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AMO And The LNG Tankers: Pact Protects American Jobs |
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By MICHAEL R. McKAY | |
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AMO didn't seek the new work on six liquefied natural gas carriers operated between Indonesia and Japan by Pronav Ship Management, but we're happy to have it. And, while we regret the flag-out of the Pronav fleet from the U.S. to the Marshall Islands, we are pleased to know that our secure collective bargaining agreement with Pronav preserves American jobs and brings labor justice to merchant ships under an increasingly prominent flag of convenience--an important goal shared by the International Transport Workers Federation and AMO. Under the AMO-Pronav agreement, AMO engine and deck officers are paid at high U.S. wage rates, and they and their families are covered at Pronav's expense by all AMO benefit plans. Union members in the Pronav fleet have the absolute right to file grievances, and AMO has the absolute right to pursue contract disputes all the way to arbitration if necessary. In addition, AMO members aboard the Pronav ships work with U.S. citizen crews represented by the Seafarers International Union, which has been aboard the LNGs since the first was delivered in 1977. As satisfying as the contract is, there is one disappointment. The agreement does not cover two additional Pronav LNGs that will employ foreign officers and crew members in spot markets while in Marshall Islands registry. Nevertheless, the AMO-Pronav agreement is a significant departure from unpleasant tradition. Maritime labor is much more accustomed to losing jobs when U.S. merchant ships go foreign. For major seagoing unions and an employer to agree on contract terms protecting American jobs and U.S. standards on six out of eight foreign-owned and flagged ships in foreign trade was no modest achievement, especially since the employer was under no legal obligation to use U.S. officers and crews to any extent. What it came down to was practical need. The ships' Japanese owners and the U.S. owner trustees wanted highly skilled U.S. officers and crews for the specialized work on the fixed-route LNGs. The owners and trustees were willing to let Pronav negotiate labor terms and conditions on their behalf for that safety margin. But the AMO-Pronav agreement was not without controversy. Nor was it without delay. All eight of the U.S.-built LNG tankers had been manned at the licensed end by members of the Marine Engineers Beneficial Association--including Larry O'Toole, MEBA's latest president. Understandably loath to give up jobs and jurisdiction, O'Toole and MEBA did what we in AMO would have done--they fought the reflagging plans at every possible turn and in every available forum, putting off manning by AMO for more than a year. At one point, O'Toole and MEBA even accused the Maritime Administration in the Department of Transportation of abandoning the U.S. flag. Ironically, O'Toole and MEBA had been prepared to man the ships under the Marshall Islands flag, and MEBA officials were at one point talking up the possibility of a breakthrough agreement that could lead to additional MEBA jobs on flag-of-convenience ships. But an agreement was never reached between MEBA and Pronav, which ultimately approached AMO for a contract and a complement of qualified officers. A Long, Important Story This is a long but important story, with much to be said for the record. At its core is the extent of AMO's involvement, and how that developed. In January 1999, the LNG tankers' U.S. owner trustees, Wilmington Trust Co. of Delaware and U.S. Trust Co. of New York, applied to MARAD for permission to flag out two of the eight ships--the LNG Aquarius and LNG Capricorn--to the Marshall Islands for continued service in the Far East. Fresh in office, O'Toole was facing an immediate and potentially wider crisis--reflagging authority for the LNG Aquarius and LNG Capricorn would put the additional six Pronav LNGs at real reflag risk. O'Toole recalled the unfortunate development in a letter to Maritime Administrator Clyde Hart on Oct. 2, 1999. MEBA had been ready to resist reflagging, O'Toole told Hart. "I do not know how to make it clearer than this--the MEBA opposes all reflaggings, period," O'Toole wrote. According to O'Toole's account to Hart, Deputy Maritime Administrator John Graykowski suggested to O'Toole in February 1999 that MEBA and SIU attempt to lock in continued employment on the LNG tankers for as many of their members as possible. O'Toole said he had interpreted Graykowski's recommendation as an indication that MARAD was "predisposed to let the LNG vessels go." O'Toole told Hart he had had no choice but to take Graykowski's advice and bargain