Peabody Coal

[Lenny53]

http://www.reuters.com/article/us-peabody-energy-bankruptcy-idUSKCN0WI19Z

"The company said there was 'substantial doubt' about its ability to continue as a going concern.

Anybody know which RRs service their mines?

[C855B]

They have several mines. Most numerous are in Illinois (and Indiana), but they have one in Colorado and an operation in the Powder River Basin. They're mostly on NS in the Midwest (co-op trackage rights on BNSF, CN and CSX), UP in Colorado, and UP and BNSF in Wyoming. Not a lot of quantity in Illinois.

Peabody is a local company, "local" being St. Louis. Much hand-wringing in our press. I think their biggest issue is the money spent on recent redevelopment of Illinois coal, which is now generally not burned in the U.S. because it is difficult to clean, emissions-wise, in existing and even scrubber-retrofitted plants. So it's going mostly to China at low margins. Peabody also has a severe issue with pension funding, and have been thumping the "bankruptcy" drum for a couple of years now as a way to weasel out of their pension commitments.

[Ed Kapuscinski]

Peabody also has a severe issue with pension funding, and have been thumping the "bankruptcy" drum for a couple of years now as a way to weasel out of their pension commitments.

It's the American Way!

[Lenny53]

They have several mines. Most numerous are in Illinois (and Indiana), but they have one in Colorado and an operation in the Powder River Basin. They're mostly on NS in the Midwest (co-op trackage rights on BNSF, CN and CSX), UP in Colorado, and UP and BNSF in Wyoming. Not a lot of quantity in Illinois.

Peabody is a local company, "local" being St. Louis. Much hand-wringing in our press. I think their biggest issue is the money spent on recent redevelopment of Illinois coal, which is now generally not burned in the U.S. because it is difficult to clean, emissions-wise, in existing and even scrubber-retrofitted plants. So it's going mostly to China at low margins. Peabody also has a severe issue with pension funding, and have been thumping the "bankruptcy" drum for a couple of years now as a way to weasel out of their pension commitments.

Here in Quebec, rest of Canada too I believe, employee pensions are protected.   My old company just shut down their defined benefits plan. All my contributions had to revert back to me. I took a reduced early pension last May and just received my portion of the plan's surplus
.

[MVW]

Isn't Peabody one of the companies that spun off a subsidiary just so they could load it up with pension obligations and file for bankruptcy? Pricks.

Remember the John Prine tune?

When I was a child my family would travel
Down to Western Kentucky where my parents were born
And there's a backwards old town that's often remembered
So many times that my memories are worn.

[Chorus:]
And daddy won't you take me back to Muhlenberg County
Down by the Green River where Paradise lay
Well, I'm sorry my son, but you're too late in asking
Mister Peabody's coal train has hauled it away

Jim

[Lenny53]

Remember the John Prine tune?


Jim

Interesting coal hopper shot @ 1:00

[oakcreekco]

Half of my family lives and works, or has worked in the mines, in the Route County CO area. Peabody is the latest and last large mine company for this area.

Hate to bore you with family history, but my Grandfathers, uncles, and cousins all have been "miners" in the Oak Creek CO area. So this subject runs deep.

The DRGW Craig Branch goes to these mines, which is now U.P.  Folks are concerned with what will happen, as the area has seen the results of mines closing, as the area is remote, in the mountains, and sparsely populated, so to speak. Yes, Steamboat is just 21 miles away, but that's a whole different culture, and mindset of people. "West coast" transplants and thinking, and politically aligned with "Green is good, and coal is bad" thinking. The Ski economy could care less, not be impacted, and feel just fine with any mine closing.

It's OK to live and play in the middle of "Coal Country"..........................just don't mine the coal! LOL

Bottom line in Colorado, this Peabody situation is serious. High and low spikes in coal production is normal, and low cost natural gas has had a big impact for the coal needed, or not needed. Add the EPA's push to kill coal, and bankrupt mines, and this is a real situation again for this area.

Folks have seen the community impacts of mine closings throughout their lives, but this is a big one, and possibly the start of another stretch of very hard times.

Everyone is hoping for the best, and bracing for the worst. We'll see what happens shortly.

[TLOC]

Without knowing a lot about Peabody, because of the debt load, they have to file the BK. If they do, it is too bad that in the US you cannot legally go after the management team and the board of directors.Why would anybody lend to this corporation.  This is a clear case of management malfeasance. How can they go from shares over $1000 to under $3.00. I bet you they made bonus in each of those loss years. Management team, banks and lawyers should be held accountable but they're not. The little guys (workers) will be hurt.

Someone will buy them after they come out of Chapter 11 and the workers (whatever is left) to keep jobs will have to give up even more. This should be a Corporate Crime.

TomO

[Robbman]

Isn't Peabody one of the companies that spun off a subsidiary just so they could load it up with pension obligations and file for bankruptcy? Pricks.

That was Alpha, with the ironically named Patriot

[Blazeman]

In the 80's and early 90's, lots of companies had over-funded pension plans. For corporate raiders meant free cash. Anschutz (who bought DRGW) was a suitor of my employer then. Company sought and found a white knight after disposing of underperforming assets and some environmental concerns.

Much of the surplus in these accounts across the country were dished out as incentives to employees in the 90's to retire early to reduce costs. Government entities followed that path but never funded their programs. Not many firms now with that situation and as we know, there are states that can't cover theirs.

[daniel_leavitt2000]

It's strange to look at private pensions from my perspective. I can understand - and rely upon a municipal pension for my retirement. But private pensions? No way. You much volatility in any market. It doesn't matter if they are public like Peabody or private like Wonder Bread. There is just no way for a company to be able to fund it and compete.

[MVW]

I understand that perspective, Daniel ... but it's the result of decades of diminishing expectations for American workers.

In 1980, 46% of private-sector workers were covered by pension plans. By 2006, that figure had dropped to 20%. Instead of pensions, we got 401(k)s, and the "right" to allow Wall St. types to milk those accounts for "management" fees.

Meanwhile, U.S. corporate profits have averaged more than $395 billion a year from 1950 onward. That includes an all-time high of more than $1.6 trillion in the third quarter of 2014.

For a real eye-opener, check out this graph of corporate profits after tax.
https://research.stlouisfed.org/fred2/series/CP

And keep in mind that workers haven't shared in any of the gains from the run-up since the 1980s.
http://money.cnn.com/2013/03/07/news/economy/compensation-productivity/

Wages stagnated, pensions disappeared. But not because it had to be that way to keep corporations "competitive."

Jim

[GaryHinshaw]

These are very important issues.  But not ones we can solve on the Railwire.

[MVW]

Agreed, Gary. I'll shut up now. 

Jim

[daniel_leavitt2000]

These are very important issues.  But not ones we can solve on the Railwire.

Exactly. My reply was originally much more political but I chose to post a simple observation. No matter your political orientation, I think that we can all agree that our system is deeply flawed.

Some days I wish we could talk politics here. Hey maybe we COULD find the solution!