Letter to the Editor: What's up next?
What does the name Warren Buffett bring to mind? The Oracle of Omaha; a rich billionaire smart at investing; a person whose sage advice should be heeded; a philanthropist who gives away billions of dollars to less fortunate countries for the benefit of its citizens?
Yes, it is possible all that could come to mind, among other things. For some Americans-at least 600 families in Kentucky and a few hundred families in our area, Warren Buffett's name brings many things to mind also, but they might not be suitable for publishing.
You might ask why 600 families in Kentucky would be upset with Buffett. According to Wikipedia.com: "Fruit of the Loom filed for Chapter 11 bankruptcy protection in 1999...
The company was bought from bankruptcy by Berkshire Hathaway Corporation, controlled by legendary investor Warren Buffett, who wanted the valuable brand. He agreed in January 2002 to purchase the company... The deal was concluded on April 29, 2002."
On April 3, 2014 the website Kentucky.com reported:
"Clothing Company Fruit of the Loom announced Thursday that it will permanently close its plant in Jamestown and lay off all 600 employees by the end of the year... The company, owned by Warren Buffett's Berkshire Hathaway, said the move... will allow the company to better use its existing investments to provide products cheaper and faster. The company said it is moving the plant's textile operations to Honduras to save money... "Terrible sad day for people in Russell County," State Rep. Jeff Hoover, R-Jamestown, said. "There was no warning of the plant closing. It is very devastating. Some of the worst news we could possibly hear as a community, not just the 600 jobs but the effect it has on city government, the county government, the school system and local business."... Russell County Judge-Executive Gary Robertson said... "It's going to be devastating to our local economy. Everybody's going to be involved. We in the county will lose revenues... We've got a lot of local banks where people who work there have house payments and car payments. It's going to affect everybody in our county and in counties around us.""
To save money for Buffett and supposedly get cheaper products for Americans, 600 Americans will lose their jobs-jobs which will be outsourced to Honduras. But that's not all--you did read the part about how it will affect the economy there, right?
For those who don't know, MidAmerican Energy is owned by Buffett's Berkshire Hathaway. MidAmerican Energy owns PacifiCorp, Rocky Mountain Power, and Energy West Mining Company. In a letter to Berkshire Hathaway shareholders dated Feb 28, 2014 regarding MidAmerican Energy Buffett said "Here's a little known fact: Last year MidAmerican retained more dollars of earnings - by far - than any other American electric utility."
So who's on Buffett's chopping block next? In our area Energy West Mining Co seems to be Buffett's target. While it hasn't received hardly any media coverage statewide or nationally, and only a few articles have made it in the local media, Energy West and the UMWA have been in contract negotiations for nearly 20 months. I personally don't believe Energy West spokesperson Maria O'Mara when she has been quoted, several times, saying "Energy West Mining Company and the union are still in negotiations about a new contract." Nothing in the line of a new contract has ever been printed for union members to see or vote. Nothing has been posted on any proposals since Sept 13, 2013 when Energy West announced it was going to sell, lease or contract out the Deer Creek Mine.
People not associated with Deer Creek coal miners or Energy West Company in some way might not give any of this a second thought, or maybe you don't even care about the fate of these fellow member of our communities facing the loss of their jobs, but pay heed to the statements made by the officials of the city of Jamestown and Russell County, Ky. First is the devastation the city of Jamestown and Russell County is now going to face came with no apparent warning, and secondly it's going to affect everybody in that area.
If (or when) Energy West closes Deer Creek Mine and its prep plant, even though it's a small percentage of the population losing their jobs in our area everybody is going to start feeling the pinch.
The personal income taken away from these miners will not only devastate these families but take revenue from our area. If they don't have money to spend businesses lose money, it's that simple. Some of these families have been loyal to Energy West for 30 or more years and will just be handed layoff notices and told to "get out". For these families it will be a far cry from the days when someone who gave their working life to one company was treated with appreciation and respect. Faced with the fact they have nothing to put on a resume except "coal miner" and some are 50+ years old on top of that, starting over seems overwhelming if not impossible for some of them.
The lost revenue from the Deer Creek Mine and Prep Plant could result in the closure of some local businesses, and affect the income of other businesses, which might impact all of us in the form of higher taxes. Taxes could be raised to make up the loss of revenue to our local governments, or if not raised might result in possible funding cuts to our schools, and local programs and amenities we take for granted and enjoy like recreational programs for our youth, nice parks for our enjoyments, etc.
The closure could raise electrical rates. PacifiCorp has enjoyed the low cost coal flowing straight from Deer Creek Mine to the Huntington Power Plant. The stoppage of this coal will result in PacifiCorp buying more coal from the open market at higher rates than coal produced by Deer Creek. Don't forget to factor in the cost of getting that coal to the power plant too. More trucks will bring it in, raising the shipping costs-all of which will be passed along to us the consumer, so there is another pinch to your wallet you might start feeling.
Maybe wages of non-union miners in this area might be cut too. Deer Creek Coal Mine is the only union represented mine in Utah and, while some might not believe or agree with what I'm about to say, the UMWA has set the wage for miners in this area. Historically non-union companies offer better wages than union companies to attract workers and keep them from joining the union-that is pretty much a fact. Without union representation in our area, what is their incentive to continue to offer good wages?
But Buffett won't feel a thing. In the same letter to Berkshire Hathaway shareholders Buffett also says MidAmerican has recession-resistant earnings. It enjoys what few other utilities do--a great diversity of earnings streams. It serves regulated retail customers in 11 states--no utility company stretches further. It is the leader in renewables accounting for 7 percent of the country's wind generation capacity, with more on the way; and its share in solar - most of which is still in construction - is even larger.
Wind and solar energy producers are given huge tax credits by the government. Buffett comments in an interview with Fortune April 28, 2014 "on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit." Could a tax credity be Buffett's only reason to build solar energy facilities too?
So maybe it's goodbye Energy West Mining Company's Deer Coal Mine and prep plant, Buffett doesn't need them anymore, and if it turns out to be so we should be sure and say "Thank you Warren Buffett for insuring more local economies are left devastated in your wake."
Oh and talk about "insuring"-don't forget Buffett's Berkshire Hathaway owns Geico too. Maybe that 15 percent or more you might save with them is worth it to you, but it sure isn't worth it to me.