Coal industry's swift, steep drop continues in Eastern Kentucky | Lexington Herald Leader

The latest report on coal production and employment in Kentucky reinforces how far and fast the industry has fallen.

In the third quarter of 2011, employment at Kentucky coal mines and preparation plants averaged 18,812 people. As of Oct. 1, that number was down to an estimated 9,356 — a decline of more than 50 percent from 2011, according to a report issued Wednesday by the state Energy and Environment Cabinet.

The swift, steep drop has been worse in the Eastern Kentucky coalfield.

An estimated 5,835 people worked on-site at mines and prep plants in the region Oct. 1. That was down from average employment of 14,303 from July 1 through Sept. 30, 2011.

The pain has spread from miners and coal companies throughout the regional economy.

"There's so many empty buildings," said W. Bruce Ayers, executive director of the Tri-City Chamber of Commerce, which includes businesses in the Harlan County towns of Cumberland, Benham and Lynch.

"When you talk with people, they're so discouraged it's almost palpable," Ayers said.

Ayers said he thinks an initiative called Shaping Our Appalachian Region, or SOAR, which U.S. Rep. Hal Rogers and Gov. Steve Beshear started to come up with ways to boost the economy, will ultimately help. But it won't be a quick turnaround, he said.

In the meantime — with few other jobs in the region that match coal salaries — laid-off miners are moving away for work, said Knott County miner Gary Brent Slone.

"I know a bunch of 'em have moved out of here," Slone said.

He got laid off from an underground mine in 2012 but eventually found work with a contract mining company. The job was an hour from home and paid $6.75 less an hour, but Slone was glad to get it. He was laid off again two months ago but hopes the company will resume work.

In Letcher County, where coal production dropped 56 percent in the third quarter alone, Judge-Executive Jim Ward said money the county gets from a tax on coal and mineral extraction has gone down so much that the fiscal court must consider budget cuts.

The county grew accustomed to getting $1 million or more a quarter just a few years ago, but its most recent quarterly payment totaled about $350,000, Ward said.

Without spending cuts or an additional source of revenue, the county probably will have to cut services in less than 60 days, Ward said.

"It's really bad," he said.

Still, the production and job numbers statewide weren't as bad for the third quarter as in some previous periods.

Mines in Western Kentucky increased production by a total of 3.7 percent in July through September, while production at mines in the state's eastern coalfield dropped 5.8 percent.

That resulted in a drop in production statewide of 0.8 percent in the quarter, according to the report released Wednesday.

Overall, jobs at coal mines and preparation plants declined 3.3 percent statewide during the third quarter.

Bill Bissett, president of the Kentucky Coal Association, said it was a positive that production and employment have been relatively flat in 2014 and 2015 compared to the freefall of 2012.

A number of factors have combined to sap demand for Kentucky coal, including competition from cheap natural gas and from cheaper coal mined elsewhere in the United States, tougher federal rules to protect air and water quality, and, in Eastern Kentucky, the depletion of thicker coal seams.

Mining employment in Kentucky is the lowest in more than a century, and the state is on track to produce less than 64 million tons of coal this year. That would be the lowest total since 1960.

And production probably hasn't hit bottom.

The reason is that most coal mined in Kentucky goes to power plants here and in more than a dozen other states to produce electricity, and that market is changing. Many utilities have switched or plan to switch from coal to cleaner-burning natural gas because of air-quality rules and low gas prices.

That has hurt the market for Kentucky coal, and the shift isn't over.

Announced closures of coal-fired generating capacity in the state and elsewhere — most scheduled for 2016 — can be expected to reduce demand for Kentucky coal by 13 percent to 20 percent from current production levels, said Aron Patrick, an assistant director for the Energy and Environment Cabinet.

"In the near-term there's a lot of negative pressure" on the state's coal industry, Patrick said. "The key here is new markets for Kentucky coal have got to be identified."