Sun, Jul 05, 2009
 Art Rodela, left, Don Marble and Rodney Gilliam, laid-off Freeport McMoRan mineworkers, commiserate at the DES office in Safford, where they were applying for unemployment benefits last week. Photos By James S. Wood / Arizona Daily Star
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RANCHO RESORT MAINTANANCE POSITION Construction West-Press Printing Finance and Accounting Charles E. Gillman Company Accounting Specialist Health Care CENTRAL ARIZONA COLLEGE DIRECTOR OF HEALTH INFORMATION MANAGEMENT Administrative & Professional Tucson Urban League CEO/President Sales and Marketing Everready Glass Sales Reps Administrative & Professional Jorgensen Brooks Group Counselor BusinessSafford's sweet times suddenly turn sour as copper jobs vanishArizona Daily Star
Tucson, Arizona | Published: 11.23.2008
SAFFORD — Everybody knew the boom wouldn't last forever.
But no one imagined the bust would come so soon.
The day after mining giant Freeport McMoRan Copper & Gold Inc. announced massive layoffs at its Arizona mines, dozens of dazed former employees milled outside the Southeastern Arizona unemployment office in Graham County.
"This town is going to die," said Ray Borquez, 56, who worked at Freeport's Morenci Mine for 10 years. He planned to move to Sierra Vista and look for work.
Jerry Marshall, 58, was preparing to vacate his company-owned home and apply for a job with SunTran in Tucson.
"What they're doing is not right," said Marshall, who worked at Morenci for three years. "I don't know what I'm going to do. … I don't know … I don't have anything."
Last week, Freeport said the economic pinch and falling copper prices were to blame for the work-force reduction.
Nearly 600 people at four of Freeport's Arizona mines were left jobless less than two years after breaking ground on the Safford mine — the first major new U.S. copper mine in more than 30 years.
Copper prices have dropped dramatically this year after reaching a peak price of $4.26 a pound on May 5. On Friday, the spot price for copper was $1.57 a pound.
"We are saddened that we must take these steps. However, copper prices are cyclical and we must respond to the current market conditions," Freeport spokesman Richard Peterson said in an e-mail. "We remain optimistic about our long-term strategy and the future outlook for our business. Our challenge now is to work effectively through this period of uncertainty and economic turmoil."
Most of the former workers said they expect layoffs will continue through the end of the year.
Asked whether Freeport was considering other cost-cutting measures besides layoffs — such as reducing executive pay or dividends to shareholders — Peterson said the company was weighing all options.
"We are in the process of revising our operating plans to target reductions in costs and capital spending and curtailing production at high-cost operations, if required," Peterson said "We will provide further updates once decisions are finalized."
Freeport CEO Richard Adkerson is one of the highest-paid executives in the United States, with a base salary of $2,083,333 in 2007, Securities and Exchange Commission filings show. With stock options and other compensation added, his annual earnings are worth more than $65 million.
Things were great only recently
The arrival of the new mine in Safford was greeted with much fanfare by the community, which has been thriving for the past three years as construction crews moved into area hotels and spent their money at local restaurants and stores.
Once the Arizona Department of Environmental Quality issued permits for the project in 2006, elected officials in Graham County hailed the news and predicted more housing, schools and utilities would be needed in the area to handle the expected new workers and their families.
After issuing only a handful of residential building permits at the beginning of the century, the city issued more than 2,000 in 2006 and 2007.
David Kincaid, Safford's interim city manager, said city officials were notified about 24 hours before the layoffs and fear more bad news.
"It was inevitable that copper prices weren't going to stay at the levels they were, but the crash came faster than we would have thought," he said. "We haven't been notified of more layoffs, but if copper prices stay where they are now, we're bracing for more."
The city is working with other organizations to provide retraining services to displaced workers, but there's not much work to offer.
"Chances of finding a job are slim to none here," Kincaid said.
As of Friday, the only city job available in Safford was for a police officer.
"It's a temporary setback," Kincaid said. "But whether temporary is six months or three years ... I don't know that."
Freeport is also providing assistance to the former workers with severance pay of two to four weeks and paying the cost of medical insurance — for those who were insured through the company plan — for up to six months, Peterson said.
"In addition, Freeport McMoRan is providing affected employees with company-paid continuing access to its employee-assistance program to help affected employees deal with issues such as stress, anxiety and coping with change," he said.
The company owns about 1,500 homes in the Morenci area, and Freeport cannot allow former workers to live in them, Peterson said.
"Current policy requires that the homes be vacated within 30 days of an employee's separation from company employment," he said.
Dispute over separations
More than a dozen people who spoke with the Star last week were told they were being terminated due to disciplinary reasons — a charge Freeport denies.
Marshall said he had a disciplinary write-up in his file and was told that's why he was let go.
Rodney Gilliam, 45, also said he was told his termination was due to a disciplinary write-up.
"I never knew this was going to happen," said Gilliam, who worked at the Safford Mine a year. He was planning to look for work with the mines in Carlsbad, N.M.
"But with all these people getting laid off, I don't know what sort of luck I'll have," he said.
If they were laid off or terminated could affect whether the workers are eligible for up to $240 a week in unemployment checks.
According to the state Department of Economic Security, an employee terminated for disciplinary reasons may not be eligible.
"If an individual lost his job through no fault of his own is the basic threshold to qualify," said Patrick F. Harrington, assistant director of the DES' department of employment and rehabilitation services.
He said state rules dictate the time between disciplinary infraction and termination must be "prompt and timely," but neither is defined.
Harrington encouraged the former mineworkers to send in their paperwork and let the state sort it out with Freeport.
"What will the company say when these employees file for unemployment insurance?" he said. "We will make a determination."
Peterson said the people were let go only because of the economy.
"The reason employment was discontinued for these affected employees was a reduction in force due to current market conditions. If it were not for these market conditions, this action would not have been taken," he said in his e-mail. "These reductions were carried out in accordance with established company policy for taking such actions, and these employees should be eligible for unemployment benefits."
"We didn't see this coming"
The effects of the job losses and bleak prospects were palpable in Safford last week.
Aside from the lines at the DES office, restaurants had plenty of open tables, and the parking lots of area hotels had only a few cars.
Two big hotels opened earlier this year — Comfort Inn Suites with 88 rooms in Safford and Marriott's Springhill Suites with 71 rooms in Thatcher.
"We didn't see this coming," said Karen Carter, general manager at the Super 8 hotel along Safford's main drag. "The whole town is in shock."
For the past two years, the hotel's 44 rooms had been booked with contractors who worked at the mine, she said.
"They were here months at a time; we became family," Carter said. "It's such a shame."
The number of layoffs reported by Freeport does not include contracted employees, as they were not employed by the mining company directly.
"Freeport McMoRan has reduced the number of contractor companies at many of its sites with an estimated 1,200 to 1,300 contract employees," Peterson said. "Freeport McMoRan cannot speak on behalf of these companies about the impact of our actions on their employment levels."
But Carter can, with her hotel half-empty and more people checking out each day.
The only people coming through the lobby are those looking for work, she said.
"It breaks my heart," Carter said. "I don't have a job to give them."
The seven-year Safford resident said she's afraid this bust could be more painful than those of the past because there were such high expectations for the new mine.
"It's worse in a way, because of the overgrowth," Carter said. "They overanticipated and overbuilt."
● Contact Gabriela Rico at 573-4232 or grico@azstarnet.com.
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