Merged Company Tries To Retire Massey's Legacy Shareholders of Massey Energy and Alpha Natural Resources have approved a merger that creates the world's third largest producer of high-priced and high-demand metallurgical coal. Massey became a takeover target after last year's deadly explosion at the company's Upper Big Branch mine in West Virginia.

Merged Company Tries To Retire Massey's Legacy

Merged Company Tries To Retire Massey's Legacy

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The most infamous company name in the American coal industry is now officially retired. But the Massey Energy legacy persists at Alpha Natural Resources, which absorbed Massey in a friendly takeover Wednesday.

That's because Alpha has folded into its management team Massey executives and officials linked to the company's poor safety record and last year's Upper Big Branch coal mine explosion, which killed 29 mine workers.

An independent investigative report about the tragedy blamed a Massey corporate "culture in which wrongdoing became acceptable, where deviation became the norm."

"We're going to run right and we're going to lead by example," declared Alpha CEO Kevin Crutchfield, in a reference to Alpha's safety program, known as "Running Right."

Q&A Transcript

Alpha Natural Resources CEO Kevin Crutchfield was interviewed by NPR's Howard Berkes Wednesday after the ceremony marking the Alpha takeover of Massey Energy. Both the questions and answers have been edited for brevity.

Berkes: First of all, do you have a basic message that you'd like to impart?

Crutchfield: The message is about the future. Our first goal is to implement the "Running Right" operating methodology across all the Massey sites. That work started in earnest several weeks ago and over the course of the next several weeks and few months we have almost 600 of these training sessions scheduled. The past is kind of the past. This was an ideal transaction for us that was all about positioning for the future and we're quite excited about the prospects for the company.

Berkes: How can Alpha be different than Massey, how can you focus on the future, when you have folded into your company Massey managers and executives who were responsible for the safety culture that existed at Massey? You've got Chris Adkins, the Chief Operating Officer at Massey, who has been labeled by investigators as somebody who helped immerse the company in a culture in which deviance was normalized

Crutchfield: The first thing I would say is judge us by what happens from this day forward. I don't hold Alpha out to be perfect by any stretch of the imagination but I think we've had a pretty respectable relationship with the communities where we operate, a pretty respectable safety record, a pretty respectable record with respect to environmental stewardship. And the goal here is to operate the combined company in the same manner that we've operated Alpha since its inception.

And with respect to the 7,000 employees that we had to choose from on the Massey side, we made those selections based on a value based system, a value judgment. Do we believe, at the end of the, they can subscribe to the Running Right philosophy that will be the mechanism by which we run the combined company. We made the selections on that basis.

Sometimes you have to make course corrections but those are the decisions that have been made to date. We stand by them. But if there is a need to create a course correction in the future then that's exactly what we'll do.

I'm not going to talk about individuals in the media. I will address Chris Adkins. Chris, uh, fairly new news. I haven't shared it with anybody but Chris will not be joining Alpha. I'm not going to say anymore about it than just that.

Berkes: Was that Chris Adkins' decision or your decision?

Crutchfield: That's all I'm prepared to discuss today. Chris will not be joining Alpha.

Berkes: Can you tell me whether [Massey executives] Chris Blanchard and Jason Whitehead have been hired or whether you intend to hire them at Alpha?

Crutchfield: I'm not going to talk about individuals in the media who have yet to have discussions. It would be unfair to them and I just don't think it's appropriate that I do that at this point. We're still in the middle of the integration. We've largely put the organization together but we still have a ways to go. And I think it would be inappropriate for people to understand what their fate is through the media rather than hearing it directly from us.

Berkes: Is it true, as the court documents that were recently unsealed say, that you agreed to hire the [Massey] people you've hired so that this would transform what had been a hostile takeover into a friendly takeover?

Crutchfield: It would come as no surprise, just like in any transaction, people are a big part of it and lots of names were discussed. I think [shareholders suing Massey] are referring to it as the conspiracy theory. As far as I'm concerned, nothing could be further from the truth. We made our selections based on who we thought would be appropriate and fit within the Alpha culture and being able to take Alpha to new levels. So, I don't give the conspiracy theory much thought.

