Patriot Coal, employees face grim future without agreementMay 4 - McClatchy-Tribune Regional News - Jeffrey Tomich St. Louis Post-Dispatch
No matter how a judge rules on Patriot Coal Corp.'s request to cut union wages and benefits, the coal producer and employees could face a grim future, the company and the United Mine Workers of America told a judge overseeing Patriot's bankruptcy. Approval of Patriot's motion could lead to a crippling strike that would likely force the company into liquidation, UMWA attorney Fred Perillo said. And if Patriot's motion is rejected, it is a "mathematical certainty" that the company will run out of cash early next year and be forced to sell off its mines and lay off 4,000 employees, said Benjamin Kaminetzky, a lawyer representing the company. The doomsday scenarios featured prominently during Friday's closing arguments in a week-long hearing in U.S. Bankruptcy Court. Judge Kathy A. Surratt-States didn't immediately issue a ruling. The stakes are huge whatever the outcome, and will go a long way toward determining the future of the company and thousands of employees and retirees. Patriot, which filed for Chapter 11 protection in July citing depressed coal markets and unsustainable legacy liabilities, says it has reduced expenses to the maximum extent elsewhere and needs $150 million in annual savings from the union to survive. The UMWA argues that Patriot's proposal is rooted in anti-union ideology. It claims the company could find additional savings elsewhere, that its business plan is based on pessimistic coal market forecasts, and that union employees and retirees have been asked to shoulder a disproportionate share of the proposed cost cuts. "We will shoulder our fair share of the burden, but we will not shoulder it all," Perillo said. For all of their differences, Patriot and the UMWA agree that the best possible outcome depends on progress at the bargaining table. But after 16 negotiating sessions and numerous proposals and counter-proposals, the two sides are far apart. They spent much of Friday's hearing accusing the other of misstating facts and negotiating in bad faith. Patriot made five proposals to the union in recent months, including an offer last month that would give the UMWA a 35 percent equity stake in the reorganized company. The stock could be sold off to help fund a health care trust fund known as a voluntary employee beneficiary agreement, or VEBA. The company also offered profit-sharing and a per-ton royalty on coal production that would go to fund the VEBA. But the UMWA said the proposal is inadequate. In a counter-offer submitted late Saturday night, the union proposed a 57 percent equity stake. Patriot said the effort to force cuts on the UMWA isn't about union vs. nonunion employees, executives vs. labor or Wall Street vs. Main Street. It's about Patriot's ultimate survival and the need to cut costs from its union workforce, Kaminetzky said. "Patriot is projected to have no cash, literally zero dollars, by early 2014," he said. And, he said, if the company is forced to liquidate and sell off its mines, they could be purchased and reopened with nonunion labor just like Hostess Brands bakeries. http://www.energycentral.com/functional/news/news_detail.cfm?did=28479283 |