By Tim Huber
AP Business Writer
May 02, 2008 05:28 am
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Even as a wave of job cuts afflict workers nationwide, in coal country, mine operators are offering free health insurance, gas money, stock and bonuses to lure enough miners as coal fetches record prices.
Abingdon, Va.-based Alpha Natural Resources announced Thursday that it would dole out 25 shares of stock to each of its 3,600 employees in hopes that they’ll stay put. It will pay bonuses of up to $9,000 to miners who stay three years, and will pay even more to members of highly trained rescue squads.
Richmond, Va.-based Massey Energy Co., the nation’s No. 4 coal producer, recently offered guaranteed three-year contracts to individual miners.
Both companies are trying to fend off the employee poaching that rippled through the industry during a price spike in 2005 and 2006. Driven by the weak dollar, high ocean freight rates and shipping bottlenecks, prices for higher-energy coal from eastern states have jumped even higher this year, more than doubling to about $95 a ton for utility-grade coal, and $200 or more a ton for coking coal used by steel manufacturers.
“Every able-bodied, drug-free coal miner is working today if he wants,” Alpha Chief Executive Mike Quillen told The Associated Press. “You basically have to try to steal them from somebody else.”
Alpha, Massey and others are looking for more miners because they’re boosting production to take advantage of the price spike. Massey, for instance, has set an ambitious goal of increasing output 25 percent from its Virginia, West Virginia and Kentucky mines by 2010. Massey plans to open new mines at the rate of one every 17 days this year, and hire 300 to 400 new miners.
Current government estimates put the number of U.S. miners at about 83,000, including about 47,500 at underground mines. National Mining Association spokesman Luke Popovich said the industry needs 50,000 new miners to replace retirees and support growth.
Labor is a bigger problem for underground mines, which still dominate Appalachia. Surface miners are easier to find because skills such as driving big trucks and operating heavy machinery easily translate from other industries, such as construction, Quillen said.
In underground coal mining, losing veteran employees typically cuts productivity, which quickly pumps up per ton costs and eats into profits. Rising demand for miners puts nonunion companies such as Massey and Alpha at a disadvantage to union operators like St. Louis-based Patriot Coal and Pittsburgh’s Consol Energy.
Patriot and Consol are among 11 large coal companies with United Mine Workers contracts that include 20 percent raises over five years.
Massey Chief Executive Don Blankenship declined to talk about his company’s approach.
The offers to individual miners has been criticized by unions.
UMW spokesman Phil Smith called the contracts “yellow dog” deals that harken to the 1920s when operators ran roughshod over miners. Smith said any arrangement that bars a miner from leaving one company to join another is a bad idea.
“It’s almost an indentured servitude sort of thing,” he said. “Things like that are just wrong.”
Massey’s approach already has resulted in litigation. Lawyer Pat Maroney has filed two lawsuits challenging contracts for West Virginia miners.
Though Maroney declined to discuss specifics of his cases, he said the contracts don’t appear valid: “At least portions of them,” he said, “particularly the no-compete clause” that bars his clients from working at another mine within a 90-mile radius.
“There’s hardly anyplace in southern West Virginia that you could work,” Maroney said. “These folks are hourly workers as underground miners and that just doesn’t fit the bill that our case law requires for no-compete clauses.”
A Massey spokesman was not immediately available for comment.
Alpha is taking a different approach.
“We look at it as kind of a reward, retain and recruit program,” Quillen said.
While he considers the stock being given to miners in West Virginia, Virginia, Kentucky and Pennsylvania more of a thank you, Quillen said incentives such as $30 a month for gas are solely meant to retain staff.
Quillen said many coal miners drive SUVs and pickups and often drive 60 to 80 miles each way to work, which is a one of two major reasons for turnover.
The other is a better shift elsewhere.
“Energy is just such a huge issue for America going forward,” he said.
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