The Times West Virginian

Headline News

June 14, 2013

Patriot, union trade jabs during bankruptcy

Roberts to gauge receptiveness to walkout by UMW

ST. LOUIS — Top executives of a bankrupt coal producer and the nation’s biggest miner’s union are trading public jabs over bargaining meant to stave off a strike against a company given a court’s go-ahead to slash health care and pension benefits to thousands of workers and retirees.

The public feuding resurfaced Wednesday, when the United Mine Workers of America accused Patriot Coal Corp. of walking out of negotiations meant to mitigate the bankruptcy judge’s May 29 decision allowing Patriot to impose wage and benefit cuts by abandoning its collective-bargaining agreements.

Patriot’s chief executive fired back hours later, denying the company broke off talks it noted it was under no legal obligation to continue and simply recessed to mull financial implications of the union’s demands that Patriot roll back most of the cost relief the bankruptcy judge approved. Accusing the union of “theatrics,” Ben Hatfield added “it remains the assessment of Patriot management that agreeing to the UMWA’s demands would sacrifice any chance of making the company viable.”

During an April hearing over Patriot’s cost-cutting, an attorney for the union through its attorney threatened a strike if the court’s ruling didn’t go organized labor’s way. On Wednesday, the union’s president, Cecil Roberts, said he planned to gauge, likely at the end of this month, his membership’s receptiveness to a walkout.

“I can only conclude at this point that there is no end to the depths of sacrifices our members and retirees are expected to make,” Roberts said. “We are going to explain all this, including the terms and conditions the judge approved and Patriot plans to implement, directly to our members. This is a democratic union, and our members will have their say about whether they want to work under it or not.

“No matter what the events of the next few weeks may bring, this struggle is a long, long way from being over,” he added.

Patriot warned anew Wednesday that a strike “would put the company on a path to liquidation, which is the worst possible outcome for UMWA employees and retirees.”

Patriot’s proposed cuts have been the most contentious aspect since the Peabody Energy Corp. spinoff filed for Chapter 11 bankruptcy last summer, saying it would have to spend an unsustainable $1.6 billion to cover the health care costs, putting it at risk of folding.

In her 102-page ruling last month, U.S. Bankruptcy Judge Kathy Surratt-States concluded the concessions were legal, perhaps unavoidable, for Patriot.

While looking to cease pension contributions, Patriot has proposed creating a trust with up to $300 million from future profit-sharing to fund some level of health benefits. Patriot also would give the union a 35 percent equity stake in the company once it emerges from bankruptcy.   

Prospects of a walkout would mirror the labor dispute involving the bankruptcy of Hostess Brands Inc. The Irving, Texas-based maker of Wonder Bread, Twinkies and other baked goods last year filed for Chapter 11 protection and later announced it was going out of business and liquidating after a nationwide strike by its bakers union crippled operations.   

In Patriot’s case, Hatfield has called the moves necessary for the coal company’s survival and the preservation of more than 4,000 jobs, the bulk of them in Kentucky and West Virginia.

Union leaders contend Patriot was saddled with unsustainable pension and long-term health care obligations when Peabody jettisoned it as a separate company in 2007, essentially setting it up to fail. Peabody disputes that.

Since Surratt-States’ ruling, the union insisted Wednesday it has agreed to more than $400 million in savings over the existing labor contract’s life, though Patriot countered that union demands would unacceptably increase the company’s losses by an additional $40 million for each of the next three years.

“Unlike the UMWA, we will not grandstand in the media or issue press releases filled with distortions about the parties’ discussions,” said Hatfield, Patriot’s CEO. “Rather than spending time on such theatrics, 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.”

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