Threat of strikes as UK Coal orders cost cutting

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Miners will have to work longer shifts under radical reforms being drawn up by UK Coal, the former RJB Mining, that aim to cut costs by a third.

The company, which runs what remains of Britain's coal industry, has hired Bain & Co to formulate a cost-reduction plan. The consultants have been working on the assignment, codenamed Project 105, for three months and firm proposals will be put forward in the next few weeks. The move threatens a new era of strikes in the sector that was crippled by industrial action in the early Eighties, as the National Union of Mineworkers mounted fierce though unsuccessful opposition to reform. UK Coal, which runs 13 deep mines and six surface mines, employs 7,500 workers.

At the heart of the cost-cutting drive is an attempt to maximise machine utilisation, which is poor in Britain compared with other countries such as Australia, where pits operate 24 hours a day. This means that British miners will have to work longer shifts, including more weekends, and accept more flexible working practices.

Miners typically work seven-and-a-quarter hour shifts, with additional voluntary overtime. Under new practices being considered, the overtime could be made compulsory. The development could actually result in more jobs being created, as the mines stay open longer.

Costs at the company's mines have escalated over the last two years, and UK Coal's chief executive, Gordon McPhie, has warned that some pits will have to close unless these are brought under control.

Mr McPhie said: "We have the mining skills and the sales opportunities. What we need now is the coal at prices customers are prepared to pay."

Deep mining costs were running last year at 135p a gigajoule, a key industry measure, and have risen further this year. The company aims to reduce this to 105p a gigajoule, which it believes is achievable over the next two years.

Kevin Irving, leader of Project 105, told the company newspaper: "Embracing change is crucial if a large viable coal mining business is to move forward.... Some of the measures needed will require a change of mind-set and a more flexible approach."

Project 105 is now completing the research phase of the initiative, which centred on examining the Kellingley and Harworth collieries and the Orgreave surface mine. An update on progress will be provided with the company's interim results on 13 September. Some meetings with union officials have already taken place and more are planned. The Union of Democratic Mineworkers says the reforms will require a larger workforce as well as big pay increases.

Company officials suggested that opposition from the union and workers would only threaten the remaining jobs in the industry. "Strikes will be a great tragedy for the coal industry. Change needs to be embraced. Equipment and men will have to work harder and longer," said one UK Coal source. The insider denied suggestions that many middle management positions would be eradicated.

Last month, UK Coal said that production has been disappointing in the first half of the year and it was looking for greater output in the second. It has received £75m in government aid since November.