UTU News Digest - Wednesday, March 10, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, March 10, 1999

American workers productivity surges

WASHINGTON -- The productivity of American workers surged at a 4.6 percent annual rate during the final three months of last year, the best showing in six years.

The revised seasonally adjusted increase in output per hour of work at nonfarm businesses, reported today by the Labor Department, was even better than the initial estimate last month of 3.7 percent. It was the best gain since the final quarter of 1992.

For all of 1998, productivity increased a healthy 2.2 percent, a significant improvement over the 1.2 percent gain in 1997.

Productivity, after growing at nearly a 3 percent rate in the 1960s and early 1970s, slowed to an anemic 1 percent rate from 1974 through 1995. Since then, it's been growing at nearly a 2 percent rate, leading some economists to speculate that the economy has embarked on a new era of productivity growth, driven by computers and other high-tech innovations.

Economists consider healthy productivity gains the key to prosperity and rising living standards. Sizable gains mean companies can pay employees more, hold the line on prices and still deliver increased profits to shareholders.

In 1998, for instance, inflation-adjusted hourly wages and benefits jumped 2.6 percent, the largest gain in 12 years. At the same time, growth in unit labor costs, a key barometer of underlying inflation pressures, slowed. They rose 1.9 percent in 1998, compared with 2.3 percent in 1997.

Railroad faces crackdown on stopped trains

CHICAGO -- Stopped freight trains are causing delays as long as an hour along 127th Street in Blue Island and prompting officials to seek tougher fines and even criminal penalties against the offending railroads.

The delays are causing headaches for businesses--clogging residential roads and forcing motorists to seek alternate routes. Delays also create hazardous conditions for kids walking to schools by crossing through stopped trains, officials say.

"This has gotten past the point where we can tolerate this anymore,'' Mayor Donald Peloquin said. "It is having a negative effect on our community.''

Trains are stopping in the intersection for a variety of reasons, including to allow other trains to pass and because of a steep grade in the tracks near the site. The city has tried to address the problem in the past by fining the railroad companies for every violation, but Peloquin said that is not working. In January, 34 trains were ticketed for blocking the busy intersection.

Now, the mayor wants to begin fining the local train yard master and is considering revoking lucrative tax abatements that have been granted to the rail companies.

"We are faced with the same type of growth problems that everyone else is dealing with and are trying to figure out ways to minimize the conflict,'' said Mark Hinsdale, general

manager of the Chicago service lanes of CSX Transportation. "However, we cannot solve all those problems overnight. We still have an obligation to move the nation's cargo.''

The rail company has instituted some changes to its policy, including not bringing trains into the area that are not cleared to proceed without stopping and trying to fix outdated tracks.

But Hinsdale said that because of tremendous growth in the suburbs, a stopped train will inevitably be blocking a grade crossing somewhere. State Rep. Jim Brosnahan (D-Evergreen Park) said if no progress is made he will consider legislation that would allow criminal charges against rail companies that chronically obstruct grade crossings.

"Our fear is that it will take a terrible, terrible accident before something gets done,'' he said.

Officials push $3.5B Trans-Hudson tunnel

NEW YORK With overcrowded trains and delays looming soon for rail passengers heading into New York's Pennsylvania Station, a coalition of state and federal officials is pushing for construction of a multibillion dollar rail tunnel into the city.

The effort is aimed at avoiding a midtown meltdown after 2002, when the country's busiest train station will be at capacity. Hoping to ease jams at Penn Station and on the trains themselves, officials are pushing the ambitious tunnel project -- expected to cost $3.5 billion to $5 billion -- as well as a plan by NJ Transit to buy 400 new rail cars, including 200 double-decker models.

Every day, 41,650 of NJ Transit's 94,000 train riders head into Penn Station. By 2010, that number is expected to jump by 53 percent -- to 63,800 riders.

"Ridership at NJ Transit has shocked even the agency," said Rep. Robert D. Franks, R-New Providence, who will introduce legislation today in Washington that could set the stage for funding the colossal tunnel project, the second rail tunnel under the Hudson River.

Rail service into Manhattan won't deteriorate overnight, Franks said, but "it'll be a slow decline unless we increase Trans-Hudson capacity and create more slots."

Penn Station's track slots -- or spaces for trains to pull in -- will be at capacity when the Secaucus Transfer rail project opens in 2002. That means that after 2002, there will be no room to add train service in peak periods. A new tunnel could potentially almost double the existing 25-slot capacity, officials said.

