Miners vs. Vultures

Members of United Mine Workers of America (UMWA) picket outside the BlackRock headquarters in New York City. Photo: Brendan McDermid/Reuters

Over the last ten months, Brian Kelly has traveled, twice, from his home in Alabama to New York City. Kelly, along with roughly 900 of his co-workers, has been on strike since April 2021, a lengthy ordeal they pin on their employer Warrior Met Coal’s lackluster proposals for a new contract. In an unusual move for a labor strike, he and hundreds of workers came to protest the three hedge funds that own Warrior Met and pressure them to pressure the company’s management. It hasn’t been easy: Last November, the NYPD arrested Kelly and several others in front of the headquarters of BlackRock, the largest shareholder in Warrior Met.

A third-generation coal miner, Kelly worked for Warrior Met’s predecessor, Walter Energy, for two decades until it filed for bankruptcy protection in 2015. That’s when a judge allowed the private equity firms that took it over, including Apollo Global Management, Blackstone, and KKR, to reject prior labor contracts with Kelly’s union, the United Mine Workers of America, as the Financial Times previously reported. Miners accepted a pay cut of $6 an hour to keep their jobs. Health-insurance costs increased. “Then they forced us to work seven days a week, up to 16 hours a day,” Kelly recalled. “Overall, we made a sacrifice during that time.” The firms say they saved jobs; instead, miners say private equity prospered from their suffering. Though private equity no longer owns the company, the strike is arguably their legacy.

“All told, we estimate that this conglomerate of private equity firms realized about $1.1 billion in savings coming out of the bankruptcy court just over the past five years, that were essentially taken out of the pockets of workers,” said Phil Smith, a spokesperson for the United Mine Workers. A bigger payday was still to come. “Before its initial public offering in 2017, Warrior paid them a $190m dividend from cash on hand,” the Financial Times reported. “A few months later it paid a $600m dividend funded with cash as well as a $350m debt offering.” Austerity for some can be a windfall for others.

In statements, Apollo, Blackstone, and KKR all emphasized that they are no longer intertwined with Warrior Met. “Our former investment in Warrior Met saved the company’s mining operations from the brink of collapse, allowed the company to deleverage and invest in its business and preserved more than a thousand high-paying jobs in Alabama,” a spokesperson for Apollo said. “During the time of Apollo’s investment until our ultimate exit in 2019, the company thrived — its stock price increased, they had positive relations with its workforce and the representative union, and employees, who rank among the top earners in Alabama, received significant pay increases and bonuses.”

That likely won’t persuade Smith or the miners who make up his union. Smith calls the firms “vulture capitalists,” which he explained in detail. “What the vultures do is they see something lying down on the ground and they come and they eat it, right?” he said. Warrior Met’s predecessor, Walter Energy, “was lying dead in bankruptcy court,” he explained, when private equity swooped in. “They’re preying on distressed and dead companies and figuring out ways to extract more money for themselves and for their investors from the bones and the remains of those companies,” he added.

As miners forge on with their strike, their plight has attracted high-profile attention, with the role of private equity swimming into clearer focus over time. In November 2021, senators Tammy Baldwin, Bernie Sanders, and Elizabeth Warren sent letters to the Apollo and Blackstone firms that linked their previous ownership of Warrior Met to the ongoing strike. “While workers endured severe cuts to pay and benefits after the Warrior Met takeover, Apollo and the rest of the private equity consortium appear to have made off like bandits,” the senators said in a letter to Apollo. Warren reintroduced her Stop Wall Street Looting Act last year, which would make the firms liable for violations of labor law by the companies they control and would require firms to prioritize worker pay throughout the bankruptcy process. “What happened to Warrior Met is a classic example of what happens when billion-dollar Wall Street firms come to town: They extract as much as they can to line their pockets, all at the expense of workers and communities,” she said in a statement.

Even beyond the terms encompassed by bills like the Stop Wall Street Looting Act, private equity’s time with Warrior Met is in some respects a case study for how much the firms can get away with doing. “It’s common for companies to use bankruptcy to restructure their collective bargaining agreements,” said Kenneth Ayotte, a University of California Berkeley professor specializing in labor law. Typically, the reorganization process is supposed to take a long time where the company and unions negotiate under court supervision, Ayotte said, but “from reading the documents in the case, the sense that I got was that it wasn’t really a bargaining process at all.” The private equity consortium that controlled Warrior Met’s finances had a clear interest in a fast bankruptcy process that would largely benefit their own bottom lines.

“They were arranging a fast bankruptcy process to sell the company to themselves,” Ayotte said, “and they had every incentive to make this a quick process so they could buy the company, get the judge to sign off on getting rid of the collective bargaining agreements, and get the company on attractive terms.” Private equity made money off terms that weren’t so attractive to workers like Kelly.

Some workers have crossed the picket line and gone back to work in that time, Kelly said, but most have not. “I would say at least 90 percent of us are still out on strike,” he said. “It’s been wearing, it’s been stressful. It makes you really tired.” Regular rallies with the union’s international president help keep their spirits high, he said, but his entire family has taken on extra work to keep their bills paid, even with the $400 per week strike benefit paid by the union. “I’m treading water pretty good,” he said. But, he added, “everyone else had to go out and get other jobs and do the picket line duties. And you know, I think we’re doing an outstanding job right now.”

Kelly sounds undaunted, even as the strike nears its first anniversary. The firms “need to be put on guard that they need us, they need unions, and they need to stop doing this not only in the coal mines but to other workers and unions across this country,” he said.

Miners vs. Vultures