Labor Dispute Highlights Coal’s Darkest Days

Patriot Coal and UMWA is Classic Dispute that Cuts Deep

Ken Silverstein | Jun 17, 2013

Most Americans realize that coal companies have been contesting the decisions of federal regulatory agencies. But many do not see the infighting that has occurred between mining executives and their labor unions, which have a long and painful history that centers on working conditions and job security.

The two separate dynamics have converged in what is known as Patriot Coal versus the United Mine Workers of America. In this case, the company is trying to emerge from bankruptcy and is asking workers for a $150 million in concessions, which include cuts in fringe benefits, especially health care-related ones to retirees; at least 1,700 current employees and 23,000 former workers and their dependents would be affected. Those promises, they say, were rewarded to them after working in underground mines and after taking numerous risks.

In Late May, a federal judge ruled in favor of Patriot Coal, saying that while the decision was a difficult one, the company had to get concessions. Without that, it would die and take all of its workers with it. As such, the coal company has the authority to begin making the necessary cuts on July 1. However, it has said that it will continue discussions with the labor unions to try and reach an amicable resolution. Labor has agreed to those talks but it has also threatened a strike before month’s end as a way to gain leverage.

“A strike would put the company on a path to liquidation, which is the worst possible outcome for UMWA employees and retirees,” says Ben Hatfield, chief executive of Patriot, in a formal statement. “Patriot’s unionized work force would be left with limited job opportunities in a difficult coal market, and our UMWA retirees would likely be left with zero healthcare coverage.”

Hatfield goes on to say that through negotiations, he would hope that the resulting wage and benefit package would reflect the regional market conditions. But he is saying that the current labor union’s proposal would increase Patriot’s losses by more than $40 million per year for the next two years, underscoring the point that Patriot won the federal court case that is now on appeal.

In an effort to keep an ailing sector alive, Senator Joe Manchin, D-WV, says that the coal industry is committed to commercializing next-generation coal technologies. Jobs and fuel diversity are at stake, especially in his state that is plush with coal revenues.

‘Robber Barons’

But that acquiescent tone may not suffice: Alpha Natural Resources, Arch Coal and Peabody have all taken a thumping. Patriot Coal, spun off by Peabody in 2007, is in struggling to emerge from bankruptcy. All are active in Appalachia. And while those companies blame federal regulations for part of their woes, they acknowledge that a declining reserve base there in combination with abundant and inexpensive shale gas are also contributing to the new energy paradigm.

What to do? Patriot is calling the shots now that it has a court victory under its belt. But it realizes that forcing massive cuts in benefits programs must be a mutual decision, to the extent possible. Discussions are must. So is avoiding a strike.

But the mine workers' president, Cecil Roberts, is accusing Patriot of awarding bonuses to hundreds of its executives and managers while miners are trying to figure out how to pay the bills. It’s all led to the use of rhetoric that has been bandied about for decades, with one local politician falling in line and calling the coal executives “robber barons.”

Coal companies, for instance, have a reputation of coming into rural communities and providing jobs and wealth -- as long as the natural resources are there for the mining. But when they dry up, the businesses pull up stakes and go home, taking their wealth with them. The towns are subsequently left destitute while the ill-will permeates. Meantime, many of the locals will remain jobless, and drug-addicted.

“This has become a country by, for and of the corporations,” adds Kentucky AFL-CIO President Bill Londigran.

It’s a classic labor dispute, except this time the company that is trying to exact a deal is actually in bankruptcy. Some tense negotiations will take place in the coming weeks between Patriot and the UMWA, which will no doubt get the short end of the stick here. But it may be the only way that its members will continue to have jobs in a coal market that is filled with hardships.

The broader question, of course, is what will happen to the industry during this period of competitively priced natural gas and tougher emissions regulations? The coal sector’s hardline posture may no longer work in these instances, if the past two presidential elections are an indication. If so, coal groups need to focus on the funding and the building of next-generation technologies to keep their product relevant, and their labor force gainfully employed.



EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been honored as one of MIN’s Most Intriguing People in Media.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com

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