The Secaucus Transfer will enable Main/Bergen, Port Jervis, and Pascack Valley line riders from Bergen, Passaic and New York counties to transfer to Penn Station trains.

"Your capacity [at Penn Station] is gone within the next four years," Franks said during a news conference Monday at the headquarters of the North Jersey Transportation Planning Authority in Newark. "Without a major investment in long-term improvements, commuters will face long delays and overcrowding. The capacity crunch is right around the corner."

There are several reasons for this, including the popular Midtown Direct service to New York. Other projects -- including the Secaucus Transfer and the Montclair Connection, which will open by 2001 -- will generate even more riders.

In addition, Amtrak's Metroliner service to Penn Station is expanding later this year to include the New York-to-Boston corridor, and the Long Island Railroad plans to introduce dual-mode locomotives and bilevel trains that will allow commuters to ride into Penn Station without transferring.

As ridership continues to grow, seating will become a bigger problem, NJ Transit acting Executive Director Stanley Rosenblum said. There are roughly 2,600 riders on NJ Transit's lines who are forced to stand, and by 2005, that number would jump to 12,832without new rail cars.

On Thursday, NJ Transit's board will hear details of a $1.3 billion plan to buy 200 rail cars and 40 locomotives by 2002, and another 200 double-decker rail cars and 17 locomotives by 2004.

More seating, along with other track and signal improvements, could provide some relief in the short-term, with the tunnel providing longer-term benefits. However, officials admitted that the tunnel's price tag is huge, and there is no guess on when it might be under construction.

"Five billion is a big number, but not in comparison to the economic development it [the tunnel] drives, and the benefit to the region," Rosenblum said. "What you see here is maybe daunting as an investment by one state, but it's an investment by many states."

Officials envision a broad-based effort that would include New York State and Connecticut funding of the tunnel project. Franks today plans to introduce a bill that would create a way for the federal government to help fund vital such regional transportation projects as the Trans-Hudson tunnel.

"It's not just a New Jersey problem, it's a regional problem," said James Weinstein, the state's transportation commissioner.

If the program is authorized by Congress, the federal government would pay for the engineering work, plus half of the cost of any project.

Amtrak Northeast chief plans better service

PHILADELPHIA --When he was 5 years old, Stan Bagley Jr. took a ride on a steam locomotive. The ride launched a love of trains and railroad people that has propelled Bagley up through the ranks of Amtrak, the national passenger railroad, to president of its Northeast Corridor Division.

In his new role, Bagley will preside over the introduction of 20 new 150-m.p.h. trains that will streak between Boston and Washington by the end of next year, replacing today's premium-fare Metroliners.

Amtrak plans to use the new trains as a catalyst for a "Transformation 2000" initiative, which Bagley said will make the railroad "much more sensitive to our customers...We want to deliver not just a ride on a train but a good experience, with our reservation system, on our trains, in our stations...We want to help them with everything along their journey."

Bagley takes over the Philadelphia-based operation from George Warrington, who in December became chief executive of Amtrak. Since 1994, Bagley has been the division's vice president for operations, and by his own estimate he already knows about half its 12,000 employees.

"I've been there in clear weather and bad weather, and worked shoulder-to-shoulder with these people and have a good appreciation for them," he said.

The Northeast Corridor division's main responsibility is the high-speed line from Boston to New York, Philadelphia and Washington. But it also is responsible for service between Philadelphia and Harrisburg; New York City and Albany, Buffalo, Montreal and Toronto; and south from Washington to Richmond and Newport News in Virginia.

Bagley grew up in Massachusetts, the son of a lawyer and five-term state representative. After graduating from the University of Tampa, Bagley served in the U.S. Air Force in Vietnam, then joined Amtrak in the operations department in 1974.

In 1993, Amtrak sent him to a four-month management development program at the Harvard University Business School.

A short time later he was put on a committee, headed by Warrington, to plan how the Northeast Corridor would become a separate division of Amtrak, and design how it would work. Soon after Warrington was named division president, he asked Bagley to be his operations vice president.

Bagley said he has seen Amtrak grow from a rigid government agency created to preserve passenger-rail service into a streamlined "customer-focused business."

"The thing I like best about working here is the people," he said. "I like the customers and the employees. It is a wonderful feeling, almost like a family."

California boasts most aggressive drivers

WASHINGTON -- Aggressive driving is worst in places where sprawling development and poor mass transit planning force drivers into their cars, according to a group of environmental activist groups.

A survey released Monday by the Surface Transportation Policy Project, a group backed by 200 environmental groups including several Sierra Club chapters, found that the Riverside/San Bernardino, Calif., region had the highest number of aggressive driving deaths in 1996, an average of 13.4 deaths per 100,000 people.

