Patriot Coal: Union 'distorted' facts on negotiations
CHARLESTON, W.Va. -- Patriot Coal officials are saying statements by the United Mine Workers are "inaccurate and distorted" and that the company never "walked out" on negotiations with the union.
In a statement Wednesday night, Patriot said it has not walked out of negotiations with the UMW. In fact, company officials said, they only learned that next week's planned negotiating meetings were cancelled from the UMW's news release.
Ben Hatfield, Patriot's president and CEO, said the union statement was "inaccurate and distorted.
"Patriot has been working diligently with the UMWA in efforts to address their concerns about the contractual changes found to be necessary, fair and equitable by the bankruptcy court. If our goal was to force acceptance of the court-approved contract as is, no further discussions would have been necessary, as that option has been available to us since May 29," Hatfield stated.
Last month, a federal bankruptcy judge said Patriot could ignore its contracts with union workers and cut wages and benefits for workers and retirees. Union leaders had said the cuts are too deep, and the company and the union had been trying to reach a new deal.
U.S. Bankruptcy Judge Kathy Surratt-States granted Patriot's requests to legally adjust employee wages and benefits "to a level consistent with the regional market."
Surratt-States also allowed Patriot to move its health-care obligations to retired miners into a Voluntary Employee Benefit Association, or VEBA.
Today, Patriot Coal is responsible for health-care benefits for about 23,000 retired miners, their dependents and widows.
Patriot Coal was founded in 2007 when Peabody Energy sold all its union operations east of the Mississippi River to the newly created company. In 2008, Patriot bought Magnum Coal, a company that had taken over union mines once operated by Arch Coal.
Those deals, the UMWA argues, gave Patriot far more liabilities than assets from its creators -- Peabody and Arch. A large part of Patriot's retiree health-care costs come from miners who already had retired from Peabody or Arch, and who never worked for Patriot.
In the statement released Wednesday evening, Patriot said it is offering the UMW millions of dollars in additional benefits, including wage increases, health-care improvements, life insurance and paid time off.
Company officials said they needed a two-day recess from negotiations this week to conduct a "financial analysis" of the costs of UMW demands that Patriot reject most of the cost cuts approved by the Surratt-States bankruptcy ruling.
"It remains the assessment of Patriot management that agreeing to the UMWA's demands would sacrifice any chance of making the company viable," according to the company's statement.
The proposed VEBA, to help retirees, would be funded with hundreds of millions of dollars, the company stated, including:
• An initial cash contribution of $15 million.
• Giving the UMW a 35 percent ownership in the reorganized company, which the union could sell for "a substantial cash contribution" to help fund retiree health care.
• Royalty contributions for every ton of coal mined by Patriot.
• Additional profit-sharing payments.
"Despite being under no obligation to do so," the company stated, "Patriot has voluntarily continued to bargain with the UMWA in an effort to reach a consensual agreement on terms more favorable to the UMWA than the proposals approved by the court."
Hatfield said, "In these continuing discussions, Patriot has offered substantial improvements for our UMWA employees that result in a wage and benefit package that is clearly favorable to the regional labor market."
Patriot Coal has 4,000 employees whose jobs could be endangered if the company collapses.
"We are hopeful that the UMWA will return to the negotiating table and work toward a solution that allows Patriot to survive and continue to provide 4,000 jobs and meaningful health-care benefits for thousands of retirees and their families," Patriot said in the statement.
The UMW is scheduling meetings with local unions representing Patriot workers in preparation for a vote on a possible strike. Local unions are likely to vote during the last week of June.
Under the UMW constitution, all active members working for Patriot, including miners who are laid off or who are on sick or disability leave, can vote on their proposed terms and conditions of employment. Miners have the right to vote up or down any collective-bargaining agreement. The authority to call a strike rests solely with the UMW's international president, Cecil Roberts.
About 1,650 of Patriot's 5,200 active employees are represented by the UMW union. The bulk of the company's union workers are employed at four mines that represent roughly half of Patriot's 2012 coal production, according to court records and financial disclosures. Three of those mines are in West Virginia: Federal No. 2, in Monongalia County; Hobet 21, along the Boone-Lincoln county line; and Guyan, in Logan County.
The UMW has appealed Surratt-States' decision to the U.S. District Court in St. Louis, and union lawyers are scheduled to file their initial brief on June 25.
Reach Paul J. Nyden at email@example.com or 304-348-5164.