January/February 2005 IBEW Journal

Asarco union retirees and supporters gather at federal court house in Tucson, Arizona, to protest against Grupo Mexico’s attack on health care benefits.

You’re sitting on your porch, enjoying another day of retirement after a lifetime of work in Arizona’s copper mines and smelters. You’re not rich, but you’ll survive on your union-negotiated pension and health care benefits. Or so you thought.

That’s until a stranger shows up at your front door to serve you with court papers. You’re not involved in any court case. What’s the deal?

You’re being sued by your former employer, American Smelting and Refining Company (Asarco Inc.), now a division of Grupo Mexico SA, one of the world’s largest mining companies. What’s the charge? You are still collecting medical benefits and Grupo Mexico is sick of paying the bills.

This isn’t a joke. This is the cold reality for a growing number of retirees in America, including those of IBEW Locals 518 and 570 who spent decades maintaining Asarco’s mines and processing facilities in Hayden, Ray and Silver Bell, Arizona.

A recent article in The Wall Street Journal described the latest tactic by employers to escape the growing costs of providing health coverage to union retirees. In mid-2003, Asarco Inc. sent letters to retirees notifying them of an increase in their health care premiums. "As it did so, " reports the Journal, "the copper company sent summonses to some retirees in Arizona, where many live, telling them they were defendants in a suit it was filing."

The suit cites a paragraph—inserted in the 1993 health plan—that says: "The company reserves the right to amend or terminate the plans at any time for any reason…even after you retire." Asarco, like other employers, also contended that retiree benefits are subject to "duration clauses," meaning that they expire simultaneously with labor agreements.

Chuck Yarter, a retired steelworker, discussed the cuts in health care and prescriptions in a Labor Day speech that was re-printed in The Rumble, a newsletter from the Solidarity Council for Justice, a group of eight unions, including the IBEW. Before the cutbacks, Yarter’s yearly pension was $12,214. Medical deductibles were $150, leaving him with $12,064 per year.

After the cuts, Yarter’s deductibles rose to $2,500, leaving him with only $6,450 for the year. He says: "We retired Americans are now under attack by the very companies that benefited from our working years."

Unions representing workers at Asarco are fighting back. The Solidarity Council for Justice held a rally of hundreds of copper retirees and supporters at the Federal Courthouse in Tucson in September. Council members have also met with union leaders from Asarco/Grupo unions in Mexico and Peru to discuss common problems.

The IBEW, the United Steelworkers of America and the International Chemical Workers have filed a counterclaim to enforce contractual obligations for lifetime retiree medical benefits.

Rejecting the mining giant’s allegation of "severe financial distress," the unions point to exorbitant salaries lavished on upper management.

Mike Verbout, assistant business manager of Tucson IBEW Local 570 says that Grupo Mexico’s downsizing has compounded retirees’ problems, forcing them to "run around to get answers to medical benefit questions."

There won’t be any answers coming from the federal government. A U.S. Department of Labor spokesman said that pensioners "aren’t our constituents anymore."

Grupo Mexico’s combative stance on retiree health care mirrors their relationship with the active work force. The contract between Grupo Mexico and IBEW, USWA and other unions has expired. After years of failing to maintain their own plants and equipment, Verbout says, "now they want concessions, under the implied threat that they won’t invest in future operations."

The copper region of Arizona has a history of vicious labor-management conflict from a 1917 strike and another pivotal strike at Phelps Dodge in 1983. The company hired replacement workers and eventually decertified locals of the United Steelworkers of America, a move that has been cited as a turning point in U.S. labor relations.