Stairway to Hell

Do the remains of Bankhead presage the fate of today’s oil-producing centers?

In this new age of renewable energy, the parallels are easy to draw. Migration to sources like wind and solar on the front end of energy supply — combined with new alternative devices like electric cars on the consumption end — potentially threatens the livelihoods of millions of people around the world involved in the production of earthly fuels.

It’s not just me pretending to be Socrates, philosophizing on a dreary, ash-colored day. Entire countries are thinking about the threat of irrelevance — places like Saudi Arabia, the world’s second-largest oil producer. In 2014, policy makers in the desert kingdom had an ontological moment. Recognizing excessive dependency on their potentially limited fuel source, they began thinking about how to diversify away from their oil-drenched economy.

Okay, compared to Saudi Arabia, Bankhead looks insignificant, a kingdom only in the minds of those who once lived where I now stand. But scale doesn’t matter. Looking around at these vestiges, I think this old mining town is an acute case study that should make anyone think twice about being complacent about their lot in life. Hundreds of communities today could similarly end up as historical footnotes if some tech-savvy alchemist were to figure out how to power a car with Captain James T. Kirk’s dilithium crystals instead of John D. Rockefeller’s black gold.

A HIGH PRICE TO PAY

I step through the rectangular void where the building’s door used to be, hoisting my leg over the crumbling footings. To be sure, Bankhead is an extreme case of desuetude catalyzed by complacency amidst a poor market for coal. But outside the building, I remind myself that jumping to hasty conclusions is as easy as grinning for a selfie these days. I tend to avoid both.

Posing beside rubble and saying “Bankhead went bankrupt, therefore so will all resource towns” is tempting, but the perplexing thing is that the world didn’t stop using coal in 1922. Far from it. Today, 7 billion people gorge on five times as much of the black stuff as a hundred years ago. In fact, Bankhead is not a case of a primary energy source becoming obsolete.

I’ve read a lot about Bankhead, but I still look to the rubble for practical answers to why Mine No. 80 and the town around it went bust. My attention turns to the historical plaque on the outside wall. Apparently the building I was just in was the miners’ lamp house, the gathering place for a hard day of back-breaking, thankless work. Closing my eyes, I time-travel a hundred years back, to an early April morning in Bankhead.

At 6:00 a.m., a siren blows, waking the entire community. By 7:45, men are heading to the lamp house for their 8:00 shift. They line up in front of where I’m standing, maybe cracking jokes, shoving each other playfully and cussing about losing at last night’s poker game.

Amid the banter, Frank Yakubiec and Mike Perrotti wait to pick up a clean, fully fueled brass safety lamp before they go into the mineshaft. When their turn comes, Frank and Mike get these lamps in exchange for their personal tags, each inscribed with a number.

The two know what this daily tag-for-lamp trade means. They’re swapping the valley’s natural glories for eight hours of hell inside the bowels of this mountain, bashing and hauling out coal, risking their lives in the process. But they do it, day in, day out — to put food on their families’ tables, clothes on their backs.

Frank makes the swap like he does every day. Except on this day — April 22, 1920 — he doesn’t make it out.

Records from the Old Calgary Court House diarize that Mike Perrotti “heard coal running down the chute, and about the same instant heard someone shout from inside the chute down below him.” That someone was Frank, who “shouted for him to stop the coal from running” and “ordered Mike Perrotti to get an axe and cut a hole in chute …”

It was too late. At 10:45 a.m., Frank Yakubiec died under a crush of coal.

FEAST OR FAMINE

I open my eyes to take in the precious daylight. “Grim” is the first word that comes to mind.

Standing at the lamp house and feeling its haunting ambience, I know there’s no way I could have mustered the nerve to trade a piece of ID for a brass lamp and the possibility of a one-way trip into a clammy black hole.

I reflect on Frank’s contribution to providing fuel that heated homes in the thick of winter or stoked steam engines for the pleasure of wealthy tourists riding a train through the Rocky Mountains. Frank dug out a lot of coal so others could enjoy those things — and gave his life in that pursuit. Yet I’m pretty sure that anyone who enjoyed the benefits of coal from Mine No. 80 had no idea where their fuel came from, nor what sacrifices — including Frank’s and many other miners’ lives — were made under that mile of mountain.

I don’t think men like Frank and Mike were looking for people to stop them on Main Street and thank them for risking their lives so others could have a warm bath. Just the opposite.

From what I’ve read, Rocky Mountain coal miners were especially stoic. Many were hardworking immigrants from Eastern Europe looking for a better life in Canada. I doubt they found an easier existence here, but I know they wanted to be paid fairly and treated well for the sacrifices they made — compensation and dignity make up for a lot of hardship.

Bankhead appears to have been one of the better mines in the area for working conditions, but, by today’s Western standards, it was hardly acceptable. Tension between the United Mine Workers of America and the tweed-suited owners of the Pacific Coal Company led to many strikes over the mine’s 20 years of operation.

Indeed, labor strife was a major factor leading to the town’s demise. The miners wanted better pay and working conditions, while the owners stereotypically remained intransigent with their profits (or lack thereof).

Coal was a feast or famine business, increasingly the latter, because the cost of production in Alberta was too high relative to the volatile ups and downs of the commodity price. The downturns in the coal market were hard on company coffers and even harder on workers’ wallets.

