And so it begins: Coal layoffs sign of things to come?

February 6, 2012 by Ken Ward Jr.

If you don’t read the Saturday newspaper, you might have missed this story, outlining two troublesome announcements last week by major coal producers here in West Virginia:

Alpha Natural Resources announced late Friday that it plans to idle several Appalachian coal mines and reduce work schedules at others, citing reduced coal demand as more electricity utilities move toward using natural gas.

The company said many of the affected workers would be able to transfer to other Alpha operations but that about 320 workers would be displaced “within the next few weeks.”

The announcement is the second such move by a major coal producer this week, coming just one day after Patriot Coal said it was closing its Big Mountain complex in Boone County.

You can read for yourselves the announcement from Alpha here and the one earlier in the week from Patriot here.  Alpha made a separate announcement of its moves, in anticipation of the release of its quarterly earnings data on Feb. 24. Patriot wrapped word of its closure of the Big Mountain Complex in Boone County inside its quarterly earnings statement.

For those who missed the details of the Alpha closures and schedule cutbacks — Alpha didn’t bother to include that in its press release — here’s the way company spokesman Ted Pile explained it in an email to me:

West Virginia:

— #2 Gas mine in Kanawha County is being idled immediately as is the Randolph Mine in Boone County. Both are underground.

–The Black Castle surface mine in Boone County is reducing its work hours

–Camp Branch surface mine in Logan County is reducing work schedules

–Progress/Twilight surface mine is cutting back work schedules (Boone Cty.)

–Alloy Powellton mine in Fayette County s eliminating one underground section

Kentucky:

— the Cave Spur and Perkins Branch underground mines are idled immediately. Both are in Harlan County.

— the Coalgood surface mine in Harlan County will be phased out by the middle of this year and the Big Branch West surface mine in Knott County will close in early 2013.

Ted continued:

These moves altogether will displace about 320 people over the next few weeks. The number would have been higher but we were fortunate being a larger company to have other positions available for miners to fill, so all told, 234 people have been given a job opportunity elsewhere in our mine network.

While this was a decision driven by the reality of the tough market for coal, it’s still a hard decision because it affects working families. We’re trying to help by giving all displaced workers 60 days of continued pay and benefits even though it’s not required. Hopefully that’ll help them transition.

In its official press release, which is also a document that gets filed with the Securities and Exchange Commission, Alpha referred to the layoffs as production adjustments, which it blamed on “market conditions that have decreased coal demand.” Alpha’s release continued:

Alpha’s Central Appalachian businesses are seeing more electric utilities switch from thermal coal to natural gas to take advantage of gas prices at 10-year lows. A series of federal regulatory actions also have prompted utilities to implement plans for shutting down a number of generating stations that have traditionally run on coals sourced from Central Appalachia.

Patriot CEO Richard Whiting explained his company’s actions this way:

Metallurgical coal demand has trended downward in recent weeks, particularly in export markets.  As previously announced, we have taken actions to match our met production with expected sales volume. We are reducing production at both our Rocklick and Wells complexes, with particular emphasis on higher-cost operations, and delaying certain of our met expansion plans.

Likewise, given our view that the domestic thermal coal market is likely to remain depressed for an extended period, we have conducted a rigorous review of our Central Appalachia thermal mine portfolio.  As a result, we made the decision to idle the Big Mountain complex in Boone County, West Virginia, effective today.  Big Mountain produced 1.8 million tons of thermal coal in 2011.  This decision effectively positions Patriot with no remaining uncommitted Appalachia thermal coal in 2012.

We’ve gone over many times on this blog the problems facing the Appalachian coal industry … reduced amounts of quality reserves, increased competition from natural gas and from other coal basins, etc. (See here, here, and here, just for example). It’s true that increased air pollution limits on coal-fired power plants are part of this picture, but it’s worth remembering that many of the power plants that are closing were slated for demise anyway, as most are old and inefficient. And not for nothing, but these mines all had their environmental permits, so there’s no real way to blame the Obama administration’s crackdown on mountaintop removal this time — it’s a chance to see the future of coal a little more clearly, perhaps.

None of that really matters to the miners who are losing their jobs, and certainly not to their families. When you get a pink slip, it’s still a pink slip, no matter what the reason. Public relations battles between the Sierra Club and the United Mine Workers, or all the energy put into lobbying efforts by all sides don’t really change the immediate challenges those families now face. Though I wonder if Mayor Bloomberg or Aubrey McClendon would shell out a few million each for a job training or educational program for coalfield residents who are likely to be hard hit in the coming years …Or maybe a place for the Sierra Club and the UMWA to find some common ground would be to spend some of that “Beyond Coal” money for programs to help families who are experiencing the impact of that program first hand.