Berkes: So, just to be clear, you're saying there was no "secret pact" to hire these people as part of the deal?

Crutchfield: Look, it was a $7 billion transaction. We paid a huge premium for Massey and I think any director fulfilling his fiduciary duty, while certainly he wants to take care of people as best he can, his fiduciary duty is to the shareholders and that's a valued proposition. As far as I'm concerned, that's where the focus was.

Berkes: I talked to one veteran Massey miner today who lost a son at Upper Big Branch and he said he can't believe that anything will change because in the old Massey mines people don't know how to run right. How will you change a corporate culture there that has been in place for quite a long time?

Crutchfield: I don't discount the fact that culture is a hard thing to change but I believe in our Running Right methodology as do 6500 of our existing employees. As I mentioned, we have nearly 600 of these training sessions scheduled over the course of the next few months.

It's not a suggestion. This is the way that we will run our company. At the end of the day, a ton of coal is not worth a life under any set of circumstances and those are just not risks that we're going to take. If it's unsafe, we're not going to run it.

Rome wasn't built in a day and you can't transform an organization overnight. But that is the goal. There's a moral imperative here, number one. It's the right thing to do. It's the right way to run your business. But, secondly, it's also good for business. And we're very focused on getting it right.

Berkes: Do you have a timeline, a sense of how long this transition will take?

Crutchfield: There are lots of challenges we're facing. Massey had very high levels of turnover. They went through a lot for the year. And then, at the end of the year, with the announcement of a [merger] transaction, that creates a lot of anxiety on the people side. So, I think just getting the transaction behind us will create some level of stability.

Then people are going to be getting touched very quickly on the Running Right training. So, the goal would be, in very short order, to get the signal out and the systems out, and say this is how we're going to run the combined company. This kind of behavior is what we want and this kind of behavior is not acceptable.

It'll take some time but I believe with the passage of time you'll begin to see citation rates fall. You'll begin to see accident rates, frequency rates improve. Lost Time Injury rates will begin to improve and will begin to approximate that of Alpha.

You can operate coal mines without accidents and we have testament of this. We have proof of this because we have many, many coal mines that operate and have operated for years without Lost Time Accidents. So, I don't think that is a far-fetched idea that we can operate safely in this business.

Clearly, I get the fact that spotlight is going to be on us. But when I look at what's transpired in the brief history of Alpha, I have every belief that we can repeat that performance on a combined basis.

"We'll let our performance be our public relations effort," he said. "We're willing to be judged by what happens from this day forward."

But deep in the Coal River Valley, not far from the Upper Big Branch mine, the transition was met with skepticism.

"Nothing's going to change," said Gary Quarles, a Massey miner himself who lost his son Gary Wayne in the Massey mine explosion that took 29 lives.

"The name will change and that's all," Quarles continued. "These men here do not know how to go about doing stuff right."

That's a reference to the coal miners, executives and managers used to doing it the Massey way. In the last two months, Alpha announced it was moving about a dozen Massey officials into Alpha management. Crutchfield defended that lingering hold on the Massey legacy in an interview with NPR.

"Those are the decisions that have been made to date," Crutchfield said. "We stand by them. But, if there's a need to create a course correction in the future that's exactly what we'll do."

Chris Adkins' Departure

And then Crutchfield suddenly disclosed a course correction involving Massey chief operating officer Chris Adkins, who was tapped to help integrate Alpha's Running Right safety program in the newly-merged company.

That move triggered fierce criticism because Adkins presided over Massey while it compiled one of the worst safety records in the industry, including two deadly mine disasters. The company was held criminally liable after one of them, an explosion and fire at the Aracoma Alma mine that left two workers dead.

The Adkins move to Alpha was singled out in a recent report on the recent independent investigative report on the Upper Big Branch (UBB) disaster.

