Copper and Phelps Dodge in Arizona

Mining is a powerful force in Arizona. Hardrock mining was Arizona's original revenue-producing industry, basically shaping the state's economic and political history since the mid 1800s. There were minor "gold rushes," which no doubt helped settle the territory. Bisbee, a mining town, was the largest town in what was to become the state of Arizona.

Copper mining in U.S. had begun in Michigan in the 1840's. In the 1870's and 1880's huge deposits of copper were discovered in Montana, making it the leading producer by 1900. Arizona took the title in 1910 and has remained the leading producer since that date. Unfortunately, mining copper was not for the lone miner—copper was sold by the pound, not by the ounce. The low price of copper and the pounds needed to make a profit required heavy equipment and big investments. Deposits of the metal required large sums of copper to be mined, moved to smelters, smelted, refined, and moved to the market. Therefore, the copper kingdom of the West was really a colony dependent on huge investments of capital of the bankers of the east coast. So the small population of the West (5% of population in 1900) who provided labor to a few large mining companies had no local control over their destinies.

So even though, the history of mining in Arizona is a nostalgic one, exciting stories of individual entrepreneurs making it rich quick, the truth is wealthy bankers from New York City owned Arizona's mining interests. For example, Jerome's modern history began in 1876 when three Anglo prospectors staked the first claims on rich copper deposits in that area. But only after seven years, they sold out to the United Verde Copper Company. The resultant mining camp of makeshift shacks was named in honor of Eugene Jerome, the venture's principal backer. Living in New York City, he never once laid eyes on the town that was named for him.

Phelps Dodge and Company Invests in Arizona Copper

Then there was Phelps Dodge & Co., which was established in 1834 in New York City to trade American products to England for copper, iron, tin and other metals. The company was named for its founding partners, Anson Phelps and his son-in-law, William Dodge. To enhance the company's interest in metals, in 1881, it entered the mining industry in Morenci, Arizona by becoming part owner (later full owner) in the Detroit Copper Mining Co. This mine has produced the greatest wealth from copper in Arizona, while the family and their headquarters remained in New York City. So the tradition has been: Make money in Arizona and ship it back east. However, with the large expansion of mining interests and the "conducive political climate," Phelps Dodge did move their corporate headquarters to Phoenix, Arizona in 1987.

Since Phelps Dodge was a New York Company that traded metal, even though imported from Europe, it was logical that they bought stock in two copper mines in Arizona in 1881: Morenci ($30,000) and Bisbee ($40,000) mines. Copper mining was turning out to be lucrative. Jerome's United Verde turned $10 million a year in profits in the early 1900's. In 1909, Guggenheim purchased large Alaskan holdings for $3 million. The Copper Queen mine in Bisbee also proved successful; the Copper Queen paid its stockholders $6.5 million in dividends between 1887 and 1906. In 1897 Phelps Dodge bought the remaining interest (Detroit Copper Company for $1.5 million) in Morenci mine. (Morenci was the Michigan hometown of one of its financiers, William Church.)

Phelps Dodge had a questionable history on the Frontier. They were a law unto themselves. Before statehood, they were indicted by the federal government on charges of selling arms to Mexico, depriving workers of civil rights, and violating custom regulations. Rather ominously in 1890, the first environmental crises occurred in Bisbee: flooding due to cutting all of the trees to use in the copper smelter.

When a U.S. Senator, Chairman of the Committee on the Territories, visited Arizona, he returned to Washington and stood firmly against statehood for Arizona. He regarded it as backward and dominated by mining companies.

Labor problems began early in Phelps Dodge's mining history

Typically, in Arizona, since the mines were in isolated areas, the owners established "mining towns" in which they owned the homes (charged rent), groceries (gave credit with interest), all utilities, and the general store-and it owned the mineral rights. Several of those towns, including the original Morenci, disappeared into the thin air of the open pit.

Prior to development of mining of minerals in the Southwest, copper mining was in the East, principally in Michigan, where the local companies had unions and paid fair wages. But it was a different picture in Arizona. The New York City businessmen of Phelps Dodge soon found they would make incredible profits using cheap labor from nearby Mexico. And the best part was that that labor was expendable.

In 1903, some two thousand workers took to the streets in Morenci to ask for better working conditions. Using the ever-ready race card, the mining officials blamed agitators from outside who worked up the Mexicans, who were always segregated. The strike was broken by use of the local territorial militia and five companies of federal troops. The Mexican laborer leaders, who were simply demanding the same deal as their American counterparts, were rounded up and deported.

