If the United Mine Workers of America’s contract with Patriot Coal is voided – as the company is seeking permission to do through federal bankruptcy court – the miners will go on strike, Phil Smith, communications director with the union said May 13.
The union and the company are actively working to reach an agreement, Smith said, but a strike remains a real possibility.
“We are working hard to try to reach a fair and reasonable agreement with the company that preserves health care for our retirees and maintains a decent union contract for our active workers,” Smith said. “Should we be unable to do those things, and should the judge impose the company’s proposals that they argued for in the court, we will have no other option but to strike.”
Patriot, which was spun off from Peabody Energy in 2007, filed for bankruptcy in July and is seeking authorization from the court to reject its current union contract and make cuts to retire health care benefits.
Attorneys for the UMWA and for Patriot argued their cases before U.S. Bankruptcy Judge Kathy Surratt-States in the federal bankruptcy case in St. Louis April 29-May 3. Surratt-States is legally required to rule on the motion on the motion within 30 days of the hearing’s April 29 start date.
Patriot attorney Elliot Moskowitz said in the hearing that Patriot must slash union wages and benefits by $150 million or be forced to sell itself off in pieces and 4,200 jobs will be lost.
UMWA lawyer Fred Perillo challenged whether the cuts proposed by Patriot are necessary, adding that Patriot’s proposal would force the union to bear a disproportionate share of cuts needed to keep the coal producer in business.
Patriot’s most recent offer to the UMWA includes a 35 percent equity state in the reorganized coal company (if it survives), $15 million in profit sharing, and future proceeds from litigation and royalty payments going to a Voluntary Employee Beneficiary Association Trust.
The UMWA says Patriot was spun off from Peabody in deliberate attempt by the energy giant to shed its union retiree pension and health care obligations for union retirees and their dependents.
Patriot was spun off from Peabody with approximately 43 percent of its pension and health care liabilities but just 11 percent of its productive assets.
Arch Coal did much the same thing when it created Magnum Coal in 2005. Patriot bought Magnum in 2008 and filed for bankruptcy protection in July of last year.
The bankruptcy case is being heard in St. Louis because this is where Patriot, Peabody and Arch are headquartered.