for MEBA's future not only on the LNG Aquarius and LNG Capricorn, but in the entire Pronav fleet. O'Toole remained confident as MEBA's negotiations with Pronav proceeded over the summer. Then, on Aug. 20, 1999, Wilmington Trust and U.S. Trust asked MARAD to green-light the reflagging of the LNGs Aries, Gemini, Leo, Libra, Taurus, and Virgo. By then, MEBA was publicly enthused about the prospect of manning the LNGs under the Marshall Islands flag. "Sensing a delicate political problem, MARAD urged both sides (MEBA and Pronav) to avoid a confrontation and work out their differences," said an account in Fairplay, a shipping trade magazine. "MEBA President Larry O'Toole saw that as an opportunity--if he could negotiate an agreement and keep his engineers on the ships, MEBA might have won itself the right to staff other foreign-flag ships. 'This could be a benchmark for MEBA to go out into the FOC market,' a MEBA official told Fairplay." MEBA, Pronav: The Bargaining Breaks Down But the bargaining soured and eventually failed. Pronav then called AMO--which had had no hand in the dispute--and proposed contract negotiations covering six ships. Certain that both the January 1999 and August 1999 reflag applications would be approved, Pronav made it clear that, while its preference was for U.S. officers and crews, the ships were going--with or without labor agreements guaranteeing American complements. I told O'Toole that, if MEBA could somehow salvage its talks with Pronav, AMO would decline the company's invitation to bargain. O'Toole and MEBA were unable to do it, so AMO went to the table--and left with a complete, fully enforceable labor contract subject only to MARAD's approval of the reflagging applications, the lasting satisfaction of having saved some American jobs, and a new trade for AMO members. Suddenly, MEBA no longer found merit in the notion of U.S. merchant marine officers working under a foreign flag, no matter what the terms--what had until then been viewed in MEBA as a potentially lucrative growth opportunity was now seen as the beginning of the end of the U.S. merchant marine as we know it. On Aug. 30, 1999, MARAD posted notice of the reflagging applications in the Federal Register and set a 15-day public comment period, which was later extended through Sept. 29, 1999. AMO filed no comment with the agency and made no attempt to influence MARAD's decision. Meanwhile, MARAD considered the applications with apparent care--it was more than a month before a decision came down. MARAD's approval of the Marshall Islands flag was necessary because construction loans obtained for all eight LNGs had been backed by the federal government under the shipbuilding credit guarantee authorized in Title XI of the 1936 Merchant Marine Act, and because three of the ships--LNG Aquarius, LNG Aries, and LNG Capricorn--had been built with direct federal aid under the now-defunct merchant ship construction differential subsidy program authorized in the 1936 statute. All of the loans guaranteed under Title XI had been repaid and the 20-year U.S.-flag service mandate on the three subsidy-built ships under CDS rules had been satisfied by the time the first reflag application was filed. The Issue Goes To Court While MARAD deliberated, MEBA led a drive to persuade the agency to deny reflag rights for the LNGs. O'Toole and others in the union argued that the government, U.S. mariners, and U.S. taxpayers would lose if the ships skipped. But the record had already confirmed that the real issue was lost jurisdiction for MEBA, not lost jobs for American mariners. On Nov. 3, 1999, MARAD announced that it would permit the eight LNG ships to be reflagged. The decision had been a difficult one, said a reluctant MARAD. The agency had apparently sought some economic or national security rationale for keeping the vessels in U.S. registry, but found none. There was no commercial U.S. demand for the ships' services, MARAD said, and the Title XI and CDS obligations had been met. Moreover, the Defense Department had advised MARAD that the LNGs were not militarily useful and that the flag transfer would not damage the strategic sealift manpower base because of the continued employment of U.S. officers and crews under the Marshall Islands flag. On Dec. 9, 1999, O'Toole and MEBA--awaiting an arbitrator's decision they had hoped would force Pronav back to the bargaining table--asked the U.S. Court of Appeals for the District of Columbia Circuit to "overturn" MARAD's decision or to "remand the decision for further proceedings," according to MEBA's Dec. 17 Telex Times. MEBA also asked MARAD to stay its reflagging order while the case was in court. On Dec. 14, 1999, Charlotte Gold--who had been designated by MEBA as its contract arbitrator--ruled that Pronav was bound by no MEBA