UMW approves new contract with Patriot Coal
CHARLESTON, W.Va. -- Members of the United Mine Workers of America who work for Patriot Coal, including 1,800 miners in West Virginia, approved a new labor contract Friday. Union members voted on an agreement reached after weeks of intense negotiations between union and company officials.
Ratifying the contract means that Patriot's 1,800 union miners in West Virginia will remain on their jobs and retired miners will continue to get many of their benefits.
Company and union officials predicted that Patriot might have shut down completely if miners rejected the new contract in Friday's vote.
"The membership has made it clear that they are willing to do their part to keep Patriot operating, keep their jobs and ensure that thousands of retirees continue getting the health care they depend on and deserve," UMW President Cecil E. Roberts said in a prepared statement. "This has been a difficult and uncertain year for our members. But I believe that in the end, they understood that we had done a lot to improve what the judge had ordered. They also understood all that was at stake and resolved to move forward in a positive way.
The new contract includes significant improvements in the terms and conditions of employment and benefits from those approved by U.S. Bankruptcy Judge Kathy Surratt-States in St. Louis, Mo., in her May 29 opinion. Patriot implemented those conditions on July 1.
On Monday, Roberts said, "After several weeks of nearly around-the-clock negotiations, I believe we have reached something that can be taken to the membership for ratification."
The new contract, posted on the bankruptcy court's website, includes some concessions.
Working miners, for example, agreed to a wage cut of $1 per hour. However, the new contract gives them pay raises of 50 cents an hour on Jan. 1 for each of the four years between 2015 and 2018.
The new contract continues paying overtime wages, after 40 hours of work per week, at 1.5 times regular wages. However, "premium overtime" wages -- paid for working on holidays, for example -- will be eliminated. Union miners working those days will get standard overtime.
The new contract also includes slight reductions in paid vacation time, holidays and sick days. It also keeps many of their health-care benefits, and union workers will not have to pay health-care premiums.
Patriot will continue to provide the existing life insurance and accidental death and dismemberment benefits, as well as eye and dental care.
The bankruptcy judge would have allowed Patriot to eliminate all current vision, dental, life and accidental death insurance benefits to union miners.
Under the new contract, Patriot will contribute 3 percent of a miners' gross wages to a 401(k) or similar plan, to provide health-care benefits when the miners retire. This will replace existing health-care benefit plans given to retired union miners.
Patriot Coal was founded in 2007 when Peabody Energy sold all its union operations east of the Mississippi to the newly created company. In 2008, Patriot bought Magnum Coal, a company that had taken over union mines previously operated by Arch Coal.
Those two deals, the UMW argues, handed Patriot Coal far more liabilities than assets. Today, Patriot is paying many benefits to 23,000 union retirees and their dependents -- most of the retired union miners never worked a day for that company.
The cost of paying those long-term retirement and health benefits was a major factor that forced Patriot to file for bankruptcy protection.
Patriot Coal and UMW leaders have said they believe a major part of Patriot's financial problems came from assuming the obligations to pay pension and health-care benefits that were due the miners who worked for Peabody and Arch, most of whom were retired when Patriot acquired those mines.
In a document filed with the U.S. Bankruptcy Court, Patriot estimated that it will end up paying $1 billion in "retiree benefits" to union miners under those sales agreements.
In its bankruptcy filing, Patriot stated that its bankruptcy was caused by many factors, including: reduced demand for coal, "increasingly adverse" safety and environmental regulations, as well as "unsustainable" costs for wages, benefits and health care for retired miners and their spouses.
Changes under the new contract, according to a statement Patriot filed with the bankruptcy court, will save about $520 million over the next four years.
Patriot operates eight mining complexes in West Virginia -- Heritage Coal, Colony Bay Coal, Eastern Associated Coal, Mountain View Coal, Pine Ridge Coal, Rivers Edge Mining, Apogee Coal and Hobet Mining.
Reach Paul J. Nyden at email@example.com or 304-348-5164.