More than 7,000 people marched through the streets of Charlestown, West Virginia to protest Patriot Coal’s attempt to eliminate health care benefits for retirees and to reduce wages, benefits, and working conditions for Patriot’s union miners. Sixteen people including seven rank and file United Mine Workers of America members and UMWA President Cecil Roberts were arrested after staging a sit-in on the steps of Patriot’s headquarters.
“This is a crime,” said Roberts referring to Patriot’s actions. “We’ve been robbed, tricked and lied to. This cannot stand – and with thousands of us from all over the country marching today and keeping up this fight tomorrow, it will not stand.”
Patriot in July 2012 filed for Chapter 11 bankruptcy and is seeking permission from the court to modify its collective bargaining agreement with UMWA. The modification would allow it to eliminate health benefits for 10,700 retirees, survivors, and family members and to reduce benefits, wages, and working conditions of its union miners to levels that are closer to those of non-union miners.
Patriot in 2007 was spun off from Peabody Energy, the world’s largest private sector coal company.
UMWA has filed suit charging that the spin-off was fraudulent. According to UMWA, the spin-off was designed to set Patriot up for failure in order to shed Peabody of retiree pension and health care costs. The spin-off resulted in Patriot assuming 43 percent of Peabody’s pension and health care liabilities but only 11 percent of its productive assets.
Many of the retirees affected by Patriot’s proposal never worked for the company.
“I never worked a day for Patriot Coal,” said Shirley Inman, a retired miner. “I don’t care what the corporate name is, those executives made us a promise: We’d mine their coal, and in exchange we’d have good health care while we worked and after we retired. I kept my promise; they should keep theirs.”
On April 2, the day after the mass march in Charlestown, Patriot creditors and Patriot itself sought permission from the bankruptcy court to further investigate the spin-off to determine whether it was fraudulent.
“Patriot is a Peabody creation,” said the creditors’ lawyers in a court filing. “Peabody selected which of its mines would become Patriot’s. Peabody determined what projections would underlie Patriot’s business plan. Peabody decided which liabilities it would retain and which it would unload onto Patriot.”
UMWA has also been holding demonstrations at Peabody’s world headquarters in St. Louis, Missouri and has launched a Fairness at Patriot campaign.
Patriot’s proposed modifications would allow it to reduce labor costs, including its obligation to retirees, significantly.
Patriot is proposing that health care coverage through the National Bituminous Coal Wage Agreement be eliminated. Union miners still working for Patriot would receive health care through a less generous plan that Patriot’s non-union workers have.
For retirees, Patriot proposes setting up a Voluntary Employee Beneficiary Association, or VEBA. The company would initially fund the VEBA with a $15 million lump sum payment, well below the $71 million that the company spent on retiree health care benefits in 2012. Patriot says that the VEBA could receive as much as $300 million in future profit-sharing to sustain it.
These profits, if they do materialize, will come from cuts to wages and benefits that Patriot hopes to gain through its bankruptcy filing. According to Patriot’s proposed modification, wages for its union miners would be reduced to “the compensation level of Patriot’s more than 1,200 non-union employees who perform exactly the same jobs as the UMWA-represented miners.”
Patriot acknowledges in its court filings that its proposal if accepted “will impose a very real hardship on unionized employees and retirees.”
The problem faced by UMWA members at Patriot is a problem that has become all to common. As union membership declines, workers have less power to negotiate and maintain fair collective bargaining agreements.
A decade ago union miners were about 30 percent of the coal mining workforce. Today, union miners are about 20 percent of the workforce. When the UMWA was at the height of its power, it represented even a larger percent of miners. At that time, UMWA was able to win trend setting health care benefits for members and families.
Despite the challenges facing union members, UMWA’s march for justice at Patriot has had an impact. Nearly all of West Virginia’s political leaders have lined up in support of the miners. The West Virginia House passed a resolution urging Patriot to maintain its retiree health care benefit.
“Patriot doesn’t have to go down this road,” Roberts said. “We can help Patriot solve its problems, with a solution that keeps the promises made to retired miners, and provides decent pay, benefits and working conditions to active miners. Patriot’s problems are not rooted in competition with other coal companies, they’re rooted in not having the assets to pay Peabody’s and Arch’s (another company that spun off its retiree liabilities to Patriot) bills.”