contract and was under no obligation to negotiate further. Nine days later, MARAD denied MEBA's request for a stay of the order. "MARAD believes that its Nov. 3, 1999 order approving the transfer of the vessels is lawful, and that a stay of the order is not warranted," the agency said. "MEBA has not provided any new information to MARAD that was not considered during the extensive evaluation of the transfer applications and the preparation of the Nov. 3, 1999 order, has not demonstrated a strong likelihood that it would prevail on the merits of its claim, and has not demonstrated that it would suffer irreparable harm." On Dec. 30, 1999, MEBA asked the federal court to stay MARAD's order while MEBA's case was under judicial review. Meanwhile, MEBA filed liens against the LNG Aquarius and LNG Aries for nearly $1.8 million per ship. According to MEBA's Telex Times on Jan. 7, 2000, the liens were intended to enforce MEBA's "severance rights." The issue remained in legal limbo until June 16, 2000, when the court concluded that it lacked jurisdiction over portions of MEBA's claim, that MARAD had acted responsibly within its scope under the law, and that MEBA had not provided sufficiently strong reason to block the registry transfer. In response to the court's findings, MARAD on July 12 gave Pronav permission to begin reflagging, and AMO members who had been collecting stand-by pay from Pronav for several months prepared to board the ships. O'Toole's Unusual Last-Stand Ploy Way down but not out, O'Toole on July 14 employed an unusual tactic in a last-ditch bid to thwart the officer turnover. He wrote to the president-director of Pertamina, the Indonesian firm that owns the cargo hauled by the LNG ships, and proposed a "mutually beneficial" swap--the training of Indonesian seafarers by MEBA in exchange for MEBA jobs on the six vessels. "In February 2002, the provisions and regulations contained in the Standards of Training, Certification and Watchkeeping '95 Convention (STCW) take effect," O'Toole wrote. "In the near future, the Maritime Safety Committee of the International Maritime Organization will be publishing a 'white list' of nations who have established procedures consistent with STCW for training their seafarers. Seafarers from countries not on the STCW '95 'white list' will be prohibited from working on foreign ships. I understand that the Republic of Indonesia is seeking from the IMO a postponement of the effective date of the convention due to not yet being prepared for the STCW IMO auditing evaluation of the Indonesian maritime training and certification programs." O'Toole called on Pertamina to "exercise its specific rights as the vessels' charterer to forcefully insist" that Pertamina's U.S. agent, BGT/BLNG Inc., "direct the existing ship manager (Pronav) or an alternatively engaged replacement ship manager, to retain MEBA represented licensed officers on board the six LNG vessels that are remaining in the Indonesian LNG trade." Such cooperative action would open MEBA's Calhoon School of Marine Engineering in Easton, Md., to Indonesian seafarers in need of STCW certification, O'Toole said. O'Toole explained his proposal to the Hon. Robert Gelbard, the U.S.ambassador to Indonesia, and Gelbard asked Pertamina to accept the deal. But, as BGT/BLNG Inc. President Sidney Vass explained in a letter to Gelbard at the U.S. Embassy in Jakarta, Gelbard had been "provided with only part of a long and complicated story." Vass pointed out that the flag transfer had been approved by MARAD in full compliance with U.S. law. He then explained why MEBA had sought Pertamina's intervention. "The simple reason for MEBA's opposition is that its efforts to negotiate a contract to keep its officers on the vessels following the reflagging failed, and, as a result, another American union, the American Maritime Officers, received the contract to crew these vessels with American officers," Vass wrote. "Indeed, MARAD took unprecedented action to preserve American jobs on these six vessels when it imposed a number of conditions to its reflagging approval. Under the current agreements with the two American unions whose members will man the reflagged vessels ... all but two of the 27 crew members will be American citizens." Vass described the specially-trained AMO engine and deck officers assigned to the vessels as "of the highest caliber," and he noted that most of the SIU complement already aboard the ships would remain. "Safety and the integrity of the service to Japan are our highest concerns, and all parties are satisfied that they have been more than adequately dealt with. MEBA's continued opposition to the reflagging thus is rooted not in legitimate concerns over safety or efficient operation of our vessels, but in an inter-union dispute as to which union will provide the Americans to crew them." Taking His Case To The AFL-CIO While Pertamina, the U.S. Embassy, and BGT/BLNG Inc. were addressing the O'Toole proposal, O'Toole was filing a bitter if baseless complaint with AFL-CIO President John Sweeney. In a July 18 letter to Sweeney, O'Toole accused me of "meddling" in MEBA's affairs and interfering with the MEBA-Pronav negotiations. O'Toole's specific complaint was that I had written to the MEBA members on the LNGs in what O'Toole called an attempt to "recruit MEBA members to fulfill (AMO's) contractual obligations to Pronav." O'Toole noted casually that AMO "is a non-AFL-CIO affiliate." Here now, the facts:
