Linthicum Heights-Based Foundation, Union Work to Avoid Last-Minute Mine Strike
By Andy Rosen
Representatives from Linthicum Heights-based Foundation Coal Holdings Inc. were working into the night Tuesday to stave off a strike by mine workers at three of its subsidiaries in Pennsylvania and Illinois.
Still, even if the issue is resolved quickly, the long-term performance of the Illinois mine that became the sticking point in negotiations is expected to remain weak.
Compensation, health care and other employment issues for staff of Wabash Mine Holding Co. have become the critical issues in a collective bargaining dispute between Foundation and the United Mine Workers of America. Union members at Wabash and two other mining companies threatened last week to strike beginning Wednesday after midnight if the dispute was not resolved.
Foundation maintains that Wabash is not in a position to operate under a recent five-year national agreement between the UMWA and the Bituminous Coal Operators Association, an industry group, because it has not had financial success.
That agreement provides for a 20 percent wage increase over the course of the deal, a $1,000 signing bonus paid immediately, increased pension benefits, increased pension plan contributions and full health care benefits for active and retired employees, according to a statement from Foundation.
The UMWA wants workers at the Keensburg, Ill.-based Wabash to get that deal, and authorized workers there to strike. Also ready to strike on Tuesday were workers at Cumberland Coal Resources LP and Emerald Coal Resources LP, both based in Waynesburg, Pa. Foundation maintains that it is prepared to compensate workers at the Pennsylvania companies under the national agreement, but needs Wabash workers to make concessions.
Wabash lost more than $26 million during the course of 2006, and expects to suffer continuing losses this year. Foundation cites geological difficulties, soft market conditions, stiff competition and aging infrastructure at the mine as reasons for the heavy losses. Wabash needs both new capital investment and cost reductions to become profitable, the company said in a release, and noted that these conditions are not the fault of workers there.
Ann L. Kohler, an analyst who watches Foundation’s stock for the California-based Caris & Co. Inc., said one of the major issues for Wabash is that the coal supply there is located some 10 miles from the surface. That is about twice as far as some competing plants, she said.
“It is a challenged facility,” she said. “Certainly there have been a number of competitors with lower cost operations [in the area].”
Kohler said she thinks Foundation made the right call in trying to negotiate for Wabash and the Pennsylvania companies separately.
Most of the company’s mining subsidiaries agreed with workers for the national agreement to take effect at the start of the year, but the remaining three had contracts that expired toward the end of March.
In a release late last week, the UMWA pointed out that it has been able to come to terms with all other coal companies, and said it did not get needed information from Foundation.
“We have reached an agreement with all of the other coal companies, and it has been essentially the same agreement at every one of those companies,” UMWA International President Cecil E. Roberts said in a statement. “Foundation has had an extra three months, yet we still find ourselves at this point.”
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