More broadly, it seems likely these announcements won’t be the last, at least if the Central Appalachian coal production forecast — a more than 50 percent drop over the next 25 years — comes to pass. So perhaps this is an opportunity for policymakers in the region to finally start thinking about what they’re going to do about this problem. EPA regulations aren’t the only cause here, and all the public relations and lobbying campaigns in the world aren’t going to change some of the factors that are behind the layoffs announced last week, or the additional layoffs likely to come.

So why is it acceptable to for our leaders to just write off the idea of coming up with some additional money for a trust that could fund future economic development, education and infrastructure that would help smooth this transition? Why should our kids have to wait for solutions so that politicians can be more comfortable running for re-election? Is that leadership?

22 Responses to “And so it begins: Coal layoffs sign of things to come?”

  1. Soyedina says:

    Ken I think this is a drum worth banging

    I wonder if Mayor Bloomberg or Aubrey McClendon would shell out a few million each for a job training or educational program for coalfield residents who are likely to be hard hit in the coming years …Or maybe a place for the Sierra Club and the UMWA to find some common ground would be to spend some of that “Beyond Coal” money for programs to help families who are experiencing the impact of that program first hand.

    If the humanitarian claims of national environmentalist organizations are to be taken seriously, this is an excellent opportunity for those groups to provide some of that leadership.

  2. Jim Sconyers says:

    The lack of planning for the future is acutely visible here. Instead of long-range planning for this kind of inevitable transition, the miners get 60 days’ pay.

  3. Inspector says:

    Combined forces of market demand being reduced due to EPA regulations forcing closure of some coal fired units coupled with crackdown on Appalachian coal mining have served to stifle coal mining production and job loss along with it. This is the intent of the ongoing Beyond Coal and similar efforts.

  4. Steve says:

    This is starting a littler earlier than I had expected, but the news is not surprising in the least. Anyone who believed WV would be able to survive off the coal industry well into the 21st century needs to take the blinders off and realize that the world is moving on. It is now time for our politicians to put real effort into bringing businesses to WV and stop relying on the coal crutch.

  5. Kate says:

    Job loss always sucks, no argument there, but you’re not even considering the ecological impact of coal mining. If you really want people to look at the long term you should too, and not just in terms of jobs, that’s an important part of critical thinking.

  6. Ken Ward Jr. says:

    Kate,

    You write:

    “… you’re not even considering the ecological impact of coal mining…”

    My guess is you’re not a regular reader of Coal Tattoo or you would know that the “ecological impact of coal mining” is discussed on this blog probably more than any other media outlet in the country.

    Best, Ken.

  7. miner says:

    and you are just giddy,as far as you are concerned it can not happen soon enough

  8. BOUTTIME says:

    No one ever listens to Chicken Little nor do they read the hand writing on the wall, folks may learn to pay attention to the daily news & particularly this Blog, these unfolding events were predicted long ago as we all her too well know. Having said all that , Soyedina, I ask you this “why should the Sierra Club be footing the bill for displaced coal workers retraining, I have followed this business for a lot of years and don’t think the Sierra Club has ever led the coal workers down the ‘primrose path’.

  9. Ken Ward Jr. says:

    BOUTTIME,

    In response to a recent Coal Tattoo post, Bruce Nilles of the Sierra Club posted this comment (http://blogs.wvgazette.com/coaltattoo/2012/01/18/breaking-patriot-agrees-to-huge-selenium-cleanup/ ):

    “Coal’s reign is coming to an end. Ninety coal plants since 1/1/10 have retired or announced to retire. This is 11 percent of all the installed coal capacity in the United States. Not a single new coal plant broke ground in 2011. The one coal plant that was completed in 2011 – Spiritwood in ND – cost $400M, and is not running b/c it is too expensive. Today’s Energy Information Agency report show’s coal use continuing to shrink as wind and natural gas come in cleaner and cheaper. These trends are not going to change.
    “As others have said so eloquently, we can pretend the world is not changing, not prepare for the transition, and hurt a lot of people in the process, or we can with our eyes open fashion a speedy transition that is fair and equitable to all involved, including coal miners and their families, and the folks living next to and downwind and downstream from health-threatening coal mines, coal plants, and coal ash ponds. Here at the Sierra Club we are working hard on this latter option, but it ain’t easy when our state officials and industry leaders have yet to find the courage to join this conversation.”

