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Union workers at Geneva Steel say a new contract with the mill must address wages, benefits and concessions they gave up to help fund modernization projects at the plant.

While it will be weeks before union workers see what the company has to offer, management and nonexempt employees at the mill got a surprise Tuesday: 5.5 percent pay increases.The pay raise, which affects 400 to 500 people, was equivalent to wage increases union workers received over the past four years, said James T. Young, vice president of corporate communications.

"We told managers that when we were in a position to do so we would give them similar increases," Young said.

In addition, the company announced a "performance dividend plan." The plan gives managers and nonexempt employees monthly bonuses ranging from 2.5 percent to 10 percent of their base wage based on shipped tonnage and adjusted for productivity measures.

Meanwhile, union leaders of Steelworkers Local No. 2701 met Wednesday in Salt Lake City with company officials to discuss noneconomic issues at the plant, such as how absenteeism is handled and workers' requests that the company provide sports drinks during warm weather.

After resolving local issues, the two sides now begin talks on departmental and plantwide concerns.

Contract negotiations begin in earnest on July 19, when both sides will bring in lawyers to represent their interests.

The existing contract at the mill, which covers approximately 2,200 union workers, expires Aug. 31 at midnight. The union and company adopted that contract in 1989 after four weeks of what both sides termed "smooth" negotiations.

"We don't have any reason to believe that negotiations will be any different this time than they were four years ago," Young said. "They'll be able to look at the books and see what the company is able to do."

Based on the books, that might not be much. Geneva has lost approximately $20 million since mid-1991.

However, the union says it's catch-up time. Geneva workers' compensation is "$3 to $5 behind what it was 10 years ago in wages and total package," said union president Pete Kropf.

"The membership feels like we need a substantial wage increase and some kind of change to profit sharing," he said.

The current contract gave union workers wage increases of $1.45 per hour over the past four years plus an average incremental increase of 18 cents per hour.

The contract also altered the company's profit-sharing plan to pay for modernization. Geneva has spent $236.2 million on modernization since 1990.

Previously, the company deducted $11 million from net earnings before figuring profit-share percentages.

The altered plan allowed Geneva to deduct a portion of modernization costs from the profit-sharing pool left over after deducting expenses from income and shaving 10 percent off the top for capital improvements.

Union workers profited handsomely in the first couple of years covered by the contract. In 1989, they received profit-sharing checks that averaged more than $4,500.

Since then, profits dwindled and then evaporated. In 1991, the average union employee received a profit-sharing check totaling $104. In 1992, they received nothing. "It (the formula) had no effect on profit sharing because the company operated at a loss," said Dennis Wanlass, chief financial officer.

Still, the union wants the profit-sharing plan amended to "prohibit writing off modernization at our cost" or for the company to give union workers stock options, Kropf said.

"The majority feels they need to give some concessions or it's going to be hard to get a contract," he said.

Kropf said the pay raises for management and nonexempt employees may bode well for union workers.

He said the increases are likely the result of a recent survey conducted by Dan Jones for the company.

The survey of 600 employees, including 200 management-level workers, came back quite negative, Kropf said.

The increase buys the company favor with its management employees.

"They start with them first. They have to do the same thing with union workers," Kropf said.