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ket contract to supply PSI's Gibson power plant in Indiana. This mine alone made AMAX $40 million per year. The contract price was approximately $40/ton and the cost of production was roughly $30/ton. The Wabash mine, however, had the low- est productivity in Illinois — typically rang- ing from 2.5 to 3 tpmh compared to the average of around 3.5 tpmh. Costs at other mines were at least $5/ton lower and many were $10/ton lower. The spot price at the time was around $25/ton. Perhaps the low productivity was due to many of the miners sleeping during third shift, as seen by my friend, who was the third shift non-union foreman. I also recall AMAX Coal management cav- ing by giving into various union demands as the company could not afford to have the mine go on strike. Corporate needed the revenue to pay off its huge debt to the banks. The union knew this and took advantage of the situation. The bottom line is that Lowry Blackburn's 1982 prediction came true, AMAX's last mine, the Wabash mine, which was owned by Foundation Coal at the time, closed in 2004. Nearly all other companies met the same fate, but not all. Some Found Ways to Survive While most of the companies with UMWA- organized mines eventually closed, only Peabody Energy and Arch Coal have con- tinued to have a presence in the ILB. Peabody's vast ILB coal reserves allowed it to go non-union through strategic acquisi- tions of small non-union producers (name- ly Black Beauty, Arclar, Dodge Hill and Lexington), using them to develop its abun- dant reserves. Peabody also allowed Armstrong Energy to acquire its West Kentucky reserves in Ohio and Muhlenberg counties. Peabody spun off its remaining UMWA mines and liabilities into Patriot Coal in 2007, effectively allowing Peabody to become 100% non-union in the ILB. Arch exited the ILB in 1998 with the closure of its Captain mine as Phase I of the CAAA was implemented. It returned to the ILB by forming a strategic relationship with Knight Hawk Coal in Illinois, and now controls 49% of the non-union 4.5- to 5-million-tpy company. Through its ICG acquisition, Arch Coal now controls the non-union Viper mine in Illinois. During 2011, UMWA mines only accounted for about 4% of total ILB pro- duction; however, the UMWA scored a vic- tory in 2012 when it successfully organized the Peabody's Willow Lake underground mine in southeastern Illinois. It was antici- pated that Peabody would shut down the mine, and sure enough, they did at the end of 2012, citing market conditions and high costs. The mine was also the least produc- tive deep mine in the ILB that year. Low Productivity = Higher Costs Not only did the undependable production cause the UMWA to lose market share over the years, low productivity and the work ethic of its members also had a negative impact. Where the "future belongs to the low-cost producer," the UMWA eventually worked themselves out of the market. The mines simply could not survive in a cost- competitive environment. From 1989 to 2000, overall weighted aver- age ILB mine productivity improved by more than 50%, which corresponds with the annual loss of UMWA market share. The period of productivity stagnation dur- ing the early 2000s is due to lack of produc- tion growth in the ILB, the depletion of permitted surface and deep reserves and the implementation of the Mine Improvement and New Emergency Response Act of 2006 (The MINER Act). The act forced deep mines to improve safety measures, particularly with mine seals, which caused mine produc- tivity and production to drop as existing mines complied with the new law. The growth of productivity after 2007 is mainly due to Foresight Energy opening the most efficient longwalls in the U.S., arguably the world (Pond Creek, Sugar Camp and Deer Run), the openings of Alliance's River View and Sunrise's Carlisle mines, and the opening of low-ratio surface reserves in west Kentucky by Armstrong and Illinois by Knight Hawk. In 1989, the UMWA accounted for 78% of ILB production. By 2001, UMWA produc- tion only accounted for 28% of the ILB pro- duction. By 2013, UMWA production only accounted for 3% of total ILB production. With the closure of Springfield's Crown III o r g a n i z e d l a b o r c o n t i n u e d 52 www.coalage.com February 2015 Figure 3: Illinois Basin Mine Productivity, 1989-2013 Figure 4: ILB Underground Productivity, 1983-2014