Union to honor 2 in management for saving refinery

Nothing unusual about the banquet menu lined up for Saturday evening's steelworkers union awards dinner - boneless breast of chicken, linguine Alfredo for the vegetarians.

But two honorees at the event at a South Philadelphia union hall will be anything but typical. The United Steelworkers Local 10-1 will honor two high-ranking management executives with "Solidarity and Appreciation Awards."

"It's rare," said Philip Rinaldi, chief executive of Philadelphia Energy Solutions and one of the two management honorees.

"I suppose there's a feel of the lions laying down with the jackals - natural enemies and natural predators," he said. "But that's not the lens through which we see our relationship with USW."

Union-management differences make headlines because, union and management experts say, there is no news in the more common reality - the productive relationships many firms have with their unionized workers.

Those relationships are an everyday reality. But an award given by a union to management is not.

The basis for the USW Local 10-1's award is simple enough:

Hundreds of union steelworkers at the former Sunoco Inc. refinery in South Philadelphia wouldn't have jobs today if it weren't for Rinaldi and David Marchick, the other honoree.

The selection of Marchick is almost stunning. He is managing director of the Carlyle Group, a private-equity management firm, a category of enterprise rarely popular with unions.

"It'll be fun," Marchick said of the event.

In 2011, Sunoco said that unless a buyer could be found by July 2012, it would shut its South Philadelphia refinery, putting 850 people out of work.

An unusual degree of bipartisan political cooperation ensued, with the White House, Gov. Corbett, U.S. Rep. Robert Brady (D., Pa.), and other local politicians putting pressure on Sunoco to come up with a deal.

The United Steelworkers central office, based in Pittsburgh, also got into the act - the union had worked with Carlyle to save another business in the Midwest. Local union leaders pressed the politicians to push a deal.

Sunoco became a minority partner in the venture led by the Washington-based Carlyle, which bought the refinery and created Philadelphia Energy Solutions, now headed by Rinaldi.

The deal closed in September 2012. Since then, the company has increased employment by 10 percent, invested millions in the 1,400-acre parcel on the Schuylkill, and installed a new rail line.

The refinery processes 330,000 barrels of low-sulfur crude oil daily, converting some of it into 6.7 million gallons of gasoline - enough to fill the tanks of 445,000 cars.

"Inviting the company to this union function feels sort of weird," Jim Savage acknowledged. Savage heads USW Local 10-1, the union that represents the South Philadelphia refinery workers.

But, Savage added, he could have "gone to Washington [lobbying] until the cows come home, but if no one was willing to buy the refinery," the union's members would have been out of work. Savage believes most of those union workers would have been unable to ever land jobs that would have paid as well.

True, the idea of a private-equity owner worried him. "You think private equity - they'll come in and strip and flip you," Savage said. "But they've put millions of dollars here."

By saving the refinery and investing in it, Savage said, management deserved the union's thanks, but that's not why Rinaldi and Marchick got the invitation to join the banquet, where they will be honored along with USW's national president, Leo W. Gerard.

"If they came in and bought the refinery and treated us like [expletive], we'd still appreciate it," Savage said, "but you wouldn't see them at our dinner."

In separate interviews, Rinaldi and Marchick described the USW, as well as its national leaders and its local leaders, as pragmatic and nonideological.

"We've tried to create alignment between Carlyle investors, the company's management, and the workforce so everybody is paddling in the same direction," Marchick said.

Savage said the tone for the relationship with the refinery's new owners was established during the first round of negotiations.

At that point, two other refineries in the area were already shut down, and his members faced the daunting prospect of unemployment.

"They could have walked in the room and handed me a [contract proposal] and I also know, no matter what was in the document, I would have taken it to my members," Savage said. "Those people were going to vote yes no matter what that document said.

"They treated us with respect and dignity at the bargaining table in a situation where they didn't have to," Savage said, "and it says something about them."

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