Rumors of layoffs at Twentymile Coal Co. proved true when parent company RAG American Coal announced Friday that 35 jobs will be eliminated at the Routt County underground mine.
The cuts, which won't occur until January, will be permanent. They will include both hourly and salaried positions, according to RAG spokesman Mike Rounds.
RAG said a "voluntary severance program" is being offered to employees who sign up in the next several days. Initially, the company asked employees interested in the voluntary severance to notify the company by Dec. 20, but Rounds said that deadline has been extended until Dec. 23 to give workers more time to think about their options.
If not enough employees accept the voluntarily layoffs, Rounds said involuntary terminations will follow as needed.
Twentymile scoop operator Ron Hockett said earlier this week he doubted many employees would take the voluntary severance because the Twentymile workforce is relatively young.
The voluntary severance package includes at least one week of pay for each year of continuous employment, but Rounds said anyone who volunteers for the layoff will receive a minimum of eight weeks pay. Medical benefits will be continued for up to six months, and the company will offer outplacement assistance to help employees obtain new jobs.
Laid-off employees might also find work at other RAG mines in the West. Rounds said the company hasn't determined whether those positions would be temporary or permanent.
"The company is doing everything it can to place employees at other coal mines, possibly near Gillette, Wyo., Price, Utah, or Hanna, Wyo.," Rounds said.
Official notifications to Twentymile employees started Thursday and Friday, and warnings were given as far back as last week.
"They've been apprised for some time that this is a possibility," Rounds said. "And this has been pushed over into January to try to minimize the impact on affected employees. This gives them more time to consider working at other sites or to look elsewhere for employment and take the severance."
Routt County Commissioner Dan Ellison said he's concerned about the layoffs because the coal industry is a major business in Routt County.
"We hope this is temporary and, if it isn't, I hope it doesn't cut any deeper," Ellison said Friday.
Mining is as much a part of Routt County's economy as recreation and tourism, Ellison said.
"It is a significant part of Routt County, which was listed one month ago as the leading coal-producing county in the state," he said. "We always hate to see the industry suffering. My understanding is that we have mines down in the southern part of the state which can produce coal more cheaply. I don't know how you can fight that unless you slim down your operations."
There are many Twentymile workers who live in Craig and work at the mine.
Twentymile plans to prepare for battle by reducing costs, hence the layoffs. RAG says the permanent reduction in employees is directly related to market conditions, including a warm fall and a coal surplus.
"Twentymile is fighting what everybody else is fighting, which hit us here," Rounds said. "It's a very competitive business and the key is cost of production. This (the layoffs) is directly related to getting the cost down."
The 35 layoffs amount to about a 10-percent work force reduction at Twentymile, which employs 360 people. Wages for hourly workers average $21 an hour.
RAG announced Tuesday it was cutting 53 jobs at its Emerald mine in Pennsylvania, but Rounds said then that no jobs were in jeopardy in Routt County despite conflicting statements from local miners.
"The situation in Pennsylvania did not affect the Colorado mine situation. Those are separate situations," Rounds said Friday. "And when we talked before, that was the best information I had at the time."
Twentymile coal mine is between Oak Creek and Hayden, southwest of Steamboat Springs. The mine has a reputation of being one of most efficient coal mines in the United States due to the amount of coal shipped each year, low cost of production and high quality coal.
The longwall operation produces in excess of 8 million tons of coal annually, serving not only Colorado utility companies, but also out-of-state utilities. Because of that customer base and limited competition, Twentymile has long been assured of the ability to sell its product through long-term contracts. Twentymile coal is also highly regarded for its low sulfur and high BTU, or British thermal unit, content.
However, a new longwall operation near Paonia has increased the supply of quality coal and reduced the demand for Twentymile's product. The price of coal is down from about $12 a ton to $11.50 a ton.
RAG International Mining purchased Twentymile Coal Co. and eight other coal companies in May 1999, as part of a $1 billion deal.