Layoffs and buyouts potentially affecting about 100 workers are needed for Montana’s largest mining company to reposition itself for future growth after two foreign-expansion ventures were put on hold, the company’s chief executive officer said.
Michael “Mick” McMullen was appointed to lead the 1,700-employee Stillwater Mining Co. in December, following a corporate board takeover by disgruntled investors including former Gov. Brian Schweitzer.
The 43-year-old CEO said that he is seeking to reduce labor costs in hopes of bringing down expenses for mining platinum and palladium in southern Montana’s Beartooth Mountains.
So far, the company’s new leadership has won cooperation from union leaders, avoiding the conflicts that accompanied prior workforce changes.
McMullen said the layoffs and buyouts — plus the scaling back of costly mining ventures in Argentina and Canada — were necessary after the company sought to expand too rapidly in recent years.
Writing down the value of its foreign projects resulted in a $270 million loss for 2013. Stillwater rebounded during the first quarter of 2014 with $19.6 million in profits.
The company said last week that 48 non-union, salaried workers had been laid off. Voluntary buyouts are being offered to as many as 50 hourly union workers, although McMullen said the number accepting offers could be fewer.
The company has seen a 35 percent increase in mining costs over the past several years.
“What I’m trying to get people to think about is securing the future of our business,” McMullen said. “Having a business where every year your costs go up $40 or $50 an ounce is not sustainable.”
Thirteen of the salaried positions eliminated involved the two foreign projects. McMullen said further development on both had been paused.
The company’s main sources of revenue are its two mines in the Beartooths and a smelter and precious metals recycling center in Columbus. McMullen said he hopes to expand the recycling business in coming years.
The buyouts are being offered to workers in Columbus and the company’s Stillwater mine near Nye, said Scott McGinnis, president of United Steelworkers Local 11-0001, which represents the company’s unionized workers. No buyouts are being offered at the company’s East Boulder mine, he said.
During last year’s proxy fight between Schweitzer’s group and former Stillwater CEO Frank McAllister, union leaders warned that workers could suffer if the board of directors was ousted. But McGinnis said the union has no objections to the voluntary buyouts, and there have been no discussions of changes to wages or work hours.
“We have no issue with it really. The severance offer itself is pretty good,” he said.
The union’s four-year contract expires next June. Negotiations on a new contract won’t not being until next spring, McGinnis said.
The company’s stock price on the New York Stock Exchange has increased by almost 30 percent since last May’s corporate takeover, an indication that shareholders have been pleased with the changes. Palladium prices rose over that period, while platinum prices fell.