Sun's exit clouds Marcus Hook

Michael McLain, a boilermaker, has worked at the refinery for 24 years. (Kate McCann/Staff)
Michael McLain, a boilermaker, has worked at the refinery for 24 years. (Kate McCann/Staff)
Posted: February 29, 2012

MARCUS HOOK has long been a quintessential company town, joined at the hip with the iconic Philadelphia company Sunoco for more than a century.

With imminent closure of Sunoco's refinery there, most of the 590 workers get their last paychecks today.

Now, fear is seeping into this quaint, tight-knit, working-class burg in Delaware County - fear that it could turn into a modern-day ghost town.

When Sunoco said in September that it would dump the last of its remaining refining operations and focus on oil pipelines and fuel retailing, local workers and residents hoped that a buyer would emerge for the 110-year-old, 175,000-barrel-per-day refinery.

But Sunoco's chairman and chief executive officer, Lynn Elsenhans, said that Sunoco didn't get a single proposal to operate Marcus Hook as a refinery. The plant has been idle since Dec. 1.

Sunoco is the largest property owner in Marcus Hook, so its decision affects not only jobs - including those of contractors and suppliers - but is also likely to have a major impact on the budgets of the borough and school district.

"This is a very difficult situation, and it's unfortunate that people's lives are impacted by these decisions," Sunoco spokesman Thomas Golembeski said.

He said that about 65 salaried employees who worked at the refinery have been or will be redeployed elsewhere in Sunoco. The company will retain 100 hourly workers during a transition period, phasing out about half the jobs by Dec. 1, he said.

Marie Horn, who owns the Star Bar & Hotel, on Market Street, said she feels that her community has been "betrayed."

"There's a huge potential for a real ghost town down here," she said. "When we first heard rumors that the refinery might be closing, Sunoco said it was not true. Then they said they would close it in July. Now it's March. It's like the rug being pulled out from under us."

Sunoco said that mounting losses in its refining business - $900 million since 2009 - forced it to move sooner on its exit strategy.

Horn's feelings are common in the borough. Sunoco contributes about a third of the borough's annual operating budget, or $900,000 in wage and property taxes, said Mayor Jay Schiliro, who also feels slighted.

"It's just another slap in the face from them to us," he said. "I was in meetings with and they said they were actively pursuing a buyer. . . . They were lying to us. Now, there's no buyer and we're in deep trouble."

He said that the borough was able to use some reserves and a modest property-tax increase - about $85 per resident - to balance the current budget. But the borough recently had to lay off a crossing guard, and the 2013 budget is likely to take a much bigger hit.

The Chichester School District, which comprises Marcus Hook and three other municipalities, depends on more than $1.8 million in school taxes that Sunoco pays annually just on the Marcus Hook refinery - about 5 percent of the district's annual budget.

The mayor and school district officials said that they would fight any appeals by Sunoco to have the refinery reassessed at a lower value. Golembeski said that Sunoco had not filed a property-tax appeal in Marcus Hook.

"Any reassessment would have a detrimental effect on our budget," said Chichester Superintendent Barbara DiMarino. "It would be scary."

"The programs we have in place are needed for us to be successful," she said. "There are not frivolous programs here."

Businesses in Marcus Hook are already feeling the pinch.

Mario Giambrone, owner of Italiano's Restaurant and Pizzeria, bemoaned the sparse number of patrons during lunch one day recently. In the past, the restaurant would be packed with Sunoco workers and workers from ConocoPhillips' refinery in nearby Trainer, which was idled in September, resulting in more than 400 layoffs.

"I can't imagine what it's going to be like when the paychecks stop for Sunoco's workers," Giambrone said.

Sunoco's hourly workers earn an average of more than $33 per hour, union officials said, and they, too, are dismayed and perplexed.

Michael McLain, a boilermaker who worked in the Marcus Hook refinery's maintenance department for 24 years, doesn't know what he will do next. He said that Sunoco told its hourly workers they could apply for jobs with the pipeline unit, but wouldn't be guaranteed jobs.

Sunoco and the union agreed to a severance package last week - two weeks' pay per year of service up to 52 weeks, with 12 weeks minimum - and earlier announced plans to contribute $80 million to employee pension funds and to earmark $200 million for a trust fund for retiree health-care obligations.

The fate of the Marcus Hook refinery may have been sealed several years ago when Sunoco couldn't find a partner to invest billions in plant upgrades.

Without the upgrades, the company was vulnerable to swings in the price of crude, since Marcus Hook was equipped to refine only light, sweet crude, which has cost more to process in recent years compared with the heavy, sour crude favored by Gulf Coast refiners.

Oil economist Phil Verleger said that slumping demand for motor fuel in the Northeast, more fuel-efficient vehicles and costly regulatory requirements have also crimped refining margins.

"Sunoco had to make a choice between putting the entire company at risk and our 7,000 nonrefining employees or exiting the [refining] business," Golembeski said.

None of that has soothed the workers, who question how committed Sunoco was to selling the Marcus Hook refinery.

"I don't believe they were as diligent as they claim," McLain said. "They just don't want to be in refining anymore."


Contact Michael Hinkelman at 215-854-2656 or hinkelm@phillynews.com, or follow on Twitter @MHinkelman.

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