    The question is … what exactly is the Sierra Club doing to ensure a transition that is not only speedy, but fair and equitable, to people like coal miners and their families?

    We know the Sierra Club is working very hard to shut down coal-fired power plants, and to stop permits for mountaintop removal mines. Readers of this blog know and understand their reasons for these campaigns.

    But the club itself has said it’s working for a “just transition” so it’s reasonable to make suggestions about how it might spend some of its resources doing so.

    I’ve already heard from off-line from folks who thought this is an unfair suggestion … but I certainly expected that.

    Ken.

  10. Bo Webb says:

    Although many assert denial, this reality has been obvious long enough for our elected leaders to have prepared the public and to have developed an effective process to soften the impact on our coal mining families and the economic distress this will have on our state’s tax revenue.
    Gov. Tomblin has known of this oncoming train wreck and has no apparent plan to deal with it. He has instead chosen to kowtow and promote a declining coal industry, cementing himself in a convenient, but false proposition that Obama is to blame for coals woes. Those that remain in denial are not doing coal miners or any of the rest of us any good. As Senator Byrd signaled; this is a time to move forward, not a time to cling to a failing and declining industry. A new leader with a clear economic vision and plan for WV is urgently needed. Unfortunately, we have four years before one may be elected.
    Side Note: If the Sierra Club was to let go of some of that “Beyond Coal” money it should be to address the growing health crisis in mountaintop removal communities. I can say with great confidence that if a UMWA member were to choose between job training or their childs health they will choose health everytime. Keeping these workers working does not require a donation; it requires creativity. Every one of these layed off workers are needed to help clean up the mess and destruction left behind from mountaintop removal. Let them work.

  11. Soyedina says:

    BOUTTIME you asked

    “why should the Sierra Club be footing the bill for displaced coal workers retraining?”

    I don’t believe that the Sierra Club has any ethical or moral obligation to do this, just so we are clear. Obviously, they can do what they want with their donations. But I do think that they have an image problem in Appalachia, and Ken’s idea might be helpful to clarify, to people impacted by these “business decisions”, just what where their interests lie.

    The way Ken phrased this, just what sort of “retraining” might be desirable was left vague and undefined. And rightly so, I’m sure there are many great ideas that have not even been formulated yet. But Bo has offered one possible way to define that. What’s wrong with suggesting that the Sierra Club has an opportunity here?

  12. Vernon says:

    Some thoughts with I hope what is a somewhat valid analogy: In Aug. 1992, thousands of US military (myself included) were laid off in the reduction in force resulting from the collapse of the Soviet Union. Some of us received a modest, though inadequate, separation package, including a year’s access to BX, commissary, etc, a few months of continued medical coverage, “Transition Assistance Program” (computer/printer access for resumes, job hunting workshops, and similar things one might get from state agencies such as Workforce WV), and GI Bill for those of us who had signed up for it and had funds deducted from our paychecks. Some year groups didn’t receive anything. Some specialties were particularly hard-hit: of the 17 AF nuclear surety officers in Europe, 11 of us were riffed. Of course this was all funded by the US government, with resources exceeding that of the “environmental community” and probably the coal industry as well, but it was thousands of people in one fell swoop, with little advance warning or preparation. A number of bases were closed, and we tried to make the best of our transition to civilian life. For most of us it was not just a job but a higher calling, so the tears were especially bitter.
    Given that much of the concern in this round of coal layoffs is access to resources, it’s good to remember that the coal industry still has the lion’s share of available resources. CEOs and stockholders will be sure to “get theirs.” Even those of us in the trenches (literally) fighting the health (life and death) impacts to our communities see no or very little of the Sierra Club’s “Beyond Coal” financing, so we’re in no position to even guess at what their version of a “just transition” is or how they would fund it. Coal River Mountain Watch simply doesn’t have the resources to retrain miners or support them in the style in which they’ve become accustomed, since our most well paid staff make less than a red hat miner. What we have done, though, is to offer viable solutions, such as the Coal River Wind Project, which could offer jobs without much retraining: welders, electricians, bulldozer operators, crane operators, etc. would simply have a different set of blueprints. But Alpha has said they’d consider wind after the coal is gone, but if Coal River Mountain is removed, so is the wind potential. There are also vast opportunities in serious reclamation: as Judy Bonds would say, they don’t even have to get off the bulldozer, just turn it around. And we continue to work for statewide efficiency policy, which could put many to work retrofitting/weatherizing homes and businesses. We have also suggested and would support a federal “GI Bill” for miners to educate/retrain them for something else. Would Rep. Rahall or Sen. Manchin introduce such a bill, or have they put all their eggs in the “sue EPA” basket?
    Really, I think, the imperative upon citizen groups such as CRMW is to save the lives and health of the citizens most impacted by mountaintop removal, while calling upon the folks with the expertise and resources to implement a just transition. Those folks are the state and federal governments and the coal industry itself, essentially those who have been warned that this day was coming but lacked the sense of humanitarian responsibility or moral imperative to prepare for, and instead denied that it would ever happen.