What Went Wrong For MEBA? So what went wrong for MEBA? In his Oct. 3, 1999 letter to Hart, O'Toole charged that the union's talks with Pronav failed because the company "did not negotiate in good faith" and "never gave notice that the negotiations were at an end." AMO was not involved in the MEBA-Pronav negotiations, so we can't speculate on what did or did not happen. But reliable reports said that, although MEBA had been making progress with Pronav, the talks collapsed for good when MEBA pressed Pronav for a $200 million performance bond on each ship--to my knowledge, an unprecedented demand in maritime bargaining. In his Oct. 3, 1999 letter to Hart, O'Toole confirmed the demand many outside of MEBA said was unreasonable. By insisting on the bond, MEBA was indicating its mistrust of Pronav--healthy skepticism is one thing, but it's difficult if not impossible to negotiate anything when there is no trust across the table. O'Toole told Hart that Pronav was never "genuinely serious about a long-term U.S. citizen arrangement" for the ships' complements. But if that were in fact the case, Pronav would not have settled with SIU, and the company would not have approached AMO. Pronav could have simply waited for MARAD's go-ahead, flagged the ships out, and recruited its officers and crews elsewhere--Americans from non-union sources, foreign nationals from overseas manning agents, or both. O'Toole also alleged to Hart that the AMO-Pronav collective bargaining agreement was "designed to snooker MARAD into thinking that U.S. jobs will be preserved despite the reflagging." He added later: "We also seriously doubt that those officers who serve on reflagged vessels, who are just as likely to be foreign citizens as Americans, will have any protections beyond the signature of Pronav." Anyone inclined to give credence to O'Toole's AMO-Pronav conspiracy theory should consider that, only a few months earlier, O'Toole and MEBA were anticipating a contract with Pronav. Only a few months earlier, Pronav's signature would have been protection enough for O'Toole and MEBA. An equally telling O'Toole comment to Hart was this one: "Of course, another union might take the chance with its members because these are new jobs for another union, and, if they don't pan out, nothing is lost." Our point exactly. During the negotiations, we found no reason not to trust Pronav, and we have no reason not to trust Pronav now. We are confident in the strength of our collective bargaining agreement with the company and confident in the ability of AMO members to do the jobs properly and safely. If we need to for some reason at some point, we can walk away painlessly. What will happen to AMO's LNG jobs when the Pronav contract expires at the end of 2004? We'll cross that channel when we get to it--comment now would be premature, but everyone in maritime labor and industry understands that AMO is always thinking ahead. And, as O'Toole acknowledged, AMO has nothing to lose in this case, even if its contract is thwarted in some way or falls short of expectations. One thing O'Toole has not acknowledged: in the matter of Pronav Ship Management. and the LNGs: the inexperienced O'Toole and MEBA blew it at the bargaining table. But admitting that must be difficult for O'Toole, who chooses instead to wrongly accuse AMO of interfering in the MEBA-Pronav negotiations and to encourage the mistaken belief that AMO had somehow instigated or hastened the Pronav flag-out crisis. But, apart from the inappropriate, unfair, and just plain wrong finger-pointing, O'Toole was tenacious in defense of his dues-paying constituents, and we admire that in anyone. Maybe in time O'Toole will understand that AMO is not the rogue union some elements in MEBA make us out to be. Maybe someday O'Toole will remember the support he, his allies, and the MEBA rank and file received from our union at MEBA's toughest time a decade ago. Maybe. Meanwhile, AMO will go about its business as the nation's strongest union of merchant marine officers, cultivating opportunity where we find it--or where opportunity finds us. |
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