributors a secret.

In hailing the court ruling, the committee’s president, Reed Larson, seems to have helped substantiate the basic charge that the committee is anti-union by describing the AFL-CIO and others who brought the “union bloodsuckers’ harassment suit” as “union goons,” “union bosses,” “union thugs” and “bullies.”

Such colorful language is probably as persuasive as the names of the contributors would be in revealing the animus of the committee toward unions.