UTU News Digest - Thursday, July 29, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, July 29, 1999

WASHINGTON: Elections to determine representation of 95,000 workers; results due today for BLE recall vote; Little predicts "overwhelming" reelection

WASHINGTON -- Bitter leadership contests are raging at two of North America's largest rail unions, even as the labor organizations battle with each other in the wake of a failed merger, the Journal of Commerce reported today.

The outcome of the internal and external disputes involving the United Transportation Union and the Brotherhood of Locomotive Engineers will become clearer Thursday when the results of a tight BLE recall election against President Clarence Monin should be announced.

The rest of the leadership picture should become clearer next month when the UTU elects a president and the National Mediation Board, which regulates rail labor issues, decides whether UTU and BLE members effectively do the same jobs and should be part of a single union.

All three results are important because they determine who will represent as many as 95,000 train crew workers in national contract talks that begin in November.

Because both unions are covered by strict Railway Labor Act guidelines, the internal strife cannot boil over into a service disruption that could affect customers.

If an election is ordered, more than 20,000 crew workers for Union Pacific Railroad will decide who they want to represent them. The UTU holds nearly a 2-to-1 numerical advantage. That election could lead to similar balloting on other railroads.

Monin takes center stage

For now, the spotlight is on Monin, who has been in office for barely three years. He was swept into office three years ago on promises to strengthen the union. He became the target of a recall that criticized his spending habits and questioned his actions in the representation battle that the UTU began last year.

The BLE labeled the UTU's proposal as a takeover effort and opposed it for months before agreeing to a merger late in 1998. Monin called off that deal in May, citing questions about UTU finances.

If Monin is removed, First Vice President Edward Dubroski would take over.

Monin and Dubroski could not be reached for comment.

"We're hoping to get the union back in financial order," said Leroy Jones, a supporter of Dubroski and a union vice president. "BLE needs to spend more conservatively. The current administration has had a very liberal spending policy with political appointments."

Jones raised the prospect of future federations or mergers with other unions inside and outside the rail industry. While he did not identify any particular union, it was apparent that the UTU was not a current possibility.

UTU chief is confident

"I think I will be re-elected overwhelmingly," said UTU President Charles Little, who has been in office since 1995. His candidacy is supported by former presidents Al Chesser and Tom DuBose.

"What we want to do is continue the course we have started," he said, citing initiatives such as improved education and health-care programs.

On the negotiating front, Little said the UTU plans to concentrate on pay issues, including the dual basis of pay for some workers and entry-level rates.

Little has been recovering from colon cancer surgery. He said he is now disease-free and working a full schedule.

Little's opponent is Roger Griffeth, who is the union's general secretary/treasurer. Griffeth's campaign stresses the union's financial situation and an ongoing investigation of those issues by the Department of Labor. He expressed concern about a union unemployment fund that is the subject of review to determine if it is covered by federal pension legislation known as ERISA. A finding that the UTU is in violation could force repayment of $7.5 million in outstanding loans and leave the union virtually without cash, Griffeth says.

Among the interested bystanders is the National Railway Labor Conference, the bargaining unit for major railroads in national contract talks.

"We're concerned about it (the leadership disputes at both unions) with negotiations coming up in the industry," said Robert Allen, the conference's chairman.

"Strong leadership on behalf of the organizations is important to both the organizations and the carriers. We hope that however these issues are worked out that strong leadership prevails."

Strong leadership helps the railroads by reducing the chances that the membership would reject a contract proposal that is recommended for approval by union leaders.

NEW YORK: Norfolk Southern profits hurt by Conrail

NEW YORK -- The railroad giant Norfolk Southern Corp. said Wednesday its second-quarter net earnings fell nearly 60 percent, depressed by the high cost of integrating its share of the Conrail system.

The company said third-quarter results would also be hurt by the problem of restructuring its sprawling rail operations to include the parts of Conrail it acquired.

"We expect ongoing effects from Conrail but don't expect them to be as strong in the third quarter as in the second," David Goode, Norfolk Southern president and chief executive officer, told Reuters in an interview. "Later in the year we expect more normal operations again."

On June 1, Norfolk Southern and CSX Corp. split Conrail's assets between them, dividing locomotives, freight cars and thousands of miles of rail track. The two companies, after battling each other for months to see who would acquire Conrail, agreed to a joint takeover worth $10.3 billion two years ago.

Last week, CSX also reported lower second-quarter earnings, saying Conrail expenses were a big factor.

Just three months ago, Norfolk Southern said that Conrail's integration would increase its earnings and revenues by the end of 1999, but Goode said full synergies would only be reached by the middle of next year.

"Such a second quarter is hard to overcome," he said. "I want to steer you away from focusing on the end of this year. We expect that revenues will improve and costs will decrease, hopefully by the end of 1999."

