Marcus Hook Refinery, Philadelphia

The Marcus Hook Refinery is wholly owned by Sunoco (since 1 January 2008) and is the second-largest refinery in the northeast US. The refinery, which first opened in 1902, is on the Delaware River and is capable of processing approximately 178,000 barrels of crude oil per day. The facility employs around 650–700 personnel and is located 20 miles south of Philadelphia in Marcus Hook.

Major concerns at Marcus Hook

A big fire broke out at Marcus Hook refinery in May 2009, resulting in the closure of the ethylene complex. Sonoco had taken the decision to close the plant after concluding that it is not financially viable to revive the plant. With the permanent closure of the ethylene complex at Marcus Hook refinery, the company’s second quarter results were adversely affected by $14m.

Over the period of its tenure the plant has had some difficulties. In 2005, for instance, after a five-year investigation the Environmental Protection Agency (EPA), the State of Pennsylvania, and the US Department of Justice charged Marcus Hook and three other Sunoco refineries with not being up to the required standard for Health and Safety Regulations.

This resulted in each of the plants being deemed as an unsafe work environment and also as gross polluters of the environment.

Following these charges Sunoco had to spend $285m to repair and upgrade its facilities to bring them into code. New equipment was installed to lower the level of emissions along with leak detectors to monitor pipelines and process equipment. Plans also had to be put into action to stop gas flares and drastically reduce benzene vapour emissions from the plant.

An additional $3.6m was spent locally for environmental projects, and there was a further $500,000 for the Department of Public Health, Division of Air Management Services.

The plant also had a major explosion and fire in March 2006 which led to little injury or damage and also earlier had major issues with asbestos in its infrastructure, which is not surprising since it was built in 1902.

Staffing disputes

In early March 2009, the Marcus Hook refinery was in a state of dispute with the company up against the local branch of the United Steelworkers (local 10-1 in Philadelphia and 10-901 in Marcus Hook). The dispute hinges on a decision by the company to reduce staffing levels on the processing units at the Marcus Hook and South Philadelphia refineries by 25%.

The unions and other commentators, such as the fire department, say that this will compromise safety at these refineries. According to union sources, Sunoco has proposed to terminate 100 out of 400 operators in Philadelphia and at Marcus Hook wanted to cut 60 of 270 operators and 30 of 150 mechanical fitters, and was proposing substantial pay cuts for other personnel.

Sunoco is seeking to cut its labour commitments across five refineries, including Westville (non-union), Ohio and Oklahoma, and reduce spending because of the economic situation.

The union, through Tim Kolodi at Marcus Hook, called for 3% annual pay increases, the preservation of current benefits, and no involuntary redundancies.

The union was more concerned over the health and safety aspects of the job cuts and publicly stated that the level of layoffs would be detrimental to the safe operation of the plant. Some of the labour losses were deemed inevitable as part of the negotiation.

Contract agreement

By 13 March 2009 unionised workers at Marcus Hook had agreed a new three-year contract. South Philadelphia had agreed a deal on 5 March 2009.

Sunoco was able to announce a 20% cut in workforce on Friday 13 March 2009, in an effort to save $300m as the demand for motor fuel drops.

The net income of Sunoco has declined from $979 to $776m over the last three years and the company is now selling 165 of its gas station sites across the US as well.

Union officials obtained a 3% annual wage increase for the next three years, a $2,500 ratification bonus, and healthcare coverage at 80% of cost.

The redundancies will now not be forced but will include attractive voluntary deals for older staff members or those who wish to leave.

A further agreement has been reached allowing maintenance workers to move between the South Philadelphia and Marcus Hook refineries when there is a shutdown at either plant.