  13. BOUTTIME says:

    First, & I in no way mean to make light of a bad situation that this has put many people in, but I have been in there shoes at least 3 very long times . I too well know the agony of uncertainty, anguish & anger of who to blame for putting me in such a bad spot & I felt like I was being punished for doing a good job — I could go on & on but you outsiders will never know the whole story till you have walked in our shoes. What I have discovered over the years after it is all said & done its just like the mine disasters — after so long NOBODY cares except those that were directly involved. I put myself in the coal mines — no one forced me, done same thing after several layoffs, finally had enough & took myself out of the mines and found a new vocation.

    I along with many others back in the late 80s pulled ourselves outta there by our boot straps & these guys can do it today if they want but sacrifices will have to be made. We had no bailouts such as the possible “Sierra Club Transition” as you Ken & others have mentioned. King coal said we would have a job forever — but ya know thinking back on it he didn’t say where or doin what. Yes Ken I did go back to the Selenium Settlement blog & re- read the Seirra thing & if they owe the miners anything then so don’t everyone connected to King Coal. That’s the blog that you booted me off for CHEERLEADING for Bo Webb LOL. & now on a diff. & lighter note: KEN: congrats to you & the COAL TATTOO for 3 very successful years & beginning the first day of the fourth year with such a controversial issue with this layoffs thing & all the intertwined issues is gonna very well be the biggest blog yet! In closing this comment I would strongly suggest that everyone out there read Ken’s very first TATTOO story “Welcome to The Coal Tattoo” if I didn’t get all that right I’m sure he will set it straight— that article is perfectly fitting in time, place & content — is uncanny!

  14. Casey says:

    Ken, you said “And not for nothing, but these mines all had their environmental permits, so there’s no real way to blame the Obama administration’s crackdown on mountaintop removal this time — it’s a chance to see the future of coal a little more clearly, perhaps.”

    No way to blame Obama’s crack down? Like Whiting indicated in his statement, when markets go soft it is the mines with the higher costs or lower margins that are idled. Mining companies find creative ways to extend surface mining without COE 404’s but this adds costs. If you add costs then you reduce your ability to compete and are subject to shut down or reduced production. This results in stranded capital that confirms the uncertainty fears of corporate America and reduces their job creating actions.

    In my opinion blaming Obama and his EPA is still valid and the ground work has been laid to slowly kill all of Appalachia’s coal production even if natural gas, Illinois coal, and the weak economy were not affecting the outcome.

  15. Bo Webb says:

    Casey, I cannot let your opinion go unchallenged. You are claiming that a downward coal market should trigger an excuse of law, that following the law increases operating costs. According to your job killing position, it’s acceptable to harm innocent Appalachian people in mtr communities if that is what is necessary to operate an mtr operation. The cost of mtr is real to people living in mtr communities Casey. They absorb a tremendous amount of mtr mining cost with their health, and happiness. If coal companies were liable for the true cost of mtr coal mining they wouldn’t think of doing it. They do it only because they get away with passing costs to the people. I am proud to have a President that is willing to stare this abomination of mtr in the eye and not enable or turn his eye to mining companies breaking of the law as the previous President did. It is not okay to sacrifice the unborn’s health nor citizen’s health for mtr profit

  16. Bob Kincaid says:

    It’s only leadership, Ken, if by “leadership” you mean “fawning, shamelessly obsequious obeisance to corporate coal patrons.” And therein lies the rub: that is EXACTLY the definition our political representatives use. Why? Because for them, it’s working quite nicely.

    Such a definition renders the entire future of this state and this region a nullity, however, for the rest of us.

    Welcome to BigCoal’s new and improved version of Boom&Bust for the 21st century.

  17. Dave Bassage says:

    I think there is real opportunity here on several fronts.

    I agree that environmental groups could choose to foster programs directly assisting displaced miners and address their health and other needs. The stereotype too often heard is that environmentalists care more about bugs and trees than people while the counter argument has always been that a healthy society depends on a healthy environment. This is a golden opportunity for environmental organizations to reach out and demonstrate the sincerity of their argument. That could go a long way toward making caring about the environment more mainstream in parts of the state where it has mostly been divisive.

