Alcoa Inc. obtained some of its hoped-for worker contributions to health care costs, according to details of a tentative four-year contract disclosed by the United Steelworkers union Thursday.
Alcoa and the USW reached a deal late Wednesday night that provides 9,000 union members with a health plan featuring low deductibles and premiums, plus wage hikes and a $1,500 signing bonus upon ratification.
The proposed master contract institutes a health plan that will require aluminum workers at 15 plants to pay part of their premiums — $20 per week — plus higher deductibles, the Pittsburgh-based USW said. Under the old contract, workers did not pay any healthcare insurance premiums.
“We were looking for a contract to instill consumerism,” said Alcoa spokesman Kevin Lowery in Pittsburgh.
CEO Alain Belda had made containing healthcare costs a key issue in the negotiations. In bargaining in St. Louis, the company initially offered the union five health care plans, then reduced it to one plan at the union’s request. The agreement places a cap on a worker’s annual deductible and co-insurance at $1,000 for individuals and $2,000 per family, excluding prescription drugs.
Rather than continuing with a plan that provided workers with first-dollar coverage on health care, Alcoa said, it sought to spread the costs by implementing plans similar to those in other unionized facilities, as well as ones for management personnel.
With the settlement reached after almost two weeks of intense bargaining, “everyone will be viewed as a winner,” Lowery said. “The facilities will be more competitive and it preserves the standard of living” for the workers.
The contract offers workers a 2.5 percent wage hike as of June 5, and 2 percent in June 2007. The final two years of the pact will provide incremental annual raises based on the job grades.
Alcoa retirees will have healthcare coverage under the agreement, but the pact limits Alcoa’s long-term liabilities. Alcoa agreed to put “millions of dollars” into a fund to cover retiree healthcare costs. Union spokesman Howard Scott said the exact amount is still unknown.
The contract makes production workers eligible for bonus pay, which will be tied to the company’s financial performance at each particular plant, and each business segment, Lowery said.
The USW, which reached the master agreement less than two hours before the old pact expired, also has tentative settlements on local issues at all 15 plants. There will be ratification votes over the next few weeks at the 18 local unions affected by the master agreement, Scott said.
Metals analyst Charles Bradford of Bradford Research & Soleil, New York City, said he could not analyze the settlement because he did not have any details.
A labor pact settled without a strike was a plus for the union, Bradford said.
“The last time they had a strike, the company realized they could do the work with fewer workers. You would not want them to find that out again,” Bradford said.