Healy coal mine says layoffs may be coming

Posted: Sunday, March 24, 2002

FAIRBANKS (AP) -- Jeff Cornelius had told his wife, Linda, to quit her job as a bank accountant so the family could move from Fairbanks to Healy, where he works as a heavy equipment mechanic at Usibelli Coal Mine.

On Friday, Linda's last day at work, 36-year-old Cornelius found himself dealing with some sour news -- the possible loss of his job.

Usibelli officials on Thursday told Cornelius and other employees to anticipate layoffs of up to a third of the 120-person work force because the company has not been able to renew a South Korea coal export contract. The contract accounts for about half of the company's 1.5 million ton yearly production.

''I like my job there,'' said Cornelius, a father of four. ''Usibelli has certainly given me a big break in life.''

Steve Denton, Usibelli's general manager, said he didn't have the exact number of people who could be laid off, but he said it would be companywide -- from miners to management.

An export contract could still be signed with South Korea-based Hyundai Merchant Marine, he said, but if not, layoffs could come as early as May 21 after the company develops a new structure.

''We wanted to give everybody as much advance notice as we could,'' he said.

Usibelli has a consultant in South Korea trying to develop a contract with the coal buyer, Denton said.

Usibelli renews its contract with Hyundai annually, but the last agreement expired at the end of 2001, Denton said. Usibelli has shipped an average of 750,000 tons of coal to South Korea annually since 1984, he said.

Usibelli spokeswoman Becky Phipps cited several reasons why the coal contract has not been renewed.

Shipping costs to South Korea put Usibelli at a disadvantage with coal mines in Indonesia, China and Australia.

In addition, Korea's single electric company was privatized and broken into six companies, creating a big push for profits, she said.

Add a strong U.S. dollar, which has made it cheaper for South Korea to buy coal elsewhere, and Usibelli doesn't have a contract, Phipps said.

The cutbacks could affect the Alaska Railroad. Usibelli sends three trainloads of coal a week to Seward, where it is loaded onto ships bound for South Korea.

The impact will not be felt right away, said railroad spokesman Pat Flynn said, because the summer construction season will offset the loss of Usibelli's shipments.

Usibelli will ship out coal obligated under the 2001 contract until mid-May, he said. By fall the railroad will feel the pinch if the contract with Hyundai is not renewed, he said.

Rick Boyles, business agent of Alaska Teamster Local 959 in Fairbanks, said 77 of Usibelli's 120 employees are Teamsters. It's not the first time layoffs have been threatened, he said. In 1997 Usibelli sent layoff notices when contract negotiations with Hyundai came to a standstill. Two months later a contract was approved.

''This one is a problem,'' he said. ''It could be the real deal.''

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