Coal strike to cost Peabody ' pounds 5m a month'

HANSON subsidiary Peabody, the largest private coal company in the world, is being hit by strikes in the US for the second time this year. According to the United Mineworkers of America, 3,000 of the 14,000 miners now on strike work for Peabody in West Virginia and Illinois, writes David Bowen.

Both sides are accusing the other of refusing to come to the negotiating table. It could be a long strike which, London analysts reckon, might cost Hanson pounds 5m a month in profit.

Last week, UMWA officials were in London trying to convince City analysts of the validity of their case. They say that some US mine owners are trying to undermine the union by refusing to employ its members when they open new pits. Kenneth Zinn, the union's special projects co-ordinator, accused Peabody of doing this in Indiana, in contravention of a 1988 agreement.

Peabody has set up a new company called Premier Coal which, according to Mr Zinn, plans to produce 40 million tons of coal over 16 years. He said it would operate in a region of Indiana where unionised Peabody pits are likely to close down, and that it would not employ UMWA members.

The last agreement with the employers, signed in 1988, laid down that three out of five new mining jobs should go to UMWA members, but Mr Zinn said: 'The company is saying that agreement was with Peabody Coal, but this is Premier so we don't have to employ UMWA people.'

Derek Bonham, Hanson's chief executive, said Premier would not open any mines under existing contracts, because they would not be profitable. 'Non-union mines have much greater productivity. It comes down to the same problems as in Britain of demarcation versus team effort.' He said that the Clean Air Act had added to cost pressures.

The UMWA lost members rapidly during the 1980s, and is fighting to re-establish its position. Last year it suggested to members of the Bituminous Coal Operators Association (BCOA) that a new type of contract should be drawn up, which would use what Mr Zinn described as a '21st century model of non-confrontational labour relations' to increase productivity.

The union also requested information about the corporate structure of various mining companies, and it was the refusal to give this that led to a four-week strike in February. Hanson said it lost pounds 15m as a result of that action.

Since then, the issue has switched to 'double breasting' - opening non-union mines as union ones close. 'The BCOA refused to address the over- arching issue, that while our hard work has allowed companies to increase profits, these have been used to expand non- UMWA jobs,' Mr Zinn said.

He claimed UMWA mines had cut the real cost of coal by two thirds since 1978, and that the union had never resisted the introduction of flexible working practices.

(Photograph omitted)