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Patriot ends talks with UMWA

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Members of the United Mine Workers of America will vote on whether they will accept Patriot Coal's bankruptcy plan scheduled to go into effect July 1 following Patriot's walking out of negotiations with the union June 11.

The company also canceled negotiations that were scheduled for the remainder of this week and into next week, the UMWA said. The union says it will now take to a vote to determine if it members will work under the bankruptcy court-approved plan.

"We are very disappointed by this action," said UMWA President Cecil E. Roberts in a statement issued Wednesday. "We had made significant progress toward reaching an agreement that provided a workable alternative to the severe terms Patriot asked for last spring and that were approved by the bankruptcy court in St. Louis. The union had agreed to more than $400 million in savings for the company over the life of the current contract, which gives them the money they say they need to survive. But that still wasn't enough for them."

Roberts said the company and the union were about $30 million to $35 million apart from reaching an agreement. The union claims a large chunk of that money is for management personnel bonuses. 

"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, even while hundreds of managers and executives are thinking about how they will spend the bonus money they'll be getting in their bank accounts," Roberts said.

The union vote probably will come in the week before July 1, Roberts said.

A ruling issued by U.S. Bankruptcy Judge Kathy A Surratt-States allows Patriot to proceed with a proposal to break its collective bargaining agreement with the union and modify retirement benefits, although the two parties never came to an agreement. After adjustments made to non-union employees, contracts and reserve utilization, the company had estimated it was about $150 million short of the savings it needed to emerge from bankruptcy.

"The company now says it will implement the terms and conditions approved by the judge, effective July 1," Roberts said. "I have consistently made it clear to management that I could not recommend to our membership that they work under those terms, because the sacrifices they require from our active and retired members are too great."

The proposal also includes a profit-sharing mechanism and a royalty paid to the union on every ton of coal. The proceeds from the royalty would also help fund the Voluntary Employment Benefits Account.

The union says that VEBA does not provide enough even with guaranteed funding of $15 million, a 20 cent-per-ton royalty and a 35 percent ownership stake. 

"There is no way of knowing what the level of that funding would be," the union states. 

The UMWA says that company is asking for $25 million more in management bonuses in each of the next three years while it cuts other member benefits. 

"We have repeatedly said that we are willing to make the sacrifices needed to keep this company operating," Roberts said. "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." 

Now, Roberts said the union will be explaining the terms and conditions Patriot plans to implement before July 1. Union members will vote whether they will work under the plan. 

A strike, as the union, the company and bankruptcy judge have stated before, would likely result in liquidation of the company. That would mean little compensation for the union and current employees in addition to the termination of thousands of jobs at Patriot operations. 

In the meantime, Roberts said the UMWA will continue an active fight against Peabody Energy, the company that spun-off Patriot in 2007, and Arch Coal, the company that sold some mines to a subsidiary later purchased by Patriot. The union has asserted that Patriot's given assets coupled with mass liabilities doomed the company to failure.

Patriot did not immediately respond for comment. 

 

For more information about the specifics of Patriot's proposal at the time of the bankruptcy proposal, see this earlier The State Journal article: http://www.statejournal.com/story/22458566/bankruptcy-judge-patriot-proposal-fair-given-bankruptcy