In the wake of the tragedy at West Virginia's Upper Big Branch mine, we've learned a thing or two about Don Blankenship, the CEO of Massey Energy, whose mines have an astonishing number of accidents and safety violations -- a record worse than nearly any other. A lot of attention has been paid to the first of these two 2005 internal memos [PDF]:
If any of you have been asked by your group presidents, your supervisors, engineers or anyone else to do anything other than run coal (i.e. -- build overcasts, do construction jobs, or whatever), you need to ignore them and run coal. This memo is necessary only because we seem not to understand that the coal pays the bills.
More telling, I think, is the follow-up memo issued a week later, explaining that of course safety comes first and anyone who got a different idea is crazy. Presumably, Blankenship's lawyers got a look at that first memo and realized that this was a paper trail that needed tending, but this kind of record-correcting reveals more than it conceals, especially when it ends on the note of the primacy of running coal over anything else.
Here's my question, though: This is the second major accident to happen at a Massey mine in four years. How has fighting against safety regulations and cutting corners helped them pay the bills? Insurance costs must be through the roof, not to mention the costs of repairing this mine. The bad publicity alone has already cut their stock price more than 10 percent, and Standard and Poor's estimates the accident could cost the mine $50 million. By all accounts, Blankenship is an ideologue, and now his doctrinaire approach to business -- regulations aren't worth my time! -- is hitting him where it hurts, right in the profits.
This is what happens when you get so focused on rigid, bipolar abstractions rather than empirics: You convince yourself that good business practices don't go hand-in-hand with regulation and safety. The consequences are disastrous.
-- Tim Fernholz
