A done deal

Nearly one year after labor contract negotiations between the United Steelworkers Workers International Union Labor 11-0001 and the Stillwater Mining Company began, a contract has been signed.
The news came from Union President Scott McGinnis last Saturday morning at 8:22 a.m., following two days of voting by union members employed at the Nye site and the smelter in Columbus. The contract covers 820 people between the two locations.
The final contract contained “a small tweak on the back-end” dealing with how incentive multipliers work. Also intact is a June 2017 wage increase review, which will come at the midway point of the newly ratified 4-year contract.
“Really nobody likes this because we didn’t gain anything. But we really didn’t lose anything either,” said McGinnis.
Union members had rejected two previous proposed contracts between June 2015 and August 2015 - both of which had been unanimously recommended by the union’s negotiating committee. The last one came at the end of July 2015, at which time the company announced it had reached an impasse on negotiations.
The two sides agreed union members would continue working under the terms of what was by then an expired contract while an Unfair Labor Practices complaint was filed in federal court. Behind the scenes and very much out of the public eye, the union withdrew that complaint in November 2015 “because we were going to lose,” said McGinnis.
By withdrawing the federal complaint, the union was free to resume contracts with SMC. That happened last month.
“With the metals market like it is right now, and people already having been laid off, this protects us. We are protecting ourselves,” said McGinnis. “It is what it is right now.”
“We’re glad to have it done, not only in Nye but for the Boulder site as well,” said SMC President and CEO Mick McMullen Tuesday in Columbus.
The material points of the agreement are two-fold:
•No increase in base wages for each of the first two years of the agreement.
•Simplification of the incentive program and the introduction of metrics that better align employee and shareholder outcomes.
McMullen said the company is making changes to stay competitive during what he called a difficult pricing climate and “change is difficult to make sometimes.”
When asked if further workforce reductions were planned, McMullen said no.
“We think we are appropriately staffed at the moment,” said McMullen, adding that he can’t promise it will stay as such.

Slumping Market, Profit Loss, Misleading Bonus Award
Adding to union members frustration was the recent announcement of bonuses for McMullen and other top executives totaling approximately $1.6 million in restricted stock. According to SMC’s filing with the U.S. Securities and Exchange Commission McMullen received 172,560 shares from the company’s equity incentive plan.
Also awarded equity bonuses were the chief financial officer, the corporate controller, vice president and the corporate attorney.
However, McGinnis and the company pointed out that such awards are built into those people’s pay structure and actually come for work done a year ago, saying it was a matter of bad timing to happen at a time when there have been back-to-back profit losses in the millions, workforce reductions and a slumping metals market. Company stockholders also must approve such bonuses.

Amid changes, much remains the same

Some of the most important things have remained the same at the Stillwater Mining Company during the last few tumultuous years.
The Nye and East Boulder mine sites sit on the J-M Reef, which is the world’s richest grade Platinum Group Metals (PGM).
There is more than 22 million proven and probable ore reserves with only 11 miles of a 28-mile strike developed to this point.

There is more than 22 million ounces of proven and probable ore reserves with only 11 miles of a 28-mile strike developed to this point. Two major development projects are well underway. SMC is the sole producer of palladium in the United States.
But there have been marked changes in the company during the past few years - some of them noteworthy.
A partially successful hostile take-over of the board of directors in 2013 was led by the New York Hedge Fund the Clinton Group and former Montana Gov. Brian Schweitzer, who at the time said he was getting involved because he wanted to revive one the state’s most high-profile companies and safeguard 1,500 Montana jobs that could be at risk.
But that workforce number has actually gone down, partially due to a lengthy PGM market slump and company reorganization that is geared to eventually save up to $10 million a year.
Also of note is the fact that Schweitzer is now one of just two Americans on the board of directors. The remaining members are mainly Canadians. SMC’s Mike Beckstead points out that it’s difficult to find a board with mining experience in-state. By all accounts, the current board brings a substantial wealth of knowledge to the table in the mining industry.
Also, SMC’s headquarters moved last summer from Billings to Denver. And the company is releasing information in a manner not regularly employed before. For example, on Jan. 19 SMC issued a press release that contained a portion of fourth quarter and full-year results. The standard practice has previously been to not release quarterly reports until the scheduled conferenced calls that media members are allowed to take part in. Fourth quarter and full year 2015 results conference call has been set for Feb. 22.
From 2010 to date, partial results have been announced a total of just five times.