The Maritime Union of Australia (MUA) is working closely with the International Transport Workers’ Federation (ITF), the ILWU and other allies on a global education campaign to show why Chevron – not workers – is responsible for bloated budgets and growing delays on a massive natural gas project in northwestern Australia.
Chevron triggered the campaign by blaming members of the Maritime Union of Australia for self-inflicted problems with the company’s “Gorgon” project that intends to develop, produce and ship natural gas in liquefied form (LNG) from offshore locations. The project’s initial price tag of $37 billion has since swollen to $54 billion.
Lawsuit and threats
When the MUA tried to negotiate an Enterprise Bargaining Agreement for maritime workers in the offshore oil and gas sector, Chevron rejected the union’s proposals and dug in their heels. Despite repeated efforts by the union, Chevron stopped talking. Following a legitimate health & safety dispute that briefly delayed the departure of a barge, Chevron declared war on union members by filing a multi-million-dollar lawsuit against the MUA. Chevron then upped the ante with an expensive and deceptive public relations campaign to smear the union by claiming that workers were making unreasonable demands for hundreds of dollars an hour, thus jeopardizing the project and causing cost-overruns.
Exploiting foreign workers
Chevron and other corporate investors in Australia have been testing the waters with a strategy to lower labor costs and destroy unions. The scheme involves importing contract laborers from low-wage countries to work on projects in Australia – paying the immigrants half or less of the Australian union rate – with no worries about unions, safety complaints or other problems.
Dave Noonan of Australia’s Construction, Forestry, Mining and Energy Union (CFMEU) says his union has filed complaints about foreign worker abuse since 2010, but little has been done by the Australia’s anti-union government.
“Australian workers are telling us they are applying for jobs on these projects and don’t even get a call back,’’ he said. Mega-profits & dangerous blunders Chevron, like other oil companies, has enjoyed massive windfall profits in recent years with earnings further enhanced by huge taxpayer subsidies.
The Northern California-based corporation reported profits of $21.4 billion in 2013 and $26.2 billion in 2012. Once seen by investors as the hottest growth prospect among major oil companies, Chevron has stumbled recently in the wake of a refinery explosion and fire in Richmond, CA that nearly killed a dozen Chevron workers and sent over 10,000 residents to local hospitals with concerns about respiratory problems.
Support to set the record straight
In early May, 2014, Will Tracey, MUA’s Assistant Secretary for the Western Australia Branch and ITF Australia Campaign Director Shannon O’Keeffe arrived in California to conduct research and establish new contacts. They were assisted by the ILWU and the United Steelworkers Union, which represents refinery workers in many Northern and Southern California sites – including Chevron’s refinery in Richmond, CA where the 2012 explosion nearly killed a dozen of their members.
After meeting with the ILWU International Executive Board, who pledged their solidarity and support, Tracey and O’Keeffe met with other unions, community and environmental organizations that monitor Chevron’s behavior in Richmond and around the world.
The whirlwind tour included interviews on a local radio station, briefings with Richmond City officials who are trying to hold the company more accountable, and discussions with key environmental leaders from Communities for a Better Environment (CBE), Movement Generation, Amazon Watch, and others.
“We learned a lot from our visit, including the fact that Chevron’s disrespectful behavior in Australia is similar to how they seem to operate in Richmond and around the world,” said O’Keefe, who ventured with Will Tracey to Chevron’s headquarters in the pristine suburb of San Ramon, CA to inspect the corporate campus.
Lessons learned from the MUA’s California visit include:
• Chevron has cut corners on safety by avoiding preventive
• Chevron has been charged with serious violations by state a federal safety inspectors;
• Chevron had 5 significant accidents at their Richmond refinery in the past 10 years;
• Chevron admitted committing six criminal charges at their Richmond refinery in 2013;
• Chevron received Cal/OSHA’s highest safety-related fines in history in 2013;
• Chevron has committed 169 air quality violations during the past six years; and,
• Chevron plans to increase cancer causing chemicals and greenhouse gas released in Richmond;
Meeting with Wall St. analysts Armed with new information and contacts from their California visit in early May, the MUA team returned to Australia for some catch-up and preparations. But within two weeks, O’Keefe and the campaign were back in the United States in late May. Their first stop was a New York City meeting with Wall Street analysts who closely follow Chevron’s operation in order to alert investors of potential problems ahead.