    Another strategy that I’ve long argued for is to embrace climate change strategies that couple financial incentives for reducing our carbon footprint with using some of the proceeds to target the needs in areas most affected by the decline of fossil fuel use. Our state leaders have long perpetuated the myth that accepting climate science can do nothing but hurt the quality of life for West Virginians. This is a real chance to use that global issue to smooth the transition to a more diverse and vibrant state economy IF part of a cap and trade or carbon tax program included retraining, addressing health issues, and any number of creative strategies to aid the difficult transition process as the dominant position of coal in the state fades.

    It’s now more clear than ever that change is happening in West Virginia, and that traditional approaches need to be replaced with more effective alternatives. Those are just two options.

  18. Steve says:

    Coal has always had it’s up and downs. How soon we forget. Remember how many miners lost their jobs between 79 & 82? Thousands of jobs were lost, and once vibrant towns dried up because of technology and a slow market. Look around, Montgomery, Whitesville and the list goes on and on. Wasn’t much national press about it either, like the press the closing of all those military bases received in the 90’s.
    There was also a big push back then to retrain those miners who’s jobs were displaced by foreign markets. Not many takers back then. I doubt you would have many takers now for retraining. The reason, I believe, is our educational system. It needs fixed badly, but that’s an argument for a different day.
    The price of coal will come back up, coal companies will again hire anybody that crawls up the road with a miners certificate, and the cycle will repeat itself.
    If our coal companies were more like OPEC maybe we would see a more sustainable long range market instead of the same old boom and bust.
    I don’t believe for a minute that this is the beginning of the end of coal.
    That my friends is a pipe dream.

  19. drh says:

    A number of points to make. First off, we will continue to mine coal for a good deal longer in West Virginia, although the decline is clear and unavoidable. One part of the industry likely to continue strongly is met coal, which is little impacted by any of the air pollution/global climate change regulations which the state’s politicians seem to want to obsess about.

    The degree to which met coal (and to be frank, steam coal) production declines in West Virginia just now has MUCH less to do with government regulation than it has to do with market forces. In 2012 the price of gas and the demand for steel in India and China is going to have a lot more influence on how much coal is dug in Boone County than the Sierra Club could ever dream of having.

    That said, the decline (which is in fact dictated by things like the simple fact that the easy to get – therefore cheap to produce – coal has already been mined out) is an inevitable long-term trend. And we do have to address it.

    There are two parts of this puzzle, one is the unemployment itself, and the other is the cultural impact. The second complicates the first.

    Unemployment: The environmental organizations have no formal responsibility to address retraining or economic development. Although it would be good if they took it on, I don’t think they really have the resources for it. And I don’t think their efforts would be met with universal joy in the coalfields.

    The government DOES have a responsibility to address them, and I would expect federal officials are open to good suggestions. As Steve points out, the education system is badly in need of repair, and job training takes more than vague statements about how important it is. The most obvious solution is reclamation, and some money is there for it.

    Economic development is a big problem, and irrespective of whatever has or will happen to the coal industry it’s going to remain that way. Especially in the coalfields.

    Given the fact that we are talking about a specific number of people – displaced miners and their families – at least the retraining part of this is undoable. It would take a lot more than is currently underway, but it’s not impossible. It is complicated by the cultural factors.

    Too much of this state’s self-image is tied up in the history of coal. And the industry has ruthlessly and destructively exploited that self-image to protect it’s own dominance. And that makes addressing the inevitable decline more difficult. Anything the federal government could do to retrain laid-off miners would be attacked, simply because it would be defined as part of the so-called war on coal.

    That’s a problem that’s going to be harder to solve.

  20. drh says:

    Make that “at least the retraining part of this is doable.”

  21. Steve says:

    It also wasn’t many years ago that power plants began to retro fit to natural gas. The price of natural gas sky rocketed and we were once again right back to coal. Again, a case of very short memories. Natural gas comes with its own set of problems and don’t think for a minute that wind power can drive this great nations industry. It absolutely cannot do it now and probably never will. Wind can’t produce on demand.

  22. Kate says:

    Ken,

    To be honest I came across the site on a random google about layoff, but from where I am sitting it is always an issue, not just in some posts. I think that moving coal workers to other, more stable power industries is a better answer. I’m not saying it will be easy, or inexpensive, but that it is worth while for all parties.

    Kate

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