UTU News Digest - Monday, November 9, 1998

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Monday, November 9, 1998

UTU - UP/IC HOTLINE: 1-800-964-9464
Call to report workplace problems.

Union Pacific plans to hire 60,000 new workers over 12 years

OMAHA, Neb. -- Union Pacific Railroad expects to hire nearly 60,000 workers over the next 12 years to replace retiring workers and respond to increased business at the nation's largest railroad, the Omaha World-Herald reported Sunday.

The hiring push by the Omaha-based railroad is the biggest since the 1970s. It will come after Union Pacific estimates it will have hired about 6,500 people this year alone, the newspaper reported Sunday.

One of UP’s big needs is for train crews -- the locomotive engineers and conductors who operate the trains. Few blue-collar jobs pay better. At Union Pacific, engineers average $68,400 a year; conductors, $54,000. Crew members who want to work lots of trips can earn $100,000 or more.

"It's a heck of an opportunity,'' Union Pacific spokesman Ed Trandahl told the World-Herald. "You don't have to have a college degree to make $40,000, $50,000, up to $100,000 a year.''

The railroad jobs do include odd and unpredictable hours with lengthy trips away from home. But the pay and long-term stability make the jobs attractive to many workers.

The jump in hires is due partly to a need to untangle severe traffic congestion. But even without the traffic problems, the railroad would have been hiring aggressively, said Kevin Naylor, assistant vice president of human resources planning for the railroad.

The age of the railroad's work force makes it certain that the company will need to hire thousands of workers annually over the next 10 to 15 years, Naylor said. Last May, more than 18,000 of the railroad's union employees -- including train crews, track maintenance workers and others -- were 50 or older. Naylor said railroad employees typically retire between ages 60 and 62.

A similar situation exists in the railroad's management ranks where more than 2,500 of nonunion workers are 50 or older. While the age trend is clear, it will take continued growth for the railroad to meet its current projections of 5,000 new hires a year through 2010, Naylor said. If the expected business growth is not there, the railroad will not be offering as many jobs.

Pilots' union urges blocking "virtual merger" of Northwest, Continental Airlines

WASHINGTON -- Calling a planned code-sharing alliance between Northwest Airlines and Continental Airlines a "virtual merger'' that would reduce competition and harm consumers, an airline pilots' union is urging the Departments of Justice and Transportation to intervene and block its implementation.

The Allied Pilots Association, which represents the 9,000 pilots of American Airlines, has asked the two departments to prevent what it terms the first step toward a large-scale consolidation of the airline industry.

The Justice Department recently filed a lawsuit in U.S. District Court in Detroit to prevent Northwest from acquiring 14 percent equity in Continental and 51 percent of its voting rights. The Assistant Attorney General in charge of the Antitrust Division, Joel I. Klein, said the acquisition ``would lead to higher ticket prices and worse service.''

However, APA President Captain Rich LaVoy and Captain Michael P. Cronin of the association's Washington office said the federal government stopped short of the action that is needed: preventing the implementation of a domestic code-sharing agreement that would allow the two carriers to ticket passengers on each others' aircraft as though they were their own. Northwest and Continental have announced their plans to do so within weeks.

The Justice Department has authority to issue injunctions to prevent implementation of anti-competitive code-sharing agreements but has taken no action in the Northwest-Continental accord.

In letters to the Department of Justice, they said it "should view these potential code-sharing agreements as cashless, virtual mergers.'' They also noted that implementation of such agreements -- and the Northwest-Continental alliance is but the first -- would allow airlines to achieve the benefits of mergers while bypassing the required government approval of acquisitions.

The APA is also asking the U.S. Department of Transportation to prevent the alliance from taking place until a review is completed. Congress has authorized the DOT to delay alliance agreements for as much as 150 days while it reviews such accords, but the Department thus far has been silent on the Northwest-Continental alliance.

If the Northwest-Continental code sharing alliance is allowed to take place without careful scrutiny, similar agreements with other carriers likely would follow, the pilots said.

"In fact, this has already happened. Within a very short period of time, last winter, all major airlines in the U.S. announced plans for... alliances,'' said LaVoy. "Competitive pressures forced them to be prepared for the approval for the first of these alliances. ... Once these things are in place, they are virtually impossible to undo.''

Echoing statements by members of Congress during hearings on airline alliances this past spring, the APA said the decline in competition resulting from such alliances ultimately will mean a reduction of jobs, closing some airline hubs, a reduction in service and, ultimately, higher ticket prices.

The pilots also cited a report by the General Accounting Office which said that, if three pending alliances among six major U.S. air carriers take place as planned, competition would decrease in 1,836 domestic airline markets and have a potential negative impact on about 100 million passengers per year. In comparison, the report said competition could increase in only 338 domestic markets, affecting 30 million passengers.

In assessing the impact of code-sharing alliances on consumers, the pilots quoted the April 1998 testimony of Paul Hudson, executive director of the Aviation Consumer Action Project, before a House subcommittee hearing on airline competition.

Hudson said that when competitors are allowed to cooperate, "they will invariably seek to set higher prices and limit supply to obtain higher revenue and lower costs and, thereby, increase profits."

"The whole system of free-market competition... quickly breaks down,'' he said. "Accordingly, there is no justification for permitting airlines to evade anti-trust and fair competition laws and to destroy what remains of airline competition.''

The APA said the Departments of Justice and Transportation have an obligation to complete their investigations of the Northwest-Continental code-sharing alliance, determine whether it will harm airline competition and, if necessary, act to prevent such harm.

