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(Pittsburgh) -- The United Steelworkers (USW), which represents more than 4,700 Arconic employees at 11 locations, issued the following statement on the proxy fight by Elliott Management at Arconic.
“The USW opposes efforts by hedge fund Elliott Management to select the next CEO and nominate four new individuals to the Arconic board,” said Leo W. Gerard, USW International President. “The proxy fight between Elliott Management and Arconic has been of great concern to USW members, retirees and their communities.”
“We have not always agreed with Aronic’s management,” said Tom Conway, USW International Vice President and chair of the union’s Arconic bargaining committee, “but we respect its management at the corporate and plant levels.
“Elliott Management has waged an all-out campaign critical of virtually every aspect of Arconic’s operations and management, including its capital investments,” said Conway. “Our members understand that the company’s success and its security require investment and innovation.”
Among the capital expenditures recently made by Arconic were a $300 million expansion of automotive sheet production at Alcoa Tennessee; a $490 million investment at the Davenport rolling mill, including automotive sheet expansion and thick plate-stretcher; and the $90 million expansion at Lafayette to enable it to produce aluminum-lithium alloys for the aerospace industry.
“Elliott has held its shares of Arconic (and predecessor Alcoa) for less than two years. Its investment in Arconic is just over 4 percent of the $31 billion it manages. The USW members at Arconic are 100 percent invested in the company for their employment and retirement security,” said Conway.
At a time of turmoil and change in the global aluminum sector, Arconic needs a management team whose primary focus is on investing in the business, developing world-class products, navigating a global market roiled by unfair trade, and providing good jobs for its workers.
Elliott has shown no long-term commitment to ownership in Arconic. It is simply seeking to engineer a short-term price increase at the long-term expense of the company, its other shareholders and its employees.
Elliott has a pattern of layoffs and divestitures at the companies it has targeted. For example, after Elliott purchased a stake in Citrix Systems, it demanded the software company sell assets and cut costs. Citrix laid off 900 employees in January 2015 and another 1,000 in November 2015. Elliott purchased a stake in Symantec Corp., the maker of cybersecurity software, at the beginning of 2016. It subsequently sold assets, paid shareholders and announced it would cut about 10 percent of its work force and close some facilities.
Elliott Management proposes Arconic hire as its next CEO Larry Lawson, former CEO of Spirit AeroSystems and Vice President of Aeronautics at Lockheed Martin and previously was Vice President and General Manager of the F-35 program.
However, Lawson’s record bears scrutiny. The F-35 Joint Strike Fighter is the most expensive weapons program in the history of the U.S. military and has been plagued by cost, schedule and performance problems. Under Lawson, the military’s top officer heading the F-35 program sharply criticized Lockheed Martin for maintaining a poor relationship with the Pentagon and not taking the steps to control costs and ensure the program’s health. Shortly after that criticism, Lawson retired from Lockheed.
Elliott also boasts of the valuable experience of its nominee Patrice E. Merrin, who currently serves as a director of Glencore, the global mining and metals company. The USW and Glencore-owned Sherwin Alumina in Corpus Christi, Texas, were involved in a bitter two-year lock-out which ended in November 2016 when the company closed the facility. USW members are currently on strike at Glencore-affiliate Canadian Electrolytic Zinc Ltd. Glencore also has a notorious reputation for questionable business practices, and has been dogged by allegations of environmental, child labor and human rights violations.
The USW represents more than 4,700 Arconic employees in North America at 11 locations. The master agreement between Arconic and the USW covers approximately 3,400 employees at four locations, which produce rolled products and aerospace extrusions. The agreement expires May 15, 2019.
The USW is the largest industrial union in North America, representing workers in a range of industries including metals, mining, rubber, paper and forestry, oil refining, health care, security, hotels, and municipal governments and agencies.