Fifty Years of Night: Coal jobs gone, perhaps for good

Jun 17 - McClatchy-Tribune Regional News - Bill Estep and John Cheves Lexington Herald-Leader

Kyle Thacker's bloodline in the underground coal mines of Eastern Kentucky goes back decades.

His grandfather Willard Thacker raised 16 children on a miner's pay, beginning in the days when the back-breaking job involved blasting down coal and loading it into carts with a shovel.

Thacker's father, Curby, went to work in the mines in the 1970s. He was rarely out of work during his 35 years underground.

"You could quit one day at one mine ? and you could get a job the next day at another one," said Curby Thacker, 66, of Knott County.

All five of Curby's sons followed him into the mines, but their experience has been different. All five were laid off in 2012; Kyle, 26, the youngest, lost his job in June and hasn't been able to find work at another mine.

"I've looked about everywhere. You can't pay them to let you work now," Kyle Thacker said.

Thacker, who is married and has two young children, cashed out his 401(k) retirement account to pay off some bills. He had started remodeling his front porch but stopped when the money ran out, and he is going without health insurance because it would cost more each month than he receives in unemployment payments. He might have to let the bank take back the white 2011 Ford Taurus he bought when times were better.

Thacker and thousands of other miners are confronting the latest in a century of booms and busts in the Eastern Kentucky coal industry. This time, experts warn, the backslide looks permanent.

Driven down by competition from cheap natural gas and other factors, coal production fell 27.6 percent throughout Eastern Kentucky in 2012, to the lowest level since 1965. The slide in Knott County was worse: 45 percent.

The downturn wiped out more than 4,000 mining jobs in Eastern Kentucky; employment at coal mines in the state's eastern coalfield dropped nearly 30 percent, from 13,608 in 2011 to 9,540 in 2012, according to the state Energy and Environment Cabinet.

Interactive: Regional changes in production and jobs in 2012

In Knott County, 63 percent of coal jobs disappeared in 2012. The loss hurt worse than in most other places because coal had been the backbone of the local economy for decades, accounting for a larger share of local wages some years than in any other county in Kentucky.

The sharp decline is an echo of the early 1960s, when Harry Caudill, a lawyer from neighboring Letcher County, wrote his landmark book Night Comes to the Cumberlands: A Biography of a Depressed Area.

Coal production in the region was at the lowest point in decades at the time, and Caudill predicted that trend would not change. Within a few years, "tireless nuclear reactors" would replace much of coal's share of electricity production, and coal "is unlikely ever again to be a prime industry," he wrote.

Some of Caudill's predictions were wrong -- nuclear power didn't become predominant, and coal had more than one comeback in the past 50 years -- but his ultimate diagnosis of decay for Eastern Kentucky's omnipotent industry now looks more likely than ever.

"I think we're going to stop mining in Eastern Kentucky with coal still in the ground," said Len Peters, secretary of the state Energy and Environment Cabinet.

Mining came late

Large-scale mining came later to Knott County than most of southeastern Kentucky.

In nearby counties, out-of-state corporations built entire towns from scratch in the 1910s and '20s to house workers for the underground mines fueling America's growth at the dawn of the century.

Coal production in Knott County, hindered by a lack of railroads, didn't top 1 million tons until 1946, during the lingering boom from World War II demand. That was more than three decades after several other Eastern Kentucky counties first hit the million-ton mark.

Knott County, however, would soon be ensnared by the cyclical swings of coal production that already bedeviled many of its neighbors.

Interactive: Knott County, Kentucky historical coal production

Demand for Eastern Kentucky coal dropped after the war, when railroad locomotives began guzzling diesel fuel instead of coal, and other energy sources gained popularity in factories and homes.

Coal production had reached 1.85 million tons in Knott County in 1950 but bottomed out at 722,198 tons in 1954, and it wouldn't return to previous highs for more than a decade, according to state records.

