Philadelphia Energy Solutions laying off nonunion workers
(Reuters) Philadelphia Energy Solutions Inc. has begun laying off nonunion workers at its Philadelphia refinery after the company fell short of a goal of trimming its workforce through voluntary buyouts, according to two sources familiar with the plant's operations.
PES Chief Executive Officer Phil Rinaldi told employees at the 335-Mbpd refinery last month that the company was cutting benefits and reducing staff due to weak gasoline margins and high costs for renewable fuel credits, Reuters reported.
The company had hoped that up to 100 non-union workers would take voluntary buyouts, but only 50 to 60 people took the deal, according to one source.
"They fell short, and they are tapping people on the shoulder now to lay off," said a second source Monday.
The company had 441 nonunion employees in 2014, according to the most recent company filing with the US Securities and Exchange Commission.
The belt-tightening, which includes a freeze on capital projects, comes as independent refiners feel the pinch of the high cost of meeting the government's renewable fuel standards.
The company is on track to spend $250 MM this year buying required renewable fuel credits, nearly double the company's base payroll, Rinaldi said his September letter.
Philadelphia Energy Solutions also cited weak gasoline margins during the busy summer driving season. During the summer of 2016, gasoline margins were at six-year seasonal lows.
The country's largest independent refiners are on pace to record their lowest profits since the shale boom began in 2011 thanks in part to high inventories that crushed margins.
Reporting by Jarrett Renshaw in New York; Editing by Jeffrey Benkoe
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