Alcoa Aluminum Co., with operations in Arkansas, Kentucky, North Carolina, Texas, and other states including Tennessee where they employ 1600 workers, recently asked their 9,000 United Steelworker employees for concessions in a new contract.

The company proposed eliminating their defined benefit pension plan for new hires, a two-tiered health insurance plan, and wanted employees to start paying health insurance premiums. They also wanted retired employees who had been promised health insurance as part of their retirement benefits to also begin paying premiums.

After a long negotiation, and a grassroots effort to oppose the concessions, a new contract was approved in late June. According to local news reports, the vote was very close, at least here in Tennessee.

The new contract provides for a 2.6% pay increase, a $1500 one-time bonus, and preserves the defined benefit pension plan. The USW also negotiated for Alcoa to establish a fund that will continue paying health insurance benefits for retirees. The parties also agreed to single health insurance plan for all employees and their families instead of the two-tiered plan proposed by the company. Employees will, however, have to pay premiums under the new plan.

Although the company's stock has underperformed of late (leading to takeover speculation), it doesn't appear the new contract will hurt them too much. Alcoa just announced a record 62% increase in quarterly profits ($744 million for the most recent quarter), on a 19% increase in revenues. Unfortunately, this was not enough for Wall Street, which was expecting more. Alcoa's stock declined $1.30 per share, dragging the Dow Jones Industrial Average down with it. Other than a small charge related to preparations for a possible strike, the new contract was not a factor.