It’s Time We Set The Record Straight
Alutiiq Responds to the Tinker Air Force Base Strike

Recently, representatives with the International Association of Machinists and Aerospace Workers (IAM) labor union have made a number of deceptive and misleading statements regarding our subsidiary Alutiiq Commercial Enterprises, LLC (ACE). In response to the misinformation advanced by IAM about our company, we want to take this opportunity to clarify the facts:

IAM members initially accepted our retirement proposal. ACE began an operations contract at Tinker Air Force Base in Oklahoma City, OK on August 1st, where the workforce is represented by the local chapter of the IAM.  Before ACE started the contract, Alutiiq made job offers to the IAM members, who accepted our offer to make retirement contributions to Alutiiq’s 401(k) plan.

At the last minute, IAM refused to accept Alutiiq’s 401(k) plan and is now demanding that the company’s contributions be made to the union’s pension fund.  The plan we’re offering IAM is the same plan ACE’s management team receives.  And it’s the same type of plan that millions of American workers use to save for their retirement today.  ACE is contributing the same amount per hour worked for each employee to its 401(k) plan as would have been paid to the IAM’s pension fund.

Alutiiq has declined to participate in the IAM pension plan because it potentially exposes our Shareholders to significant liability. The pension plan is a multiple employer plan, where the liability for ACE could be in excess of 30 million dollars if the union’s pension fund becomes “underfunded.” This has happened to many such plans. As the exposure would extend an additional five years beyond the conclusion of the Tinker contract, it’s a risk we are unwilling to accept.

The IAM’s pension fund has also been under government investigation for violations of federal law and, as a result, paid large fines. In July 2016, The U.S Department of Labor’s (DOL) Employee Benefits Security Administration found that the IAM National Pension Fund violated the Employee Retirement Income Security Act (ERISA) and breached its fiduciary duties. The DOL discovered, among other violations,  conflicts of interest, unlawful solicitation and acceptance of gratuities, and “lavish” spending on “unnecessary trips, parties and extravagant food, wine and accommodations.” As a result, the defendants had to repay $200,000 to the fund and pay $40,000 in civil penalties. Plan trustees were also required to take immediate corrective action to protect fund participants from future violations.

ACE is also making cash payments to each employee to accommodate the gap between the IAM’s former health plan, and the one offered by ACE. The union has claimed that ACE is offering employees a health insurance plan which is inferior to the one they had with the prior Contractor. What they are not saying is we are paying each employee between $224 (single coverage) and $923 (family coverage), per month, to compensate for the difference between the two plans. This is in addition to providing coverage under the Company’s health insurance plan.

As a contractor to the federal government, we have an obligation to be a responsible steward of taxpayer funds.  As such, ACE does not offer overtime pay for those who work beyond an eight hour work day. In accordance with federal law, we pay overtime for any hours worked over 40 in a week. With few employers offering daily overtime pay today, we believe this policy best serves the interests of U.S. taxpayers.

We have tried, and remain willing, to advance discussions with the union, but IAM representatives have stated they have no intention of changing their position. Since August 1, the IAM has instructed its members not to report to work to coerce ACE to agree to participate in their pension plan. Regrettably, IAM representatives are now engaging in a public relations campaign to mislead our Shareholders, as the union tries to pressure us to agree to IAM demands.

We have made every good faith effort to reconcile the union’s stated positions with our fiduciary duties to protect the Corporation for generations to come. The management team understands the financial stress the union’s position has placed on its members.

But it was the union that instructed its members not to report to work, even after members signed offer letters agreeing to receive payments to Alutiiq’s 401(k) plan and not the union’s plan.

Alutiiq has a strong and positive relationship with organized labor at military installations across the United States.  For years, Alutiiq subsidiaries have successfully negotiated with multiple unions to resolve these situations – and these unions have accepted Alutiiq’s 401(k) plan or another plan as an alternative to union pension plans.  It is our hope that this matter will conclude with a similar result.

Alutiiq’s subsidiaries have exemplary performance records, evidenced by 16 years of dedicated support to the U.S. government, and Alutiiq Commercial Enterprises is no exception. We are especially proud of all of our employees, and their commitment to delivering exceptional service to our valued customers across our family of companies.