In the Eastern Kentucky mines still running, machinery robbed jobs from men. A machine called a continuous miner, which grinds coal out of the seam, became available in 1948, and a national labor agreement in 1950 encouraged wider mechanization, forcing many smaller mines out of business, Appalachian historian Ron Eller wrote in his 2008 book Uneven Ground: Appalachia Since 1945.

The effect of the downturn was evident by 1960. Coal jobs in the region plummeted by more than half in the 1950s; 76 percent of Knott County residents lived in poverty, more than three times the national poverty rate.

"Hunger, lack of clothing, inadequate housing -- these are all too prevalent," a local committee said in a December 1960 report, now archived at Berea College.

Knott County lost nearly 15 percent of its residents between 1950 and 1960 as hundreds of thousands of people left Eastern Kentucky to look for jobs in the industrial Midwest.

Curby Thacker was a little boy in the 1950s, but he remembers lean times. His father put out a big garden and kept hogs, chickens and a milk cow to help feed the family, Thacker said.

"They just raked and scraped to get by," he said.

Hillsides full of jobs

In the 1960s, industrial expansion and electricity-sucking suburban homes kick-started coal consumption. Knott County got a new rail line just in time to benefit.

A new railroad spur pierced the Caney Creek area in 1962, according to a book of local history. National Mines opened several operations along the spur, and those mines ultimately employed more than 2,000 people, according to the history book.

Coal companies in Knott County, as in the rest of Central Appalachia, also got a boost when Middle Eastern nations decided in the early 1970s to cut the flow of oil in retaliation for U.S. support of Israel.

Coal production nationwide shot up 14.4 percent between 1973 and 1976, according to the U.S. Energy Information Administration, and much of that coal was wrested from Central Appalachian mountains.

The boom lured Curby Thacker away from his job as a telephone lineman and into the mines, following in his father's footsteps. Hollows around the county were pocked with portals to underground mines that honey-combed the hills, Thacker said.

On one warm day, as Thacker sat with his retired father on a roadside rock where he often whittled, three coal operators stopped by to offer Thacker a job, each promising $1 an hour more than the one before, he said, laughing as he recalled the story.

"There was jobs all over these hillsides," Thacker said.

For much of his career, Thacker ran a machine that drove bolts into the roof of the mine to keep it from falling and crushing miners. His father thought the old way of shoring up the roof with pieces of wood was better, Thacker said.

"He said, 'You'll get killed, son, if you don't set you some timbers," Thacker said.

Coal exports from the region more than doubled by the end of the decade, boosting jobs and small-business growth and, for a time, reversing out-migration, Eller wrote. The poverty rate in Knott County dropped by more than half in the 1970s.

"It was obvious that the economy was better; there was more money," said Robert Morgan, who was Knott County attorney in the 1970s before becoming a judge for more than 25 years.

From 1,300 jobs to 330

Coal production has swung wildly in Eastern Kentucky for a century, thanks to changes in market conditions, technology and regulations. Coal operators have sometimes exacerbated the boom-bust cycle by opening too many mines during good times, leading to overproduction.

"If they've got a little boom, everybody in the world gets into it," said Ray Slone, who has mined coal in Knott County since 1974, first as an employee and later as a contract mine operator.

The 1970s boom led to "long-lived excess productive capacity" in the coal industry, according to the U.S. Energy Information Administration.

With the flow of Mideast oil restored by the early 1980s, the number of surface and underground mines in Eastern Kentucky dropped from more than 1,700 in 1985 to 382 in 2000, and mining jobs dropped from more than 34,500 in 1980 to fewer than 13,000 in 2000, according to state and federal sources.

Interactive: Knott coal jobs

In the early 2000s, Knott County saw the pendulum swing again, recording job and production gains as red-hot growth in China, a U.S. economy and other factors supported demand for coal, according to state statistics.

The relative good times didn't last long.

The county suffered an economic blow in summer 2009, when Consol Energy closed its underground mine on Jones Fork, laying off more than 150 people, but that was only the leading edge of a tsunami that wiped out local coal jobs in 2012.