In 1915 with the rise of the price of copper, laborers, again in Morenci, were asking for higher wages. Arizona Governor Hunt visited there and declared to the strikers: "Those people who had the temerity to stand up for their rights are heroes and not traitors." The PD officials staged a great escape, making it appear as if there was danger of a revolt. They set up a workers' camp where they intended to organize a team of strikebreakers. Governor Hunt intervened and even called in the National Guard to keep strikebreakers out of Clifton. The strike was settled with an agreement by which "a handful of owners in New York, Boston or Edinburgh can impose on ten or fifteen thousand men and women the choice between surrendering their liberties or starving." [Quoted from New Republic Magazine]. Governor Hunt even suggested that Phelps Dodge officials had attempted to intimidate him into taking actions favorable to the company.

Hunt wasn't malleable, but PD found others who were. James Brykrit, author of Forging the Copper Collar, wrote in his study of the early years of Phelps Dodge:

The counter-offensive by management grew to include the control of every aspect of Arizona-economic, political, social and even religious. The mining men intimidated editors, threatened ministers, bought sheriffs, seduced lawmakers and bullied union leaders. They rigged elections and manipulated the legislature. . . . Between 1915 and 1918, the companies, led by Walter Douglas, completely reversed the direction of Arizona politics and destroyed the liberal in the state.

The Great Deportation and Labor Relations

In 1917, PD took the opportunity to test their personally selected man: Governor Campbell. Declaring that "you can't compromise with a rattlesnake," the Phelps Dodge President rounded up around 1,200 men and women who were striking, packed them into filthy railroad cars, and shipped them to the desert of New Mexico. Federal troops took them in and fed them or they could not have survived. Phelps Dodge executives were indicted on criminal conspiracy charges, but no federal laws existed then to prosecute such offense. Phelps Dodge used the excuse that it was wartime and the strike was detrimental to the war effort. However, the war effort meant that the price of copper was up and the profits were high, as well as a shortage of men because of the war. [Interestingly, the recent article in the Arizona Republic newspaper mentioned this incident, but did not include the name of the offending company: Copper Miners are facing formidable, complex forces.]

So under Phelps Dodge's rule in Arizona, the labor movement languished through the 20's and 30's. But in 1935, the National Labor Relations Act gave federal protection to workers to organize unions and to strike. In the early 1940's the Mexican-American laborers in Morenci formed their own union because the AFL was discriminating against them. Undaunted, PD tried a new tact—firing 35 union members because they called a strike. When the Labor Board reinstated the workers, PD took it to the Supreme Court—and lost. The company attorney had argued: "It is not an unfair labor practice for an employer to refuse employment because of union membership or activity. . ." The Court ruled that companies could not discriminate against union members. PD found that, although it could manage Arizona politicians, its sphere of influence did not reach the U.S. Supreme Court.

Expansion in World War II

In 1921 Phelps Dodge had gained complete control over the Clifton-Morenci mining area with a purchase value of $50 million PD stocks. Its high grade ore was depleted, but the low grade ore was to yield more than one billion tons of useable copper. In the early 1940's, the Federal Government granted Phelps Dodge $26 million for establishing a new open pit in Morinici to obtain metal to aid the war effort. Another $2.5 million was financed by the Defense Plant Corporation to enlarge their El Paso smelter. Output from the Phelps Dodge mines exceeded four hundred million tons of copper annually for four years, 1942-1945. During this period, the Phelps Dodge Copper Products Corporation expanded and provided many products for military vehicles, submarines and cable for special operations.

Even though extra cash was flowing in, Phelps Dodge still resisted a union contract. Finally, in 1946 they signed with a union group after a 107 day strike. The union finally won full medical coverage for its employees in 1955. But they had to strike again and lost… due to lack of coordination among several unions that were competing for members. Of course, Phelps Dodge management encouraged the divide and rule tactic.

A large labor force of Mexicans and Mexican Americans were a major barrier to labor solidarity. In the twentieth century, Arizona copper workers often engaged in an unequal struggle against large, wealthy corporations owned by absentee capitalists, including Phelps Dodge, the United Verde Copper Company, the Arizona Copper Company, and the Calumet & Arizona Mining Company. Mexicans were a significant part of the workforce at the mines in the Clifton-Morenci district from the start of mining. [From Copper for America, by Charles Hyde]

In 1964, Forbes Magazine commented: "…. New York's Phelps Dodge has consistently led the copper industry in profitability." In 1966, Phelps Dodge invested $100 million on converting the old Tyrone, New Mexico copper mine in to an open pit operation [meaning poor quality ore]. Noteworthy is the fact that they did not have to borrow any money for this sizeable expenditure. That was the year the four major mining companies totaled a profit of $400 million. When additional water was essential to the Tyrone operation, they bought up (through an agent) agricultural land in New Mexico, thereby obtaining water rights to the Gila River. In October 13, 1980, a tailings dam at the Tyrone Mine ruptured and covered nearly three hundred acres of a nearby draw with finely ground sediment. The force of the flood downed power lines and broke water mains.

