Coal Industry Overview:

Responding
to World
Demand and Competition

Presentation
Details on Current Status
Driving Forces for Change
Impact on Corporations/People
Focus: Meeting the Challenge

US EIA

US EIA

United States

US EIA

World Coal Snapshot -- 1999

Country
C.I.S.
U.S.A.
China
Austr.

Reserves

Prodn

241 (23%)
241 (23%)
115 (11%)
91 (8.7%)
Bt

0.30
0.91
1.03
0.23
Bt

Exports
26.7
53.0
37.4
171.6
Mt

U.S.

31%

52%
48%

Consumer Prices for Fossil Fuels

(Nominal Dollars per MM Btu)
Year

Crude Oil

Nat. Gas

Bit. Coal

1980
1985
1990
1995
1997

7.40
7.62
7.47
7.26
7.82

2.86
4.61
3.85
3.81
4.62

1.47
1.70
1.49
1.37
1.31

Mergers, Restructuring, Re-engineering

Reverberating shock that has reshaped

our business cultures -- and our workers
cultures, in and out of work.

High Water Mark -- Coal

Oil embargo (1974)
*
*
*
*

Boom

U.S. industry prospered

$90+/ton for some coals
$57 for Pittsburgh seam (J&L)
Record enrollments in mining

But ...

Beginning of trouble
*
*
*
*

Many new mines, new people

Inefficiency
Oversupply
Globalization of competition starting

Turning point was ~ 1978

U.S. Price of Coal: 1975-1999

30
FOB
Mine
25
Price
(Current
20
$/ton)

27.14
24.52

25.10
21.76

19.23

75

17.21

80

85

90

99

U.S. Production, Numbers of Mines

and Miners: 1979-99
Year

Production

# Mines*

#Miners

1979
1983
1986
1990
1993
1999

592 MM
782 MM
890 MM
1,029 MM
945 MM
1,099 MM

4,243
3,337
4,424
3,430
2,475
1,828

148,121
175,642
154,645
131,306
101,322
82,937

* Active mines only

Production Efficiency: 1975-1999

(Tons/employee-hour)
Year

Underground

Surface

Overall

1975
1980
1985
1990
1994
1999

1.19
1.21
1.79
2.54
3.16
4.66

3.26
3.27
4.32
6.07
7.67
11.84

1.81
1.93
2.74
3.83
4.98
6.45

Summary of Driving Forces

*
*
*
*
*
*

Intense domestic competition

Global market
Labor-technology trade-off
Regulatory Pressures
Shareholder expectations
De-regulation

Changes in Methods/Equipment
* More western surface mining
* More longwall tonnage
* More reliable, powerful, and
productive equipment
* Conventional mining disappearing
* Deep-cut mining underground
* Continuous haulage improved

Whose behaviors have changed?

*
*
*
*
*

Owners
Executives
Operators
Managers
Labor Leaders

*
*
*
*
*

Foremen
Engineers
Inspectors
Contractors
Miners

* Enforcement Agency Leaders

* Academia -- in many ways

Impact on Workforce
* Blue collar and white collar numbers
* Union affiliation (41% UMWA in 1994,
only 24% of production)
* Increasing use of contractors

Some Emerging Realities

* Conditions will degrade
rather than improve
* Deeper, thinner seams/ores
* More discontinuous reserves
* Even tougher competition
* Fewer and more global
companies

Key Issues for the Future

* Nature and organization of work
* Demographics of workforce
* Distribution of workforce across
sectors
* Intensification of stress factors

Nature/Organization of Work
* Fewer miners; doing jobs faster
* More frequent repetitive motions
* Performing broader range of tasks
* Encountering more complicated
conditions
* Switching companies more frequently
* Longer commutes
* Working longer hours, more days

Nature/Organization of Work
* Working more irregular off-shifts
* High risk at small mines; contractors
* Less time with family
* Often, lower wages
* Often, lack of health insurance
* Transfer of stress from continuous
improvement programs

U.S. workforce demographics are

changing, too. By 2005:
* ~147 million workers
* ~ 28% minorities
* ~ 48% women
* ~ 40% age 45 or older

Work Stress
* Americans are working more hours than
ever before, with the greatest increases
among women and working couples.
* The average U.S. worker works 47 hours
per week, with 20% working 49 or more.
* Workers in the U.S. work 70 hours per
year more than workers in Japan, and
350 more than European workers.

Work Stress
* Even with the current strong U.S.
economy, job insecurity among
workers increased over the 1990s.
* 1988 - 20% reported frequently being
concerned about lay off.
* 1997 - Worry rose to 40%
* Companies often suffer decreases in
profitability, productivity, and employee
morale.

Expanded Role of Contractors

What do they do?
*
*
*
*
*
*

Site prep
* Construction
* Drainage
Trucker* Welding
* Cleaning
Security
* Painting
* Weeding
Blasting
* Drilling
* Sampling
Maintenance
* Electrical
Demolition
* Reclamation

Job Redesign
* General efficiency/excise waste
* Broader range of tasks for workers
* Expectations re-defined
* Technology affects workers

Work Practices
* Tougher to keep up with production
* Watch after details better
* Maintain higher availabilities
* Systematic focus to improve

Greater Ergonomic Focus

* Visible company programs
* Palletization of supplies
* Material handling devices
* Man-machine interfaces

Continuous Improvement Strategies

*
*
*
*
*

Company programs
Consultants
LMPCP
Re-engineering, restructuring, mergers
Management and labor behaviors impacted

Safety and Training

* More workplace contact with miners
* Company programs
+ back injury
+ emergency prep
+ accident repeaters
+ compensation case oversight

Conclusions
* Intense competitiveness will continue
* Changes in methods, equipment, and
workforce structure will continue
* Behaviors of all groups will be impacted
* RULE: Do more with less but better