There were only 330 people employed at coal mines by the end of the year, down from more than 1,300 a decade before, according to the Kentucky Energy and Environment Cabinet.

Kyle Thacker and two of his brothers were among the Knott County miners who lost jobs when Arch Coal closed several underground mines among the steep-sided mountains along Caney Fork. Two others lost their jobs at other mines.

One morning in late June, as Kyle Thacker and other miners arrived to don their work gear for the day shift, officials from Arch Coal headquarters in St. Louis told them that the company was mothballing the mine.

"When I showed up, they said don't even worry about putting your clothes on," Thacker said. "They just said they couldn't sell the coal."

Who to blame?

A sign in County Clerk Ken Gayheart's office, and many others around Knott County, says "Stop the War on Coal" -- an expression of the widespread local opinion that federal environmental regulations pushed by President Barack Obama are to blame for gutting production in Central Appalachia.

"That's the way the people in our county feel -- the regulations has gotten so tough," said Gayheart, whose five employees include two who are married to miners. "We still have coal, but they've stopped us from mining it."

The U.S. Environmental Protection Agency has held up permits for dozens of surface mines in the region because of concern over their potential to damage streams and water quality.

On another front, tougher federal clean-air rules -- along with the potential for more -- have helped to motivate utilities to close older, coal-fired power plants that produce relatively high amounts of pollution in favor of cleaner-burning natural gas plants.

Those developments dampened demand for Central Appalachian coal for production of electricity -- called steam coal or thermal coal -- and will continue to do so.

However, the chief force behind the coal industry's precipitous slide in Eastern Kentucky was very cheap natural gas, which enticed utilities to switch from coal to gas, analysts said.

Developments in drilling technology have unlocked vast reserves of natural gas in recent years that were once inaccessible, driving down the price. Natural gas at the benchmark distribution hub in the U.S. averaged $4.12 per 1,000 cubic feet in 2011 but only $2.83 in 2012, according to the U.S. Energy Information Administration.

An abundant supply of cheap natural gas was "the dominant fact" fueling coal's demise in Eastern Kentucky, said Peters, the Energy and Environment Cabinet secretary.

In April 2012, the share of electricity generated using natural gas reached 32 percent, matching coal for the first time since the federal government started keeping records in 1973.

Two months later, Arch Coal cited the "continuing decline in demand for steam coal" from Central Appalachia when it announced that it was closing mines in Knott and adjoining counties and laying off more than 400 people, including Kyle Thacker.

The price of natural gas has gone back up some in 2013, helping coal regain market share, but that hasn't sparked a significant resurgence in Eastern Kentucky.

Knott County and the rest of the Central Appalachian coalfield face other challenges, including competition from other coal-producing regions and higher production costs.

In 1973, six Western states accounted for only 9 percent of all coal mined in the country, but that figure had jumped to more than 50 percent by 2010, according to EIA figures.

Most of that Western U.S. coal comes from thick, low-sulfur beds in Wyoming's Powder River Basin, which are easier and less costly to mine than the coal in Central Appalachia's mountains.

In mid-April, the spot-market price for Powder River Basin coal was $10.55 a ton, compared to $67.27 for Central Appalachian coal, according to the EIA. Eastern Kentucky coal burns hotter, but the price difference is a disadvantage.

One key reason it costs more to mine coal in Eastern Kentucky is that the region has been mined for a century. Coal companies went after the best, easiest-to-reach coal first, meaning higher costs and lower productivity when the remaining thinner seams are mined. Mining productivity dropped 45 percent in Central Appalachia between 2000 and 2010, the EIA said.

Analysts project that coal production in Eastern Kentucky and throughout Central Appalachia will continue a steep slide in the next few years regardless of the mix of environmental rules, said Sean O'Leary, an analyst with the West Virginia Center on Budget and Policy.

Interactive: Coal production projections by region

"It's too expensive to mine, with or without the environmental regulations," O'Leary said.