In 1967, after a dozen years of competition among unions for members, the smaller unions merged with the powerful United Steelworkers of America. Arizona miners had more to gain from this union, which used a "pattern" contract for all auto workers. Negotiating with this Union, all the copper corporations would have to sign the same deal, so that the contract was consistent. The year 1967 was a big one for labor. In spite of the record profits in 1966, the companies still resisted the idea of a uniform bargaining structure.

Again, Phelps Dodge attorneys filed a charge before the Labor Board to declare the copper unions' coalition a violation of federal labor laws. After an initial victory with the Labor Board, which ruled that a pre-approved contract was an attack on the "integrity of a collective bargaining unit," Phelps Dodge lost when the decision was reversed in the U.S. Court of Appeals. This time the U.S. Supreme Court refused to consider Phelps Dodge's appeal.

The Final Blow to Labor

Since the 1915 strike in Bisbee, Phelps Dodge had managed labor by granting some wage increases to the local unions with the agreement that the miners would forego national union affiliation. In 1967, the national manufacturing wage was $3 an hour, the average national mining wage $3.10 an hour, but the average Arizona mining wage was about $2 an hour. From mid-1968 when the pattern agreement was finally met, the company would be required to sit down with a powerful Steelworkers coalition to negotiate a contract—every three years. For the next 15 years, things went well for copper miners. The unions demanded and won cost of living adjustments and higher wages from Phelps Dodge, but only after a walk-out by employees.

But Phelps Dodge had an ally. As in the case of using an Arizona Governor—if they couldn’t control the system they would find other ways to manage it. A cantankerous Wharton School of Business professor took it upon himself to start a program to reverse “union power buildup.” Professor Herbert Northrup wrote a series of books on formulas for weakening unions. A founding partner in the project: Phelps Dodge. He had the brains; PD had the dollars. It appears the company would bear any cost to cut labor costs.

We can begin to see a trend here—Phelps Dodge had deep pockets for expenditures to curtail labor demands even though labor's demand were always small and reasonable. PD had money to hire attorneys to argue right up to the Supreme Court to avoid paying back wages to the 35 employees who they had fired for being union members. This trend was also true in the historic 1983 strike, when the workers had agreed to a wage freeze and were only asking for the continuation of their cost of living raises—which would have been minimal since cost of living was not increasing significantly in the early 1980's. Recognizing this fact, the other mining companies had already signed the pattern contract. Phelps Dodge had bigger plans. Break the union once and for all.

With the 1983 strike, they succeeded. Phelps Dodge broke the strike with assistance of Arizona Governor Babbitt, National Guard and State Troopers. But it was all worth it to them, within two years PD had wiped out thirty union locals made up of 2,000 workers. They were used to having their way—money was the bottom line.

For a brief description, I defer to Barbara Kingsolver—who was there—and who wrote a book about the strike, Holding the Line.

In a place a few hours' drive from where I live [Tucson], the government, the police and a mining company formed a conspicuous partnership to break the lives of people standing together for what they thought was right. That ironclad, steel-toed partnership arrested hundreds of citizens on charges so ludicrous that the state, after having perfectly executed its plan of intimidating the leadership and turning public sympathy against the strikers, quietly dropped every case. [ New York Times review of Holding the Line]

In the aftermath of the strike, Phelps Dodge officials celebrated, while loyal miners whose families had worked in PD mines for generations sorted out new lives for themselves. The cost in human dignity has reverberated through the decades and still touches the ex-miners lives. The wound still has not healed, there are families in Clifton-Morenci who still do not speak to each other. Of course, the permanent replacement workers they had recruited during the strike voted against a union!

And Arizona was not the only place the tactics were used. Read the story: Former Phelps-Dodge head caught 'selling' union-busting plan to Oregon Steel

In 1995, Jonathan D. Rosenblum, union attorney and author of Copper Crucible published a report on previously uncovered documents and interviews that revealed facts there were unknown during the strike. The Arizona taxpayers had no idea that they were paying for a covert Tucson-based intelligence agency, the CIA of Arizona state government that was acting against the Union. During the copper strike:

• Undercover agents with the Arizona State Criminal Intelligence Systems Agency (ACISA) infiltrated every union in the Clifton-Morenci mining district early in the strike, bugging nearly one out of every two meetings and monitoring the rest with informers. "We were using about five (informants) at any given moment and as many as eight or nine others moved on and off assignments," said ACISA's former supervising undercover agent.

• A sophisticated supercomputer in Tucson enabled ACISA to compile intelligence files on hundreds of union members and supporters.

• ACISA, in tandem with the Arizona Department of Public Safety, set up an elaborate sting operation to entrap alleged arms dealers during the strike. But the Department of Public Safety botched the operation by critically wounding one of the suspects in an accidental shooting. Meanwhile Phelps Dodge was smuggling arms into the copper mine with impunity.

