International Paper Changing Labor Strategy IMAC Conference August 2009.
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Transcript of International Paper Changing Labor Strategy IMAC Conference August 2009.
International PaperChanging Labor StrategyInternational PaperChanging Labor Strategy
IMAC ConferenceAugust 2009
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International Paper - At a GlanceInternational Paper - At a Glance
More than 100 years in business - started in 1898
Currently focused on two global platform businesses, Uncoated Papers and Packaging, supported by our North American distribution business, xpedx
We have more than 60,000 employees worldwide
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Our OperationsOur Operations
North America -- 180 manufacturing locations -- 105 distribution centers
Global Operations -- Europe, Asia, Russia, South America and North Africa -- 63 manufacturing operations in 33 countries -- Customers in more than 100 countries
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International Paper, Recognized LeaderInternational Paper, Recognized Leader
Ranked 97th in FORTUNE 100
2008 sales of $24.8 billion
#1 on FORTUNE’s list of “Most Admired Companies” in the Paper & Forest Products Industry --- six consecutive years
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New StrategyDifferent DirectionNew StrategyDifferent Direction
USW/PACE merger
IP’s transformation– Divestitures– Selective Re-investments– Improve balance sheet– Return value to shareholders– Focus on core business
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Status of Relationship with USWStatus of Relationship with USW
April 2005– USW/PACE merger
September 2005– IP initiates communication with the USW
July 2006– IP and USW reach agreement of understanding to begin non-binding
discussions focused on the U.S. mill system August 2006
– Non-binding discussions begin on a monthly basis through July 2007 August 24, 2007
– Agreement ratified and executed covered 14 US Mills 2008 Converting Agreement ratified and executed over 32 facilities 2008 Acquired Weyerhaeuser Packaging Business
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8 Initial Discussion Items8 Initial Discussion Items
Wages Pension Health Care Union/Job Security Contracting Profit-Sharing Work Redesign Joint Efforts in areas of common concern
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Wages and PensionWages and Pension
Existing location wage increase and lump sums remain in effect 2%-$1,000-2%-$1,000
– Apply to renewal agreements starting on the existing expiration date Riegelwood example:
– 2% - Effective 9/9/2010 (existing expiration date)– $1,000 - 9/9/2011– 2% - 9/9/2012– $1,000 - 9/9/2013
Employees hired after the “Agreement” effective date paid in accordance with new wage grade schedule
– Overall 15% reduction at full maturity
Wage grade schedule increases at each location under renewal agreement terms:– 2%-$1,000-2%-$1,000
Mill Pension improvement contingent upon ratification of the “Agreement” – Current employees: $50.00– New employees: $45.00
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Retiree Medical Savings ProgramRetiree Medical Savings Program
Eligible EEs can contribute up to $160/month
Effective 1/1/08, Company match will increase from $1 to $2 on first $80 of employee contribution
Employee Contribution
Current Company
Contribution
New Company
Contribution$20 $20 $40$40 $40 $80$60 $60 $120$80 $80 $160
$100 $100 $160$120 $120 $160$140 $140 $160$160 $160 $160
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Retiree Medical Savings ProgramRetiree Medical Savings Program
Age on Effective Date
YR 1 – 2007 YR 3 - 2009
50-53 $2,000 $1,500
54-57 $4,000 $3,000
58+ $6,000 $3,500
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Active MedicalProvisions Current NewMedical Plans 3 CDH Plans and
PPOPPO only(BCBS & UHC Networks)
Plan Changes Company has right to make up to 5% design change to each plan
Company forgoes it's right to make plan changes
Review Process Benefits Advisory Board meets four times per year
Joint health care committee will meet at least 2x/yr
Cost Sharing 75% Company25% Employee
Potential to transition cost sharing to 80% Company 20% employee by the final year
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SuccessorshipSuccessorship
Includes successorship for all covered mill locations– In short, new owners assume the collective bargaining
agreement– Note: This is the same successor agreement previously
granted at divested facilities.
Reductions in force through voluntary severance and/or attrition– Does not apply to temporary reductions or
complete/partial closures
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Joint EffortsJoint Efforts
Public Policy– Joint efforts governed by a joint committee
Health and Safety– 2 joint health and safety conferences
Dependant Care– Joint communication efforts
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MiscellaneousMiscellaneous
The “Agreement” expires in 4 years– Both parties to engage in non-binding discussions at
least 60 days in advance to discuss another “Agreement”
If no new “Agreement” is reached local agreements expire at the end of their respective renewal period. “Traditional” bargaining would take place as in the past.
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MiscellaneousMiscellaneous
Wages, successorship, RMSP (2:1 match), Health Care, are part of the local agreement
Joint efforts (public policy, H&S conferences), employment security items, and RMSP (Lump Sums) are part of the “Agreement” and cease if a new “Agreement” is not reached
Pension council will re-open pension discussions in 4 years
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Converting AgreementConverting Agreement
Wages (2% - 2% - 2% - 2%)
Pension $30-$34 over term
Health Insurance – Access to former company plans
Successorship
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Renewal AgreementsRenewal Agreements
Will continue to have local bargaining and separate location agreements
– Scope of local bargaining will be limited to subjects not covered by the “Agreement”
No hiatus between local expiration and contract renewal– The original provision will remain in effect if no agreement is
reached on an item prior to expiration
Company agrees to no lockout; union agrees to no strike
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What did IP get?What did IP get?
Constructive relationship with USW Labor stability through transformation No common expiration dates 2-Tier wage structure Ability to address retiree medical Active healthcare caps State of Art Contingency Plan
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What’s Next?What’s Next?
Integration of former Weyerhaeuser facilities
2011 Negotiations with USW on Master Agreement (Mills)
2012 Negotiations with USW on Master Agreement (Converting)
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Contingency PlanningContingency Planning
Had to regain our ability to have viable contingency plans– Assigned an Enterprise leader for Contingency Planning– Screened and identified a full service Contingency Partner -
IMAC selected and contracted – Developed a web based application for Contingency Planning
using a “virtual plant concept” with templates and piloted successfully in diverse operations
– Currently require Contingency Plans at non-master agreement sites
– Retain our ability to plan through leadership, contract and close partnership/relationship with IMAC