Boston was best, with only 2.1 aggressive driving deaths per 100,000 people.

"The endless strip malls and high-speed roads we're building seem to be breeding ground for aggressive driving," said Roy Kienitz, executive director for the group that advocates mass transit alternatives to traffic congestion.

A community like Boston, the Surface Transportation Policy Project believes, has a lower rate because it offers commuters options like the subway, commuter trains and an extensive sidewalk network.

The Riverside/San Bernardino area, by contrast, is near Los Angeles, a region with few mass transit options, overcrowded freeways and a tradition of driving vast distances, the project says.

Vice President Al Gore told 20 traffic reporters invited to Washington for a news conference that he wants the Federal Communications Commission to establish a national "N11" hotline -- using the numbers 211 or 511 -- that would give drivers immediate transportation and traveler information, such as road conditions and bus schedules. Unlike 911, it would not be used for life-threatening situations.

The aggressive driving report was criticized by The Road Information Program. The Washington road-building group noted a recent AAA survey in which motorists said aggressive driving is triggered by congestion and slow-moving traffic -- evidence of the need to build more roads.

Mexico looking for short line sales

MEXICO CITY -- With the most attractive Mexican rail lines already sold, it is now a buyers market for the few remaining short lines, the Journal of Commerce reported. Many of the lines being privatized by the government are drawing single bidders.

The Mexican government wants to sell as many of the short lines as possible this month before shutting down Ferrocarriles Nacionales de Mexico. FNM is the former state railroad now scheduled for closing in September. Its remaining functions will be handled by a newly created regulatory agency.

Because demand is limited, the plan is to repackage some of the remaining lines and invest in others to make them more attractive to buyers. Several of the short lines were sold in 1997 but winning bidders failed to raise the capital to take control. Now the companies that operate main line track are eyeing the short lines but are doing so cautiously.

For example, Ferrocarriles del Sureste (Ferrosur) turned down the opportunity to purchase the Mayab Line connecting the chemical and petroleum port of Coatzacoalcos to the Yucatan city of Merida. However, if that line is bundled with track in the southernmost state of Chiapas, there might be interest.

"We said the Mayab Line as represented in the package that we bought doesn't make sense. That's why for now we declined to take it over," said Frantz Guns, general director of Ferrosur, a subsidiary of Mexican construction giant Tribasa.

The day after Mr. Guns made his remarks, FNM director Ramiro Sosa said the Mayab line would be packaged with the Chiapas line that runs from Oaxaca to Tapachula at the Guatemalan border. Ferrocarril Mexicano (Ferromex), the joint venture between Grupo Mexico and Union Pacific, also sees weak demand.

"The ones that are attractive are already gone," said Juan Manuel Correa, who heads commercial operations for Ferromex. However, Mr. Correa said his company is interested in the Nogales-Nacozari line, which primarily serves the mining traffic of Grupo Mexico -- which holds 74% ownership of Ferromex.

Ferromex made a earlier bid that did not meet the government's minimum asking price, but Mr. Correa said the government underestimated the investment needed in the line. The company is resubmitting a project that includes a lower purchase price and a higher investment commitment.

The interest of Transportacion Ferroviaria Mexicano lies in the Puebla-San Lorenzo line.

However, the company said that the line needs extensive modernizing. Some of the track dates back to 1910, and informal flea markets take place on the track. "Market owners have to pull back their tarps to allow trains to pass by," said TFM Chief Financial Officer Mario Gonzalez. "It reminds me of how far we have come with the rail privatizations."

Other lines to be privatized include the Oaxaca railroad and the Tijuana-Tecate line near the California border cities of San Diego and Calexico.

If the government does not receive bids that exceed a minimum price for any of the lines, in June the lines will incorporate into a newly formed company that will operate the trans-Isthmus line. That line connects the Pacific port of Salina Cruz to the Gulf port of Coatzacoalcos.

The Isthmus line is slated to remain in government hands because it represents an important sovereignty issue for the country. However, there have been rumors that it will eventually be privatized.

Amtrak CEO: New Northeast service to fuel self-sufficiency

NEW YORK (Dow Jones) -- Amtrak's new high-speed Northeast Corridor service will lead the railroad to financial self-sufficiency by 2002, according to Chief Executive George Warrington.

"The high-speed program in the Northeast, when operating on a full annual basis, will generate a net contribution of $180 million a year minimum," Warrington told CNBC Tuesday.

