FairPoint unions accept deal, end strike
By Darren Fishell
BDN Staff
PORTLAND — About 1,700 FairPoint employees in northern New England returned to work Feb. 25 after members of two unions approved new three-year contracts with the company.
The contracts approved in votes over the weekend will end the strike started Oct. 17, 2014 at 131 days, putting into effect contracts with some concessions from two unions representing about 800 workers in Maine.
“This was a concessionary bargaining session as everyone understood,” said Peter McLaughlin, a lead negotiator for and business manager of IBEW Local 2327 in Maine, in a telephone interview Feb. 22. “What we have going forward, it’s fair to the employees and the company, and we still maintain good jobs with the good benefits we’re accustomed to.”
The strike was the longest strike in the country in 2014 and pitted the telecom company that has posted net losses since emerging from bankruptcy in 2011 against its unions on key issues like outsourcing work and health care and pension benefits.
Paul Sunu, FairPoint’s CEO, said in a prepared statement that the contracts are a “win-win,” with a mix of cuts to retirement and health care benefits and scheduled wage increases of 1 percent in August 2016 and 2 percent in August 2017.
The contracts, which last through Aug. 4, 2018, also eliminate a “two-tier wage structure” the unions said would pay new hires as much as 20 percent less than current workers.
In a written statement, the company said the new contracts “liberalized” subcontracting rules to allow it to hire contractors during weather emergencies, spikes in service workloads “and where management determines that due to evolving technological needs, different skills are necessary.”
McLaughlin said the company would need to prove that there are unusual demands on the company before it could hire outside contractors. The company said the contracts eliminated certain prohibitions on layoffs.
On retirement plans, the new deals eliminate all retiree medical benefits for active employees, with a stipend that could be available to workers who retire in the next 30 months. The contracts allow workers to keep their defined-benefit pensions, with future benefit accruals cut to 50 percent of prior rates. Workers will get a 401k retirement plan, with the company matching employee contributions up to 5 percent of pay.
On health care, McLaughlin said the two sides compromised between their prior plan and one the company imposed on union members after declaring an impasse in negotiations on Aug. 28. The employees will be able to enroll in a plan administered by the IBEW, which McLaughlin said will save the company about $30 million over the course of three years.
“The important thing is that we maintained a good health care plan that would take care of our folks at a cost that is livable,” McLaughlin said.
The agreement also caps the number of sick days at six per year, where the previous agreement did not have a limit.
During negotiations the company proposed concessions totaling about $700 million, McLaughlin estimated, with counterproposals from the unions including about $200 million in concessions. McLaughlin said the contracts approved include concessions valued somewhere between those two amounts, though he did not have a specific figure.
Sunu said that the agreements “position the company to compete and serve the customers and communities of northern New England.”
Investors appear to think so, with the North Carolina-based company’s stock rising about 5.5 percent, to $17.65, as of the market’s close Friday.
McLaughlin said that’s a response to savings the company will see — and return to shareholders — from concessions on retirement and health care costs.
The company, which sells landline phone service and retail and wholesale broadband Internet, in 2008 struggled to take on the massive New England landline phone network it purchased from Verizon and in 2009 filed for Chapter 11 bankruptcy. Since emerging from bankruptcy in 2011, the company has posted annual losses, with about $92.7 million in net losses through the third quarter of 2014.
Analysts and observers in Maine have long identified the company as a possible target for acquisition. McLaughlin said he thinks the contracts approved Sunday make the company more alluring to potential buyers.
The company said that it will include its guidance for how the new contracts will impact its future financial performance in its earnings statement for the fourth quarter of 2014, to be released in early March.
