CRISIS IN COAL

The Cure Is Drastic But Essential

IN the midst of the nation's greatest boom, one major U.S. industry is gravely ill. Coal, once prince of U.S. power, has become a pauper. In the past 30 years, its work force has shrunk from 884,000 to 400,000. One-third of the remaining force is out of work or has gone into other jobs. During the past year more than 130 mines closed down, and in six years annual production of coal has dropped from 630.6 million tons to an estimated 440 million tons this year--less than was produced in 1912.

Such statistics are evidence that coal is losing its market to cheaper, more efficient competitors. Nine years ago, Class I railroads burned up 132 million tons of coal; now, largely dieselized, they take only about 35 million tons a year. Millions of homeowners have switched to oil or gas for heating. Result: last year, for the first time in history, coal was replaced by oil as the No. 1 source of U.S. energy. Coal accounted for a mere 34% of the total (v. 88.4% 50 years ago); oil, on the other hand, produced 39.4%, natural gas 22.5%, and water 4.1%.

Coal has been priced out of its market by: 1) rising freight and materials charges and 2) a never-ending series of wage boosts gained by John L. Lewis' United Mine Workers. Since World War II ended, the mineworkers have won wage and welfare increases totaling $9.32 a day. Their average daily wage of $19.67 is the highest in big U.S. industry (auto and steel workers get $16.80). Even on a short week, their take-home pay stacks up well.

Coal has another basic problem. The industry is mostly made up of companies too small to afford the sort of technological research that enables other industries to cut their costs. Last year, for example, the petroleum industry spent ten times as much for research as the coal industry. In fact, much of the effort to find new uses for coal has come from outsiders. The chemical industry pioneered the extracting of chemicals from coal through hydrogenation (TIME, May 12, 1952); the utility industry worked out methods of getting more heat energy out of a given amount of coal. A few machinery makers spend about one-third as much on improving coal-mining equipment as the entire coal industry spends on research and development.

Coal also faces an ominous new threat in atomic energy, which may some day replace it as a source of electric power. But the U.S. cannot permit the coal industry to die. Next to atomic energy itself, coal is still the greatest reserve source of energy in the U.S. Despite the 32 billion tons that have been mined, only about 2 1/2% of the U.S.'s vast coal resources have been used. Moreover, as the cheaper, more accessible reserves of oil and gas are used up and the best hydroelectric sites are utilized, coal may again be a chief source of energy for the U.S.'s rapidly expanding power demands.

Tough as coal's problems are, they are not insurmountable. High freight costs can be reduced by technology. As long as four years ago, for example, Ohio's Riverlake Belt Conveyor Lines, Inc. was ready to spend $210 million on a 130-mile overhead conveyor belt to carry coal from Ohio River mines to West Virginia, Ohio and Pennsylvania steel plants, thus cut freight costs in half. But the required state legislation has not yet been passed. Coal can be transported in other ways, e.g., by converting it into electricity near the mine site, by converting it into gas and shipping it by pipeline. Pittsburgh Consolidation Coal Co. has tested a system for pulverizing coal, mixing it with water and pumping it through pipes in liquefied form.

But in order for coal to help itself, the small mine operators will need to pool their resources to pay for increased research and development. Wage cuts, once the standard answer, provide no solution. As the Northern mine operators' Chief Bargainer Harry Moses says: "[Wage cuts] never solved any of our problems . . . With any moderate reduction in the wage scale, the customer would soon have all the saving, and the oil and gas industries would promptly meet practically all our new prices." A more likely solution: a joint labor-management approach to the whole coal problem. Labor could make its own positive contributions, such as accepting incentive payments geared to productivity.

The Government also can help. Tax law revisions, allowing greater flexibility in writing off wear & tear, would encourage the installation of new equipment. An increase in the annual depletion allowance, now only 10% of the annual gross, would put coal on a more even footing with the oilmen, who are allowed 27 1/2%.

If coal can modernize and cut its costs, it has the chance to regain its former high estate. On the basis of current population trends, even if coal's share of the fuel market slips below 30%, statisticians figure that it should boost its sales, by 1975, to 880 million tons. But that figure will be a dream unless industry, labor and Government get together on a sensible cure for the chronic sick man of U.S. industry.

This file is automatically generated by a robot program, so reader's discretion is required.