"That, coupled with getting very aggressively into the mail and express freight business on our trains, is going to make the difference between just surviving and growing and profiting," he added.

As reported, Amtrak announced Tuesday that, in October, it will start running 20 new high-speed trains to cut travel time between Boston and New York to three hours and New York-Washington trips to 2 1/2 hours.

Warrington also dismissed a suggestion that Amtrak would be privatized once it reached profitability. "We have a public policy responsibility to offer a national system," he said. The government-run railway plans to use profits from the high-speed service to offset unprofitable long-distance service, he said.

Illinois: Ryan appoints transit task force members

SPRINGFIELD, Ill. -- A 10-member task force will study Illinois' transportation system this spring to determine what repairs are most important and need to have state money spent on them now.

Gov. George Ryan previously appointed leaders for his Infrastructure Task Force. Today, he appointed members and asked them to make their recommendations for improvement by May 1.

Task Force members are John Buck of Chicago, Diane Cullinan Edwards of Peoria, Glen Harston of Chicago, Jim Kenny of Wheeling, Peter Mesha of Oak Brook, John "Buddy" Ruel of Chicago, Kehar Soodan of Chicago and Donald Zeilenga of Wheaton.

It is headed by John E. Glennon of Lake Forest, a former investment banker, and Ed Bedore of Springfield, a government consultant who once was budget director to Chicago Mayor Richard M. Daley.

The task force will hold three hearings across Illinois to allow people the chance to express their views on which appointments are most important. Status of roads, bridges, rail, mass transit, airports, sewers, water supplies and wastewater treatment all will be studied by the task force.

Professional associations and local government officials will be asked for their views, as well as their suggestions on how such repair projects should be paid for. "They will evaluate and prioritize Illinois' infrastructure to make sure this state is up to date in all areas to enhance our quality of life," Ryan said.

Ryan proposed the task force when he presented his budget plan for the upcoming state fiscal year, which begins July 1. The General Assembly and Ryan will have final say over which projects will actually be priorities for state spending.

Canadian Pacific Rail/CWB reach out-of-court settlement

WINNIPEG -- The Canadian Wheat Board (CWB) and Canadian Pacific Railway (CP) Ltd. have reached an out-of-court settlement in the dispute over the shipping problems experienced during the 1996-97 (Aug-July) crop year. The value of the settlement, payable to the CWB and be distributed to western Canadian producers, was pegged at roughly Cdn$15 million.

The settlement will be paid to the CWB in calendar year 1999 and 2000, the CWB said in a prepared statement.

In addition, under the terms of the agreement, the CWB will discontinue its lawsuit against CP. This is a no-fault settlement.

Rob Ritchie, president and CEO of CP along with Greg Arason, president and CEO of the CWB in a joint release said the settlement was negotiated in good faith, recognizing that farmers were negatively affected by the events experienced during the crop year in question, and that weather was a contributing factor.

"We are pleased that this settlement allows us to put the events of 1996-97 behind us. We look forward to working with CP on developing business solutions that benefit farmers and customers," Arason said.

"Canada's exports are at a 10-year low and prices are dramatically reduced. Now that a lengthy civil suit has been avoided, we can focus our full attention on moving farmers' grain," Ritchie said.

The out-of-court settlement follows a court approved extension that was granted Feb 23. Both CP and the CWB had sought the 21-day extension in order to pursue discussions on a settlement and to prepare court cases.

The CWB on Dec 23, 1998 filed a statement of claim with the Federal Court of Canada against CP for breach of service during the winter of 1996-97. The CWB alleges CP's poor service during that winter cost western Canadian producers an estimated Cdn $45 million.

Out-of-court discussions were held before the CWB filed its statement of claim in the court, CP said. However, those talks failed to resolve the issue. In a ruling issued Sep 30, the Canadian Transportation Agency (CTA) decreed that CP failed to meet its service obligation regarding the delivery of grain to major corridors and that there was "undue discrimination" against product moving to the Port of Vancouver in British Columbia during the harrowing winter of 1996-97.

Detailed in the claim are costs and expenses--including items such as demurrage, additional carrying charges, loss of premium prices—totaling over $25 million, and a claim for $20 million relating to the loss of business, and injury to economic relations, good will and reputation.

The CWB originally filed a level-of-services complaint with the CTA in Ottawa on Apr 14, 1997 against both of Canada's major freight carriers, but reached an undisclosed commercial agreement with Canadian National Railway Co. (CN) shortly after hearings began Mar 30, 1998. The hearings lasted until Jun 5.