• ACISA shared some intelligence reports directly with the plant manager and security officers at Phelps Dodge.
[Complete report by Rosenblum]

By 1985 Phelps Dodge was making record profits again in copper. Earlier Phelps Dodge had diversified, so not all of its financial problems in the early 1980's were due to copper prices. Phelps Dodge emerged as a model for other American Corporations, for its "ruthless" labor relations. The company president gloated, "We created a new approach to labor. It was followed all over. Suddenly people realized, hell, you can beat a union. Time was big unions were considered invincible. We demonstrated that nobody was invincible."

Several analysts have calculated that it would have cost them less money if they had satisfied the small demands of labor. The strike cost them plenty. There were continual expenses: attorneys, lobbyists, full-page newspaper ads, travel and accommodations for management, alleged gratuities to Arizona politicians and labor officials—getting their way in Arizona was doable, but it could not have come cheaply.

Then there was the taxpayer's money that footed the bill for the National Guard, the Department of Public Safety, and the Attorney General's office for their work in going through charges, even felonies that were not worth processing. Moreover, there were some successful suits from the Ajo mine strike (also owned by Phelps Dodge). Several strikers were awarded settlements for mistreatment by public officers.

But the point is Phelps Dodge showed that they were not interested in the dollars —they just wanted their way—and their determination to get rid of labor is well documented. Labor Law states that the parties have to approach bargaining "in good faith" for an agreement can be arrived at. Did Phelps Dodge play by the rules? The strike would cost them plenty, and the union-related events prior to it cost them plenty. Would the attorney fees paid to go to Supreme Court two times in attempts to break the union, plus other continual attorney's fees to avoid union bargaining in "good faith" have paid for the minimal "cost of living adjustments" the miners were asking for?

This is the corporation that in 1999 merged with Cyprus Climax metals, and in so doing obtained the Duval/Sierrita mine to the west of Green Valley and a lease on part of the Twin Buttes mine to the north of Duval Mine Road. "The combined company will retain the Phelps Dodge Corporation name and will continue to be traded on the exchange under the 'PD' symbol." —quoted from letter to ADEQ from Phelps Dodge. [See letter.]

And this, my friends, is the corporation that we citizens of Arizona are providing basically free water for their operations and in exchange we get their contaminating substances in our water. Why? . . . supposedly because they provide jobs!? And the taxpayers have to subsidize those laborers too—every time the price of copper goes down, the miners are laid off and collect unemployment.

Their interest is bonuses for their management and profits for their stockholders. In their exquisite book, which they paid to have written by a professor and published by the University of Arizona, it's never mentioned what they have done for their laborers—not a word … clearly not in their realm of interest. (At least it shows some honesty.) And we Arizonans continue to kowtow to their demands because they provide jobs. We give them free water, free water rights, and in exchange let them pollute our water and air. . . . Is it time for a change?

Recent History: Power of Phelps Dodge in Arizona

News for 2005: Phelps Dodge management went for an all-out campaign this year to prove that they still owned the Arizona Legislature—and they almost succeeded. There had been a history of surface water pollution at Bagdad copper mine, which had caused fish kill in the early 1990’s. The owner at that time, Cyprus Minerals, has since merged with Phelps Dodge, taking their name. But it is still the “same company.” Problem is one of the mine waste facilities was built over a wash. Other PD news was that the CEO raked in $4.3 million in 2005.

When Department of Environmental Quality tried to force some clean-up, 45 Phelps Dodge employees signed up as “lobbyists” to fortify the paid ones, and the battle was on. In a midnight session, the AZ legislature—with PD lobbyist hot on their collars—voted to discontinue funds for ADEQ because “business” was complaining. I checked with legislators and the AZ Chamber of Commerce, which was “helping” the pollution cause, both refused to say who was complaining. Can you imagine the Arizona Senate was eliminating the Department of Environmental Quality for complaints from companies they would not disclose. Well, that’s legislators in Arizona.

Fortunately, the Arizona Republic got the story out immediately and the coup died a fast death.

REMEMBER, copper mining will never go away in Arizona. Copper is our workhorse metal, especially in the technical age. Copper mining is a big part of Arizona's history—tarnished though it may be when it comes to Labor and Environment—and Phelps Dodge has been a star player. For further details, I refer you to Copper Crucible: How the Arizona Miners' Strike of 1983 Recast Labor-Management Relations in America by Jonathan D. Rosenblum, Copper for America: The United States Copper Industry from Colonial Times to the 1990s by Charles K. Hyde and Forging the Copper Collar by James W. Brykit. Arizona natural resources has produced millions in profits annually for over 100 years for the copper companies. Now we are simply asking for "responsible mining"—mining using the best technology available—a relationship that provides for the well-being of the environment and the nearby communities as well as the stockholders.

Return to Home Page