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Rod Smith

Mandalay, Union at Stalemate

23 September 2004

LAS VEGAS -- Contract talks between the International Union of Operating Engineers Local 501 and Mandalay Resort Group are at an impasse, and workers are taking a strike authorization vote today, a union official said Wednesday.

"We're not calling for a strike yet, but negotiations have bogged down," said Local 501 business representative George Scott, whose union represents 1,100 workers in Las Vegas.

Current workers on the average make $21 a hour, Scott said.

Mandalay, however, has proposed a two-tier wage and benefits structure, with the first tier covering current employees and the second tier covering new hires, he said. Mandalay is also asking for what amounts to a $3 an hour wage rollback for new workers, which the union says would be a first on the Strip.

"This is something they tried to do in Detroit where (hotel) unions aren't as strong and haven't had the relationships they have here," he said.

In Detroit, Mandalay operates the 75,000-square-foot MotorCity Casino, which in 2003 had $130 million in earnings before interest, taxes and depreciation.

"We've had contracts on the Strip for 50 years, and this is the first time ever anybody has tried a rollback," he said.

Union members voted 171-2 on July 7-8 to reject the current proposal. Union representatives last met with Mandalay officials Sept. 15 and are scheduled to meet again Oct. 5.

The union's contracts with Strip operators expired March 31. Since then, the union agreed to extend the contract while negotiations are under way for workers at Circus Circus, Excalibur and Luxor, which combined have 320 Local 501 workers. Mandalay Bay Resort has never been organized by the union, he said.

Other casinos, which have 780 Local 501 workers, completed contract negotiations in the spring, agreeing to a five-year contract and about a $4.30 a hour increase in wages and benefits, Scott said. But none of those agreements call for either a rollback or a two-tier pay scale.

The other properties covered by the contract include Bally's, Caesars Palace, Flamingo, Harrah's Las Vegas, the Jockey Club, Las Vegas Hilton, the Riviera, the Sahara and Tropicana, he said.

Scott said the union also has not reached agreement with the New Frontier because of its financial difficulties.

He said the wage proposal would leave skilled workers covered by Local 501 with lower pay than unskilled workers with other unions.

Operating engineers manage and monitor life safety systems, central plants, boiler, cooling systems, evaporation equipment, electrical systems and building maintenance.

Scott said Mandalay Resorts' position is particularly objectionable because both the Culinary and the Teamsters won healthy wage increases in recent contract talks, "and they want me to take a pay cut."

David Hames, an associate professor at the University of Nevada, Las Vegas who specializes in labor and dispute resolution, said two-tier pay systems have never worked well.

"They're good at saving a lot of money, but there are always difficulties having two people working side-by-side on different pay scales. It creates a lot of tension and feelings on inequity," he said.

University of Nevada, Las Vegas professor Bill Thompson, who specializes in gaming studies, said the confrontation bodes poorly for the destination and labor relations.

"There's just no justification for two tiers, especially for people who are doing the same work. And there's no justification for a rollback, with Mandalay doing so well and going through a major merger (with MGM Mirage)," he said. "They may see it as a cost, but they should see it as a chance to build good labor relations before the merger."

Scott said he is at a loss to explain why Mandalay has dug its feet in for a two-tier pay structure and wage cut.

"They're just trying to push us in a corner instead of taking the same deal everybody else on the Strip (agreed to)," he said.

Some insiders speculate the latest move by Mandalay is a "union-busting" tactic because of the pending MGM Mirage and Mandalay merger. But MGM Mirage spokesman Alan Feldman said despite that speculation, his company cannot be involved in any of the union talks. No MGM Mirage properties are organized by Local 501.

Mandalay spokesman Mike Sloan could not be reached for comment.