The final, irreconcilable strike began on April 1, 1922. For 76 days, workers refused to gather at the lamp house. Looking around these ruins, I can imagine union leaders and management reps negotiating for hours in a dingy room hazy with cigarette smoke. It must have been hard enough cutting through all that smoke and bullshit in the air, let alone cutting a pay deal.

So there was no deal.

On the evening of June 15, Bankhead began its abrupt decline from bustling, proud mining town to a historical curiosity for hikers.

AN ASSAULT ON ALL FRONTS

A gust of wind rustles the leaves, breaking my train of thought and directing my attention to a path. Intrigued, I head over. I arrive at what the miners called a dinky, a hefty air-powered iron cylinder used to haul materials into and out of the mine. It looks like a prop from a steampunk show.

Not far from the dinky, leftover slags provide evidence of what’s been written about Bankhead’s mine: the quality of its coal was not that good. Sure, the stuff looks black, but it’s full of rocks and too wet in composition, prone to crumbling into small grains. Fireplaces like to be fed dry, chunky coal, so, after the dinky hauled coal from the mine, workers had to pick out the rocks, which added a lot of manual labor.

As Mine No. 80 developed, its coal output became finer and finer, which meant the yield of desirable coal chunks was poor relative to the effort required. Bankhead suffered from the most serious of business maladies: poor-quality product and a high cost of production.

I start walking back down the path, my mind wandering farther than my feet.

The operation had challenges on many fronts: labor discontent, poor product and thin profits. Another competitive drag was that Bankhead was a thousand kilometers from the lucrative markets to the east, so transportation costs were prohibitively high.

Bankhead had big-picture business issues, but I also know that local circumstances played a part in taking the place down. The Pacific Coal Company was a sophisticated operation backed by the ample wallet of its parent, the Canadian Pacific Railway. Having corporate backbone was good, but in Alberta, there were plenty of “mom and pop” coal-prone sites. Collectively the little guys could produce fairly large quantities of coal without a lot of up-front money. I’ve been to some of those sites too, where a few picks, shovels, a donkey, some rickety carts and a cadre of small-time entrepreneurs were enough to get into the coal business.

Whenever the price of coal went up — as it usually did in the dead of winter — the little guys flooded the local market with too much of the stuff. Prices fell quickly in the spring and nobody, big or small, could make a living.

The historical record speaks to brutal competitive circumstances. Owners, managers and workers at Bankhead were constantly challenged to make a buck in this recurrently adverse micro-environment.

After World War I, change hurtled at the coal business like a freight train — literally. Diesel engines powered by oil succeeded coal-fired locomotives in North America. Lessened demand to fill a tender car with coal at pit stops like Bankhead further eroded the mine’s sales. The contemporary parallel to this development is obvious: if everyone starts buying plug-in electric vehicles, thousands of gas station owners will be subject to a similar fate.

HOPE AIN’T NO STRATEGY

I emerge from the woods at the final stop on my tour: what’s left of the church on the hill.

There’s not much here, just crumbling foundations wrapping around what used to be the basement, now overgrown with shrubs and trees. The central feature is a wide stone staircase that’s still in pretty good shape. Affectionately named the Stairway to Heaven, it rises about three meters above the foundations before ending with a sharp drop to the basement. There’s no building awaiting, just a view of the heavens.

From the top of the stairs, I survey the ruins and imagine miners and their wives praying for renewed prosperity during those tough times. This place is a case study of life in so many dimensions.

During my MBA, case studies about bankruptcies were coldly analyzed in a sterile classroom. Yet an Excel spreadsheet and a stuffy lecture from a prof in a wrinkled shirt can’t begin to capture the human element of business failure and community demise. This old church — where unemployed workers desperately prayed for more food on their table — gives a “distressed” corporate balance sheet entirely different meaning.

The first thing I noticed on my trip to Bankhead was a love story. Despite the hardship, I can sense a love of community nestled here in the beautiful Rocky Mountains. I leave saddened that this love affair lasted only 20 years.

Heading to my car, it occurs to me that my day job may not involve religion, but it is about analyzing business, which is a church of sorts: corporate leaders and their faithful flocks of investors revere making money. When that’s not happening, there’s much gnashing of teeth, wringing of hands.

I think about the presentations and lectures I’ve given to people in the energy business over the years. I’ve observed that, in tough times, especially when oil and gas prices are depressed, the first companies to suffer from competitive pressure are those not at the top of their game. In every case, that underperformance leads management and employees to a strategy of hope and prayer, rather than innovation and improvement. But business, unlike church, is an unforgiving environment, one where success, and failure, are indifferent to such folly.

I always see heads in the audience nod sagely at my commonsense conclusion: if you want to survive in the energy business for the long haul, you must have quality assets; a productive, innovative and disciplined organization that keeps costs low; and access to diverse and lucrative markets that aren’t plagued by the ups and downs of seasons and other cyclical factors. I realize that isn’t a message everyone wants to hear though, especially those in financial trouble.

Instead, maybe I should encourage my audiences to forget their spreadsheets, stop listening to me and plan a trip to Bankhead. Anyone who comes here will realize that merely hoping for business success can lead to their own Stairway to Hell — a place where too many have found their end.