The EIA projected in April that coal production in Central Appalachia will plunge from 184.9 million tons in 2011 to no more than 104.3 million tons in 2021, with only a modest recovery after that.

A May report from Downstream Strategies, a West Virginia consulting group, pointed out a key reason for concern in Kentucky: 60 percent of all Central Appalachian coal that was shipped in 2011 to power plants slated for closure came from Eastern Kentucky.

The study said total coal-industry employment in Central Appalachia could go up over the next two decades because more miners might be needed to get harder-to-reach coal. The increase will be patchy, however; some counties are likely to see increases in jobs and coal-tax revenue, but most will probably lose out, the report said.

The study predicted that Knott, Pike and Letcher counties in Kentucky and Wise County, Va., are the most vulnerable, based on factors including where their coal goes.

"The expectation would be that those counties will experience economic losses," said Rory McIlmoil, one of the report's authors.

The bottom line is that structural changes in the economy have forever altered the Central Appalachian coal industry, Peters said.

There might be mini booms and busts in the region in coming years, and exports could prop up some production, but the overall trend will be down, he said. Higher natural gas prices could be a factor in slowing the decline, but they won't reverse it, he said.

"We think it is clearly on a downhill slide," Peters said of Eastern Kentucky coal production. "If it comes back, it's going to be ephemeral."

'You can't pay your bills'

The crash in coal production was evident by the time Greg Mullins, a retired state trooper, took over day-to-day oversight of Knott County's government in early December after Judge-Executive Randy Thompson went to federal prison in a vote-buying case.

The county had come to depend heavily on a severance tax that coal companies pay based on the amount of mineral they pull from the ground. County officials used the money for employee salaries and benefits and a range of programs, including fire departments and community centers.

Severance-tax revenue had dropped so sharply and so quickly in 2012 that the county was on track to finish the fiscal year nearly $1 million in the red, officials with the state Department for Local Government told Mullins and members of the fiscal court at a meeting in late January.

"You can't pay your bills at this point," Andrew Hartley, staff attorney for the agency, told the fiscal court.

It was bitterly cold outside, but the meeting room in the Depression-era county courthouse was packed as Hartley explained the county's options: enact an occupational tax or a tax on business profits; cut spending; or approve a combination of spending cuts and tax increases.

Hartley said the county would probably be left with a skeleton government if magistrates tried to balance the budget through cuts alone. When magistrates opened the floor for comments, however, retiree Roy Jent stood and said he opposed any tax increase. There weren't enough wage-earners in the county to justify an occupational tax, he said.

"You pass an occupational license tax on everyone working in this county and you won't raise enough money to make a payment on the Sportsplex," Jent said, referring to a large county-owned recreation center built with coal-severance money. "We're a poor county."

Over the next three weeks, a budget committee and the fiscal court wrangled over how to deal with the budget shortfall. In one meeting, magistrates rejected both a tax increase and proposed cuts, leaving the budget in limbo.

On, the day the Department of Local Government had ordered magistrates to put a new budget plan in place or face court action, the fiscal court met again. They went through the budget line by line, discussing everything from potential cuts in computer service to vending-machine supplies and uniform rentals for county employees.

In the end, magistrates voted 3 to 1 for significant budget cuts, including layoffs or reduced hours for a quarter of the county work force; deep reductions in the contribution for employee health insurance; and a reduction in hours at the Sportsplex.

Magistrate Jamie Mosley, a former county dog warden, said afterward that he didn't think it would be right to levy a tax on jobs, especially when so many were out of work. He also said the county payroll had grown bloated.

"We've got two, three people doing one job," Mosley said.

One painful result of the budget cuts was fewer hot meals for older people who need help. The senior citizens center had to reduce home deliveries of meals from more than 50 a day to 19, director Eva Huff said.

The county receives federal money to provide some meals, but it had used its own money since 1999 to feed more people.

The nutritious meals weren't the only benefit of the program, Huff said. Delivery people helped clients with chores, such as taking out the garbage, and they were the only people some residents saw all day.