Analysts were interested in hearing more about the Gorgon gas project, especially details about the delayed timelines, budget problems and company’s provocative labor posture that includes growing litigation expenses.
Texas shareholder meeting
The next stop on the campaign trail was Chevron’s annual shareholder meeting on May 28, where investors are allowed to ask top management questions about company policies. Previous
Chevron shareholder meetings have taken place in the San Francisco Bay area, near the company’s headquarters. But this year, Chevron tried to hide from critics and the media by moving the shareholder meeting to Midland, Texas. The MUA team and their allies weren’t subdued by Chevron’s last-minute
switch and came prepared with proof of their shareholder status. The campaign delegation included MUA National Secretary and ITF President Paddy Crumlin, Western Australian Branch Assistant Secretary Will Tracey and ITF Australia Campaigns Director Shannon O’Keeffe. The trio listened patiently until the floor was opened for questions.
Then they set the record straight about the real reasons why Chevron’s massive Gorgon project had gone off the rails in Australia. They explained how the company wasted money on expensive public-relations and lobbying consultants who unfairly blamed the Gorgon’s bloated budget and tardy timelines on the MUA.
“Gorgon is an important project for both Chevron and the Australian national interest in the development of our nationally-owned resources,” said MUA National Secretary and ITF President Paddy Crumlin. “We’ve been trying to reach a reasonable agreement with Chevron for years, but each approach has been firmly rebuffed by the company. Chevron should sit down with the unions to develop a sustainable and functional relationship with its workforce.”
Crumlin noted that the Gorgon is one of the largest LNG (liquefied natural gas) projects in the world – and that those energy resources belong to the Australian people. He said Chevron should develop a good relationship with workers on the project and maintain community support. So far, he said, it has been a dismal failure. Crumlin concluded with some colorful Aussie language that may have baffled Chevron’s top brass: “The company needs to get a grip, cop its stuffups on the chin and return to a mature and balanced industrial relations model, more suited to Australian values underpinning economic and commercial success.”
Chevron CEO backtracks
Crumlin’s comments drew a response from Chevron’s top dog, CEO John Watson. Their exchange was covered in a Reuters news report about the shareholder meeting. Unlike Chevron’s strategy in Australia that scapegoated the union, Watson was careful to avoid any suggestion that labor costs had contributed to the Gorgon’s busted budget. Instead, the CEO mentioned bad weather, a rise in the valuation of Australia’s currency, and increasing material prices. He added that Chevron is committed to using union labor in Australia and closed with a clear statement that amounted to a welcome and refreshing flip-flop: “We have no intention of blaming organized labor for cost overruns or delays at Gorgon.”
Business school exposé
In addition to verbal sparring with company officials, the MUA team used the shareholder meeting to release a research port about the Gorgon project conducted by the University of Sydney Business School, which offered a thorough analysis of the project’s problems.
Authored by Professor Bradon Ellem, the report titled, “What is Happening on Chevron’s Gorgon Project?” concluded that delays and cost problems were due to logistical challenges and poor management decisions – not unions and labor issues which played a negligible role.
The report noted that wages are only a small part of the project’s overall cost, with maritime labor estimated to be only 1%. He also found that most of the financial figures used in public debates were misleading, and suggested that Chevron should engage workers in a more cooperative approach to increase efficiency.
‘Wealth of untapped worker experience’
The report suggested Chevron should utilize workers’ “untapped wealth of experience and ideas about how to deliver the project on-time and on-budget,” and encouraged Chevron to rethink the issues and stop blaming workers. The report also chided management for shifting responsibility from themselves to workers, noting that “neither Chevron nor the partners and contractors appear to see themselves as in any way accountable for the failings on their project. In short, both the evidence presented here and the pattern of blame-shifting raise questions about management practice and management accountability.”
MUA WA Branch Secretary Christy Cain welcomed the report as a “wake-up call” and hoped it would influence much of the Australian media that has blamed workers for the Gorgon’s problems.
Western Australian Branch Assistant Secretary Will Tracey praised the report for showing how time and money could be saved through closer engagement with union workers who want the Gorgon project to succeed.
“There’s a lesson in this report – not just for Chevron, but for the media commentators pushing for lower labor standards as some sort of economic panacea. The real key to unlocking Australian workplace productivity is through better engagement and cooperation between management and workers – not screwing down wages and eroding conditions in an adversarial environment.”