"Consolidation through the use of domestic code-sharing alliances would be unique to this industry,'' LaVoy said. "What other industry allows for anti-competitive practices while consolidating market share?

"We urge the Department of Justice to consider this potential domestic code-share alliance as a merger and to give it the same scrutiny it would get if these two corporations were planning a traditional merger.''

FedEx Pilots to Refuse Overtime

MEMPHIS -- Pilots for Federal Express say they will turn down overtime starting Monday to call attention to stalled contract talks.

The FedEx Pilots Association, which represents 98 percent of the package express company's pilots, said the tactic will delay deliveries at the peak of the company's pre-Christmas rush. Daily traffic reaches 4 million packages during the period.

"Within 10 days, you'll see sporadic disruptions of service. It won't be anything catastrophic, but it will cause people to take notice,'' union spokesman Bob Clement said.

FedEx said only 2 percent of the company's flights are operated by overtime crews, and planners can bypass them. The company can adjust schedules, alter routes and use more trucks so customers won't be able to tell the difference, spokesman Greg Rossiter said.

FedEx, based in Memphis, is the world's largest air package delivery company.

Company pilots earn an average of $142,000 a year, about midrange for the airline industry. Annual salaries for 1997, including overtime, ranged from $37,000 to $379,000, depending on pilot seniority and the kind of aircraft flown, FedEx said.

With a proposed 17 percent pay raise over five years, FedEx says its pilot salaries would rise to No. 2 in the industry, slightly behind United Parcel Service.

The union wants a 5 percent pay increase retroactive to a negotiated date and an additional 19 percent raise over four years. The pilots say they also are concerned about schedules and retirement.

Chicago-area RTA plan to spend $91 million on transit stalls

CHICAGO -- A RTA plan to spend $91 million to build a futuristic system of four-passenger train cars in Rosemont was put on hold last week by agency Chairman Thomas McCracken Jr.

Some members of the RTA Board had said they would not approve the plan if it had been presented at last week’s regular meeting.

The meeting agenda had included a measure to authorize spending $70 million to partially finance the RTA's proposed Personal Rapid Transit system. The agency already has spent $21 million on the project.

Raytheon, the manufacturer, has estimated the cost of the 3.5-mile Rosemont line at about $124 million. More than half of that would come from the RTA.

But director Valerie Jarrett, who also chairs the CTA Board, said there were too many unanswered questions about the plan. Some officials questioned whether using the $70 million would jeopardize millions in federal funding.

"If we use the money [for existing capital needs], we could leverage a total of $350 million in federal funding for the capital needs of the system. The CTA, Pace and Metra are in need of billions of dollars for capital infrastructure repairs," Jarrett said.

RTA Board member Michael Rosenberg said, "under the federal match program, our primary responsibility is to maximize the leverage on these federal funds. I don't think I'm prepared to vote on it without more fully understanding these underlying issues."

Jarrett said there also were some substantive questions about the plan.

"The RTA has not done any independent analysis of the ridership projections and financial plan" for the system, she said.

The RTA, which is jointly developing the technology with Raytheon, would receive royalties on the sale of PRTs outside of Rosemont. The manufacturer has estimated that the RTA could get about $200 million as a result.

According to projections, about 2 million riders are expected to use the system annually, RTA officials said. Rides would cost $1, and the cars would operate 20 hours a day, seven days a week.

PRTs have been in development for eight years. The system recently passed multiple car operation tests at a track in Marlborough, Mass.

The system, also called PRT 2000, uses computer-controlled, rubber-tired train cars on an elevated guideway. Electric cars would run in one-direction loops linked to form networks. Stations would be at key points.

In Rosemont, the PRTs would carry workers, conventioneers and theatergoers between the CTA's Blue Line and hotels, convention halls and theaters on River Road.

CN opens steel center north of Toronto

TORONTO -- Canadian National opened its new Metals Distribution Centre north of Toronto in Concord, Ont., at an official ceremony Friday.

The 65,000-square feet, temperature-controlled facility offers customers transfer and storage services for a variety of metal products used in the automotive industry, appliance manufacturing and construction markets.

"Our new facility gives us the ability to provide just-in-time service to steel and aluminum producers in this expanding marketplace," said CN's James Foote, vice president, merchandise. "We offer a world-class transfer and storage facility in the largest steel consuming region in Canada."

The state-of-the-art Metals Distribution Centre, open seven days a week, 24 hours a day, offers customers quick turnaround times in the highly competitive steel market. The center is heated and humidity-controlled, which allows for the transfer and storage of temperature-sensitive products such as high-grade steel coils manufactured for the automotive industry.

Distribution centers are playing an increasingly important role as metal producers specialize in their product lines and customers seek one-stop shopping and flexibility to order small quantities. Steel and aluminum products are transloaded between railcars and trucks for delivery to the final destination.

The new facility is located at CN's Macmillan Yard, Canada's largest rail marshalling yard and the hub of CN's eastern operations, with daily dedicated rail service to major U.S. gateways. Adjacent to Highways 400 and 407, the center is also within 90 minutes of all major customers.

The North American market for steel accounts for more than 18 per cent of world demand. Southwestern Ontario is the largest steel-producing and consuming region in Canada, with approximately 13 million tons of steel produced in the region.

CN has invested approximately $4 million to upgrade its fleet of railcars to accommodate the growing demands of the industry. This week the company received the first delivery of specialized insulated railcars to handle coils and cold rolled and coated sheet steel.