Despite bankruptcy ruling, fight for fairness at Patriot continues

Members of the United Mine Workers of America (UMWA) will rally again on Monday, June 17 at Peabody Energy in St. Louis as their fight for fairness at Patriot Coal continues.

In May, a bankruptcy judge ruled that Patriot, which spun off from Peabody in 2007, could impose contract changes and cut health care benefits for 23,000 retired mine workers, most of whom never worked a day in their lives for Patriot.

UMWA President Cecil Roberts has called the Patriot bankruptcy the result of a spinoff designed to set Patriot up for failure, so that Peabody could significantly reduce its pension and health care obligation to retirees who had worked for Peabody subsidiaries.

Since the bankruptcy judge ruled that Patriot could impose contract changes and reduce retiree benefits, UMWA has been negotiating the terms of a new agreement with Patriot and holding rallies at Peabody headquarters in St. Louis.

Talks between the two sides broke down on June 11 when Patriot executives walked out of the negotiations and announced that they would impose the changes on July 1.

After the talks broke down, Roberts said that the union would hold a vote on whether union members would work under the imposed terms and whether members would authorize a strike.

After Roberts announcement, the St. Louis Post Dispatch on June 14 reported that Patriot executives said that they would return to the bargaining table.

UMWA has held Peabody responsible for Patriot’s bankruptcy. According to the UMWA, when the spinoff took place, Peabody transferred 43 percent of its retiree pension and health care obligations to Patriot but only 11 percent of its productive assets.

About 90 percent of the retirees who currently receive their benefits from Patriot never worked for Patriot; instead, they worked for various subsidiaries of Peabody and Arch Coal.

Patriot is currently the second largest contributor to UMWA’s pension fund, which could be severely damaged if Patriot stops making contributions to the fund.

At an April rally for fairness at Patriot, Roberts described Peabody’s spinoff as fraudulent. “This is a crime,” said Roberts. “We’ve been robbed, tricked, and lied to. This cannot stand.”

The State Journal, West Virginia’s only state business newspaper, reports that during the negotiations that took place after the bankruptcy judge’s ruling, UMWA and Patriot had made some progress toward reaching an agreement on a new contract, but that on June 11, Patriot executives walked out on the negotiations.

The UMWA said that when the executives walked out, between $30 million and $35 million separated the two sides and kept them from reaching an agreement. The union said that the company was not offering enough money to adequately fund the VEBA, which is being set up to administer retiree health care benefits.

While the executives negotiating the contract were unwilling to increase the company’s VEBA contribution, they insisted that $75 million more over the next three years be set aside for management bonuses.

“We have repeatedly said that we are willing to make the sacrifices needed to keep this company operating,” Roberts said to the State Journal. “We are working to preserve these jobs and preserve retiree health care. We also believe that those sacrifices should be shared by all, and that once the company gets through the short-term cash problem it has and begins to make money again in a few years, our sacrifices should be recognized.”

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