The announcement is likely to spark fears among coalfield counties that have depended on the company for jobs and taxes. But Pittston attempted to soothe some of these worries by saying that it expects that any buyer would keep its mines operating and continue to employ substantial numbers of people.
Pittston, which is headquartered outside Richmond, has decided to focus on its more profitable business groups. These include BAX global freight and Brink's armored cars and home security. The bulk of the company's $3.7 billion in 1998 revenues came from those businesses.
‘‘The performance of the coal business and its related liabilities have cast a shadow on these healthy and growing businesses,’’ Pittston chief executive Michael Dan said Monday.
Dan said Pittston's coal operations are some of the best in the nation, and would be solidly profitable — except for $600 million in economic legacies created by its long-term obligations for retiree health plans, black lung benefits, workers' compensation and environmental cleanup.
The company said it will create a fund to cover those costs. This, Dan said, would make the coal operations "even more valuable, even more sellable," because it would free any buyer to operate profitably in the future. The health care obligations to retirees and their families cover about three-quarters of the $600 million in "coal legacy liabilities."
Dan added that the company will continue to develop its other natural resource businesses — gas extraction and wood products divisions that are supported by the 144,000 acres of land it owns in Southwest Virginia.
But the company also plans to sell those holdings within a few years.
Dan isn't sure how long it will be before the company gets out of the timber and gas business, but "there's no reason we can't wait a year, two years, four years, even five years."
Pittston has been an economic and social presence in Virginia's coalfields for much of the century — a company admired for its job-producing powers and sometimes criticized for violating labor and environmental laws.
One of its corporate forebears, Clinchfield Coal Corp., bought up more than 300,000 acres of land and mineral rights in the first few years of the century and built bustling coal camps in Russell and Dickenson counties. Pittston took full stock control of Clinchfield in 1944.
Pittston drew national attention 10 years ago when the company and the United Mine Workers of America fought a grueling nine-month strike over job security and health benefits. This year some coalfield residents targeted the company with protests over a chip mill it opened in Dickenson County. The critics fear the wood-processing plant will increase clear-cutting in the region's forests.
Kenneth Mullins, a retired Pittston miner from Dickenson County, said the news of Pittston's pullout will hit Virginia's coalfields hard.
"They've been the backbone around here," Mullins said Monday.
Mullins said it's important that people are told Pittston expects its successor will keep mining coal in the region. "That would keep down the panic."
Mullins, 62, retired a decade ago after working for the company for more than 30 years. In the old days, he said, he would stick his chest out proudly when he said he worked for the company. But in recent years he and many other miners have become critical of the way Pittston treats its employees. Some coalfield residents have also questioned the company's environmental and economic legacy.
"I feel like we're going to be just cast aside," Mullins said. When Pittston leaves, "we'll just be left out here, cleared out, with kind of a bare spot with the timber and coal and gas gone."
Pittston officials say the company has been good to the region, that it has been a responsible and vital economic engine and has provided substantial tax contributions and donations of land and money for economic development. In Dickenson County, for example, the company paid $3 million in coal and real estate taxes in 1998.
The company has a dwindling number of employees, due in part to a downturn in the world coal market and the use of new machines and strip mining that allow it to dig more coal with fewer workers.
The company now employs about 1,400 nonsalaried workers. It employed as many as 12,000 rank-and-file miners during the coal boom of the late 1970s and early 1980s.
Pittston and other companies in the industry have been bedeviled in recent years by plummeting coal prices. Pittston CEO Dan said that steam coal generally goes for $21 to $25 a ton. Less than two decades ago, it sold for $70 to $80 a ton, or the equivalent of $120 to $130 a ton in 1999 dollars.
The company expects to mine about 11 million tons of coal this year, about half what it produced two years before.
Dan said Pittston Coal's management "has done an excellent job improving operations and cash flow under extremely difficult market conditions."
He said Pittston has been studying whether to sell off its coal assets since he took over as CEO 18 months ago.
Stock analysts who joined in a conference call with Dan praised the move.
The company also said it will eliminate its tracking stock structure, in which stocks track the financial performance of its Brink’s, BAX and coal mining operations.
Pittston Minerals Group, which operates the mining businesses, closed up. Shares of Pittston Brink’s soared to $21.
In Virginia's coalfields, word had not spread widely as of Monday afternoon. Even if a new owner for Pittston's coal holdings maintains the same level of employment, the announcement could produce at least a short-term psychological blow to the region's hopes for more economic development. Virginia's coal counties have long had the highest unemployment in the state, with Dickenson and Buchanan counties usually trading first and second place.
Charlotte Mullins, Dickenson County's economic development director, said Monday that she had not heard of Pittston's announcement until a reporter called her. She said the only comment she could make about the company's move was that it would prompt her to increase her industrial recruiting.
Mullins is trying to recruit furniture and auto-parts factories and other industries that could benefit from the region's pool of skilled blue-collar labor.
"I just don't know why anybody wouldn't want to be here," she said. "We've got people in abundance with great job skills — and the greatest work ethic. A day's work for a day's pay is what our people give."
The Associated Press contributed information to this story. |
