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THE BUY-OUT
Tower colliery was situated at the head of the Cynon Valley near the village of Hirwaun on Hirwaun Common. This was one of the areas where coal mining began in earnest in South Wales, initially to provide for the needs of the iron industry. The colliery, originally called the Goitre colliery, was re-named after a mediaeval-style tower built by the iron master, William Crawshay after the workers' insurrection that broke out round Merthyr Tydfil and Aberdare in 1831. A depression in the iron industry had produced a knock on effect in the coal industry. Workers were laid off and a large crowd gathered in the centre of Merthyr, met by a detachment of 93rd Highlanders, brought from their new barracks in Brecon to restore order. In the riot that broke out twenty-four workers were killed and sixteen soldiers were injured. One of the rioters, Richard Lewis, known as Dic Penderyn was accused of injuring a soldier and was sentenced to death. He was hanged on 13th August, 1831. The insurrection led to the flying of the red flag on Hirwaun Common, near the Goitre colliery, when a white flag was dipped in calves’ blood, the first use of the famous symbol of workers solidarity.
Tower survived the wave of closures that followed the defeat of the miners' strike in 1985 but after Labour's fourth consecutive defeat in the 1992 election it seemed clear there was no longer an effective Labour and Trade union movement in the country. A major assault began on what was left of the mining industry under Michael Heseltine as Secretary of State for Trade and Industry. The miners were deeply demoralised, feeling quite unable to resist. The mood of the time is expressed powerfully in the well-known film Brassed Off, set in an imaginary Yorkshire mining town. There were 170 deep shaft mines throughout the UK in 1984, on the eve of the miners' strike but only eight major ones left by the end of March 2005. This did not signal an end to reliance on coal. Nearly 40% of the UK's energy needs are still [in 2008] provided by coal, the great bulk of it imported from, for example, Russia, Colombia, Australia.
By April 1994, Tower was the only deep shaft mine left in South Wales but the management wished to close it as well, possibly in the hopes of taking it over themselves and making a quick profit through exploiting its short term potential as an open cast mine.
The closure was resisted by the miners under the leadership of the NUM branch secretary Tyrone O'Sullivan. On Thursday 14th April 1994, Ann Clwyd, the MP for the Cynon Valley (later to distinguish herself as Mr Blair's 'human rights envoy' in Iraq), was smuggled down the pit. The sit-in lasted twenty-seven hours. The management seemingly backed down but quickly came back with a proposal that involved reduced wages and an impossible production target. Despite a recommendation by the union that the fight should continue, the men had been put into an impossible position and could take no more. They voted by 70% to 30% to accept British Coal's terms. It was at this point, when the pit was put up for sale, that they had the idea of buying it and managing it themselves.
The decision was made in the Penywaun Miners' Club. 178 people were present, who each agreed straightaway to put £2,000 of their redundancy payment into the venture. O'Sullivan recalls that the money was mostly collected by his friend Glyn Roberts, 'put in a brown paper bag, taken home and put under his bed until he could get to a bank to open up a separate account for our wonderful new venture.' [1]
[1] Tyrone O'Sullivan, with John Eve and Anne Edworthy: Tower of Strength, Edinburgh and London, Mainstream Publishing, 2001
A team was put together under the name TEBO (Tower Employee Buyout) and they soon secured the enthusiastic support of Philip Weekes, ex-chairman of the National Coal Board, South Wales area. As financial adviser, they employed Price Waterhouse, the firm used during the 1984/5 strike to sequestrate NUM funds. Price Waterhouse agreed to work without any down payment on condition that the workers would pay them 150% of whatever their final bill would be. 'After three months', O'Sullivan comments, 'we owed them so much money that they wanted the pit back more than me.'
A business plan was put together despite the refusal of the previous managers to have anything to do with them. They managed to secure the services of Tony Shott, an ex-surveyor from Tower, and of Cliff Jones, 'an experienced colliery manager who had been involved in many pit closures' and 'was keen to join to try to put something back in to the industry after all the pits he had helped shut down.' They secured a two million pounds loan from Barclays Bank on condition they could match it from money they had raised themselves. As a result they had to go back to the workers to ask for a further £6,000 each, bringing the total of each man's contribution to £8,000. And then there was the job of securing customers to buy the coal which they hoped to produce, knowing that their expenses in the first year would be some £8 million.
Happily, and to their own very great surprise, they got the support of the then Secretary of State for Wales, John Redwood, well-known as one of Margaret Thatcher's most ideologically driven supporters. On his blog (www.johnredwoodsdiary.com for 25th Jan, 2008) he remarks:
"I was suspicious of the Coal Board's
[2] view. Experience had taught me that they were not great managers of our national resource. They had a glittering legacy of losses, subsidy demands, closures, redundancies and poor employee relations to their credit. Their safety, productivity, profitability and social records were far from perfect. I was not inclined to believe them that so many pits had suddenly become uneconomic (though this was the firm conviction of his colleague Michael Heseltine - PB) ...
[2] Sic. By this time the National Coal Board had been disbanded and replaced by 'British Coal'. It was British Coal, with an eye on the profits that could be made from dismantling and privatising a nationalised industry, that had an interest in proclaiming pits to be uneconomic. That having been said, Redwood would certainly have been opposed to the corporatist management practises of the old Coal Board. See the previous article in this series - Scargill and Gormley.
"I was therefore delighted when I was told by my private office that miners representatives from Tower colliery wished to come to see me to put the case for keeping open the mine. I was even more delighted to learn that they believed their case so strongly that they were prepared to take the pit over and mine it themselves ...
"So was forged a partnership in British politics that none had predicted. I joined forces with Tyrone O 'Sullivan, the charismatic Lodge Secretary and leader of the buy out team to persuade Coal Board [sic] and government they should give the miners a chance. I was the only person who saw nothing strange in the alliance. I had always believed in workers participation and employee ownership ...
"I was delighted for them when they took possession of their mine, improved conditions and wages, and set about demonstrating that there were 13 years of profitable workings left ..."
As O'Sullivan explained it to Jonathan Morgan in an interview around 2005, Tower was not run as a co-operative, but as a company with the miners as shareholders. Decisions were made on a majority vote and six directors were elected each year on a rotating basis. There were approximately three hundred and ten shareholders and another hundred people employed as contractors. Much of the coal went to the South Wales power station at Aberthaw; some of the anthracite went to people’s homes and some to public buildings. Clean coal technology probably added about another 10% to the cost of burning the coal.
It is generally agreed on all sides that the project was a success. The Tower colliery website claims that by December 1995 (after the first year of working - the formation of the new company coincided with the final privatisation of the coal industry in December 1994) they had made pre-tax profits of over £4 million. Through their operations they improved wages, introduced a contributory pension scheme, 38 days holiday a year, a profit related pay scheme, a sick pay scheme. Profits were ploughed back into local community projects. They boast that they were ' the only worker owned coal mine in Europe.' In total they mined over 7 million tonnes (£300 million worth) of coal, finally closing because the pit really was exhausted.
To quote the account in the Sunday Independent, 3rd February:
"And so, in the club on Friday, emotion and pride were shoulder to shoulder, just as the miners and their families had been throughout the traumatic 1984 strike, a hard-fought struggle to keep intact the pit and the community around it, the triumph of the buy-out and the 13 fulfilling years that followed - and, yes, the day of the march away after all the coal that could be mined was brought to the surface. "We didn't leave an ounce down there," Tyrone O'Sullivan declared."