"But full synergies will definitely be achieved by the middle of next year," he added.

Norfolk Southern on Wednesday reported second-quarter profits of $77 million, or 20 cents per diluted share, down 59 percent from $187 million, or 48 cents a share, a year earlier. Wall Street analysts had expected the company to earn 21 cents a share, according to analysts surveyed by the research firm First Call.

Conrail congestion and integration expenses for the second quarter totaled $94 million, according to a company statement.

Railway operating revenues for the quarter were up 11 percent at $1.19 billion compared with $1.08 billion the previous year.

Goode told Reuters, "Our second-quarter results reflect in large measure both pressures on revenues and higher-than-anticipated expenses related to the many challenges of integrating our portion of the Conrail properties.

"These additional second-quarter expenses include the costs of labor, equipment rental and service adjustments to meet the immediate needs of our customers."

Aside from its Conrail problems, Norfolk Southern said reduced coal traffic also hurt its results. Coal-related revenues, which account for 25 percent of Norfolk Southern's business, slumped by $18 million in the second quarter due to depressed export and domestic metallurgical markets.

"The outlook remains bleak until Japan recovers," Goode said. Continued weakness in the Asian economy reduced tonnage to Korea and Japan.

The company's intermodal business, transfer facilities that allow for unloading and continued shipment of trailers and customized freight, are considered by some to be the growth spot of the rail industry.

Intermodal operations constitute 16 percent of Norfolk Southern's business, "and I expect it to grow as part of our business in the future," Goode said.

Norfolk shares were up 19 cents a share at $30.25 in late New York Stock Exchange trading.

CANADA: Train crews at Canadian Pacific Railway ratify 4-year contract agreement

CALGARY -- Canadian Pacific Railway and the Canadian Council of Railway Operating Unions (CCROU), representing approximately 4,800 train crew personnel, today announced that a four-year contract settlement (January 1, 1999 to December 31, 2002) reached on May 26 has been ratified by a large majority of CCROU members.

The CCROU is comprised of two international unions, the Brotherhood of Locomotive Engineers (BLE) and the United Transportation Union (UTU). This is the first major railway labour settlement in North America to extend beyond 2000.

The agreement provides for wage increases of two per cent in each of the four years of the contract. In addition to benefit and pension improvements, the agreement contains provisions for improved productivity by allowing greater flexibility in training and scheduling.

CCROU (UTU) Vice-president John Armstrong said, "We are pleased that our members voted in favor of this settlement which is precedent-setting in terms of pension improvements at CPR.''

"I believe the agreement was ratified because it addresses a number of our members' issues and needs, particularly those related to benefits and pensions,'' said CCROU (BLE) International Vice-president George Hucker.

The agreement also renews gainsharing, a pay-for-performance program designed to improve customer service and safety as well as reduce costs.

"I am pleased that our employees ratified this agreement,'' said Rob Ritchie, CPR President and Chief Executive Officer. "It provides for productivity gains, and importantly, allows us to continue working together over the longer term to improve the operating and financial performance of the company.''

CPR currently has national agreements in effect with all of its Canadian unions, representing roughly 12,200 employees. Calgary-based CPR, a wholly owned subsidiary of Canadian Pacific Limited, provides rail transportation services over a 24,000-km network reaching most of the principal centers of Canada, as well as the U.S. Midwest and Northeast. It also serves key ports on the east and west coasts of Canada and the U.S.Eastern Seaboard, and is the only carrier that can move freight between Chicago and Vancouver over its own rail line.

WASHINGTON: Freight cars increase for 5^th straight year

WASHINGTON -- The total number of freight cars operating on the U.S. rail network increased for the fifth consecutive year during 1998 according to the Association of American Railroad's 1999 Railroad Equipment Report.

The fleet grew from 1,270,419 cars in 1997 to 1,315,667 in 1998. The aggregate capacity of the fleet increased from 122.6 million tons to 127.8 million, the sixth consecutive year it has increased.

Also increasing last year was the size of the locomotive fleet operated by Class I railroads. It grew from 19,684 units in 1997 to 20,261 in 1998. The aggregate horsepower of the fleet increased by 5.2 percent to 63.3 million h.p.

POLAND: Four killed in train accident

WARSAW -- A train hit a tractor pulling a hay-laden trailer over an unguarded crossing in central Poland on Tuesday, killing a couple and three of their children, police said.

A surviving 5-year-old daughter was hospitalized in serious condition after the crash at Owadow near Radom, about 60 miles south of Warsaw, police spokeswoman Grazyna Puchalska said.

The 39-year-old father was driving the tractor, pulling the trailer carrying his 35-year-old wife and four children, aged 4 to 11, when it was hit by a train heading from Radom to Warsaw, police said. Three of the couple's other children were at home at the time of the crash.