"One need look no further than UBB, where conditions, as described in this report, reflected a mine in which safety standards were swept aside in the rush to produce coal," the report said, in raising questions about Alpha's hiring of Adkins.

In recent weeks, the United Mine Workers of America condemned the job assignment, and Congressman George Miller (D-CA) and Congresswoman Lynn Woolsey (D-CA) cited it in a letter to Crutchfield.

"We are troubled by indications that, as Chief Executive, you could think that miners are fairly served by perpetuating Massey's safety culture for even one minute longer," Miller and Woolsey wrote.

In the NPR interview Wednesday, as Crutchfield was pressed by the hiring of Adkins and other Massey executives, the Alpha CEO suddenly said, "Chris will not be joining Alpha. I'm not going to say any more about it than just that."

Crutchfield would not say whether Adkins made that choice or Alpha made it for him. Adkins walks away with a departure package worth $11 million, according to an analysis conducted by investment banking firm Cypress Associates on behalf of the of families of seven Upper Big Branch victims and a survivor suing Massey Energy.

Status Unclear Of Two Massey Execs

Crutchfield also would neither confirm nor deny the hiring of Chris Blanchard and Jason Whitehead, two executives at the Massey subsidiary responsible for the Upper Big Branch mine. The two spent four hours underground and unsupervised immediately following the deadly explosion last year. State and federal mine safety officials and investigators have expressed concern that the pair may have tampered with evidence.

Blanchard and Whitehead were among nine Massey executives and managers named by Crutchfield in a deposition three weeks ago, before he said, "There's a reasonable likelihood every one of those will be extended an offer" for jobs after the merger.

The deposition is among more than 5,000 documents unsealed Wednesday in a West Virginia court in response to a motion filed jointly by NPR and the Charleston Gazette.

In the NPR interview, Crutchfield refused to discuss the status of any other Massey official. But he defended his decision to consider them for jobs.

"We made our selections based on who we thought would be appropriate and fit within the Alpha culture and being able to take Alpha to a new level," Crutchfield explained.

Shareholders Fear 'Secret Pact' For Jobs

The court documents are part of a lawsuit by several large institutional Massey shareholders who allege that the job offers were part of a "secret pact" to make sure Alpha bought Massey. The documents also show that another company, Arch Coal, had offered more money but had a merger plan that "straightens out Massey," according to a Crutchfield e-mail.

The shareholders claim that the job offers transformed the Alpha bid from hostile to friendly and protected Massey executives and board members from liability if the lawsuit succeeded.

"I don't give the conspiracy theory much thought," Crutchfield responded.

Crutchfield said Alpha would launch a massive training effort, involving nearly 600 sessions, to change the safety culture at the former Massey mines. Alpha has a better safety record, according to documents on file at the federal Mine Safety and Health Administration.

Strict attention to safety "is not a suggestion," Crutchfield insists. "This is the way we will run our company...A ton of coal is not worth a life under any set of circumstances."

Still, skepticism lingers. That's because the merged Alpha management team includes Shane Harvey, Massey's general counsel and spokesman, who persistently pressed the company's theory that the UBB explosion was due to an unpredictable and unpreventable infusion of natural or methane gas. Mine disaster investigators say there's no evidence to support that theory.

Also moving to Alpha is Charlie Bearse, president of the Massey subsidiary responsible for the Freedom #1 mine in Kentucky, which was targeted for the Labor Department's first ever federal court injunction. Massey settled the case before the mine could be placed under federal court supervision.

Freedom "has a high risk level for a fatal accident ... on any given day," wrote mine safety official James Poynter in a court document.

Alpha's own assessment of the Massey culture concluded it "is driven by a strong focus on production...with...employee safety and regulatory compliance receiving minimal consideration," according to documents unsealed in another shareholder lawsuit in Delaware.

Massey executives and managers who were part of, and responsible for, that culture are still part of the Alpha management team. That may make Crutchfield's efforts to keep the focus forward elusive.