Sunday, October 22, 2000

Massey Coal Co. has had tumultuous past

Profitable company has long history of labor troubles

By Mike Boyer
The Cincinnati Enquirer

        The A.T. Massey Coal Co., the company responsible for the 250 million gallons of coal sludge oozing toward Cincinnati, is one of the biggest and most profitable coal producers in West Virginia and eastern Kentucky.

        It has also been controversial.

        Massey's history includes a 1991 outcry over its plan to use non-union labor to mine Blair Mountain just across the Kentucky border in West Virginia.

        Blair Mountain was the site of the 1921 Matewan Massacre, in which thousands of miners seeking to form a union clashed with heavily armed guards in the nation's largest labor insurrection.

    A.T. Massey Coal Co. is a subsidiary of Fluor Corp., and one of the largest producers of low-sulfur coal in West Virginia and eastern Kentucky.
   • Headquarters: Richmond, Va.
   • CEO: Donald Blankenship, chairman, CEO and president.
   • Founded: 1920.
   • Employees: 3,700.
   • Financials: Operating profit of $147 million on revenues of $1.1 billion last year.
   • Coal reserves: More than two billion tons last year.

        Massey's workforce — unlike many other mining companies' — is not heavily unionized. Only about 5 percent of Massey's 3,700 employees are represented by the United Mine Workers.

        Last month, K.O. Damron, a lobbyist for Massey, stirred the ire of the Mine Workers when he included the union on an “enemies list” in a speech before the West Virginia Chamber of Commerce.

        “If K.O. Damron had his way, we would all be living in company houses in company towns, getting paid company scrip to shop in company stores,” Cecil Roberts, UMW president, told the Charleston Gazette, which, incidentally, also made the enemies list.

        Founded in 1920 by A.T. Massey, a Richmond, Va., coal broker, Massey today is owned by Fluor Corp. — one of the world's largest publicly held consulting, engineering and diversified services companies with revenues last year of $12.4 billion.

        Another Fluor subsidiary, Fluor Daniel, has managed the cleanup of the Fernald uranium processing facility in northwest Hamilton County since 1992.

        Aliso Viejo, Calif.-based Fluor was recently ranked first in the engineering and construction category in Fortune magazine's list of the “World's Most Admired Companies.”

        Massey, which didn't enter the mining business until 1949, when it acquired its first mine in West Virginia, is today one of the most profitable pieces of Fluor.

        Last year Massey, which has more than 2 billion tons of low-sulfur coal reserves mainly in West Virginia and eastern Kentucky, generated operating profits of $147 million on sales of $1.1 billion.

        The company, which operates through a network of 18 mining subsidiaries, also has a few mines in Virginia and Tennessee, but none in southern Ohio.

        One of those units, the Martin County Coal Corp., maintained the coal waste impoundment that broke on Oct. 11.

        Much of Massey's growth in the mining business was under the direction of E. Morgan Massey, son of the founder who was the company's chairman and CEO until retiring in 1992.

        In the 1980s, Mr. Massey foresaw that the federal Clean Air Act would spur demand for low-sulfur coal and he invested heavily in reserves, Mr. Nyden said.

        Mr. Massey was also responsible for the “Massey Doctrine,” a company document Mr. Nyden obtained which outlined the company's operating approach.

        Basically, the company itself operated the richest and easiest-to-mine coal deposits while turning over more marginal coal seams to contractors, Mr. Nyden said.

        These contractors were typically under-funded and have had an “abysmal” safety record, Mr. Nyden said.

        Between the mid-1970s and late 1990s, Mr. Nyden said his research found that Massey mine contractors avoided paying some $46 million in workers' compensation payments.

        “One of their mines had six or seven different operators over a two- or three-year period. One guy would get into trouble and they'd bring in the next guy.”

        The Massey family sold the mining business to a partnership of St. Joe Mineral Co. and Royal Dutch Shell Corp. in 1974.

        In a diversification move in 1981, Fluor acquired St. Joe and Shell later withdrew from the Massey partnership, leaving Fluor as sole owner.

        Earlier this year, Fluor, which has seen its shares slump more than 30 percent this year on fears of rising interest rates, announced plans to spin off Massey into a separate publicly traded company, Massey Energy Co.

        Fluor shares closed Friday at $33, up 43 3/4 cents. The spin-off of Massey Energy is still expected before the end of the year.

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