Pearl Maggard, 70, was among those dropped from the meal program. Maggard said she has taken care of her husband since he suffered a stroke 17 years ago. She can fix a meal, but getting food delivered was a great help as she attended to him.

"It adds to each day's burden," she said of being dropped from the program.

Business is down

In some ways, the sharp downturn in 2012 leaves the county facing the same dilemma it did in December 1960, when a group of nearly 100 local leaders and residents gathered on a cold night to seek help from the administration of President-elect John F. Kennedy.

The group wanted it known that there had been progress in the 1950s, such as electricity installed in all but one school and telephone service that had grown from 80 phones in 1950 to 900.

But, the group's report said, "Knott County desperately needs JOBS."

When coal ultimately brought more jobs, the industry had an outsized impact on Knott County's economy because there were few other opportunities for good-paying work. The county has no hospital, no motels and few restaurants, and with a population of about 800 in the one-stoplight county seat, the retail base is small. There is no Wal-Mart.

In 2011, mining accounted for 50 percent of the payroll in the county -- the highest percentage in the state, according to the Kentucky Office of Employment and Training. When coal jobs disappeared, so did the local economy.

Many of the laid-off miners got severance packages, softening the initial blow of the layoffs, but they cut spending when smaller unemployment checks replaced their severance pay, said Russell Bentley, a former state representative who owns a small market at Topmost.

"I think everyone in the area ? is seeing the impact right now," he said. "I know my business is down. People are really cutting back."

Bill Kitchen, who runs a jewelry story in Hindman's small shopping center, said he couldn't remember a worse economic time since he moved to the county in 1970.

One afternoon in early April, Kitchen was watching golf on television as he waited for a potential customer. One man had looked at a pair of earrings and talked of coming back to get them later for his girlfriend, but he hadn't showed up by the time Kitchen closed.

It's not unusual to go all day without a sale, he said.

"All these stores, I'm sure, have 0 days," he said of surrounding shops. "If they're paying their bills, they're lucky right now."

Sam Godsey, who owns a local trucking company, said he had only enough business in March for four tractor-trailers, down from 12 a year earlier. He parked his eight other trucks and didn't re-license them, which will mean less tax money for local and state governments, in addition to the lost jobs.

"I'm a pretty optimistic person, but I don't see it," Godsey said of a comeback for the local coal industry.

No future

Kyle Thacker said that after high school, he thought about training to be a mechanic, but he decided instead to follow his father into the mines. That was in 2007, when there were plenty of mining jobs, and they paid far more than anything else available in the area without a college degree.

"I seen that money sign and I didn't look to the future," Thacker said.

He mined for five years, running a roof-bolting machine at times like his father. He went through some periodic layoffs, but they didn't last long and he didn't mind having a little extra time for hunting.

By mid-May, however, he was sick of the "vacation" that had lasted nearly a year.

Thacker, often dressed in his blue miner's pants with reflective tape, has searched for mining jobs across the region. He received one offer at a mine in northern West Virginia, but he didn't want to work that far from home.

An official at a coal company two counties away took his application in early May and wished him good luck, but nothing more. Not long after, Thacker thought he had a job lined up at a small mine, but then federal regulators shut it down after a surprise safety inspection.

Discouraged, and with the end of his unemployment looming, Thacker signed up in May for public assistance with his mortgage and began searching for jobs outside the mining industry.

"I'm open to anything that pays decent, that I can pay the bills on," he said.

Thacker still thinks the coal industry in Eastern Kentucky will eventually rebound, but he doubts there will be a mining job waiting in Knott County when his 2-year-old son, Taylon, joins the workforce. Even if there is, Thacker said, he'll try to talk his son out of relying on coal for his livelihood.

"Find something that's steady," he'll tell him.

Bill Estep: (606) 678-4655.Twitter: @billestep1.John Cheves: (859) 231-3266.Twitter: @BGPolitics.Blog: bluegrasspolitics.bloginky.com

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