According to its own website, Murray Energy Corp. is the nation’s largest privately-held coal-mining company, “producing approximately 30 million annual tons of bituminous coal … [from] eight (8) underground and surface mining operations, plus 40 subsidiary and support companies.” The website also states it has “a support team of 3,000 hard-working, dedicated, and talented employees in six (6) states.”
Make that 2,844. Because on Nov. 7, 2012 – less than 24 hours after a valid election awarded another 4-year term to Democratic Pres. Barack Obama, CEO Robert Murray laid off 156 workers.
In doing so, according to the Washington Post, he offered this prayer:
The American people have made their choice. They have decided that America must change its course, away from the principals of our Founders. And, away from the idea of individual freedom and individual responsibility. Away from capitalism, economic responsibility, and personal acceptance.
We are a Country in favor of redistribution, national weakness and reduced standard of living and lower and lower levels of personal freedom.
My regret, Lord, is that our young people, including those in my own family, never will know what America was like or might have been. They will pay the price in their reduced standard of living and, most especially, reduced freedom.
The takers outvoted the producers. In response to this, I have turned to my Bible and in II Peter, Chapter 1, verses 4-9 it says, ‘To faith we are to add goodness; to goodness, knowledge; to knowledge, self control; to self control, perseverance; to perseverance, godliness; to godliness, kindness; to brotherly kindness, love.’
Lord, please forgive me and anyone with me in Murray Energy Corp. for the decisions that we are now forced to make to preserve the very existence of any of the enterprises that you have helped us build. We ask for your guidance in this drastic time with the drastic decisions that will be made to have any hope of our survival as an American business enterprise.
Though Murray’s company offers very little public insight about company financials, he has had plenty to say about his political preferences. An article by The New Republic lays out his significant financial support for Republican candidates and his vehement opposition to Pres. Obama.
It also repeats the accusation that Murray compelled some of his workers to attend a rally/photo op for Presidential Candidate Mitt Romney in August. The validity of those accusations have been argued – in some cases by the same minors who made them in the first place, a retraction that brings no clarity whatsoever.
But Murray is perfectly clear: He laid off workers because he didn’t like the results of the election.
He implies the election will change the economics of mining coal. And to the extent that the Obama administration is increasingly aggressive about enforcing safety regulations and pollution regulations, he’s probably right.
But Murray declines to mention that the economics of coal mining are suffering even more under new competitive pressures from lower-cost, cleaner and newly abundant natural gas, according to a variety of analyses, including this from the University of Pennyslvania’s Wharton School of Business.
He also fails to mention that if mine regulators are a wee bit aggressive, it may have something to do with Murray Energy’s own safety record. In March 2012, it paid a $500,000 fine after acknowledging 17 out of 20 citations (3 of them deemed flagrant) in the wake of a 2007 cave-in that killed 9 people at one of its Utah mines, according to the St. Louis Tribune. And in September – less than 2 months before the election – it paid another $950,000 to settle another case stemming from the same disaster.
Coal mining is dangerous work, and it pays better-than-average wages, according to this document from the National Mining Association. In Ohio and Utah – where Murray’s post-election layoffs took place, the average annual pay is more than $70,000. Which means the annual cost savings from the layoffs will be in the ballpark of $13 million ([$74,000 + 20% for benefits]*156 workers).
That’s no small piece of change. But neither is the amount of revenue Murray Energy generates from coal. While the company doesn’t release such numbers, a simple calculation provides a useful revenue estimate. With bituminous coal selling for about $60 a ton, according to Fred Frailey in Trains magazine (who also makes a case for the impact of natural gas on coal profits), Murray Energy revenues on 30 million tons would be in the range of $1.8 billion.
So the layoff represents about 0.7% of revenue. And complete upheaval in the lives of 156 families.
It seems to answer the question: How much does it cost when a CEO throws a tantrum.