UTU News Digest - Monday, May 24, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Monday, May 24, 1999

WASHINGTON, D.C.: Transportation bill mark up expected Tuesday

WASHINGTON -- Amtrak supporters expect Sen. Richard Shelby's (R-Ala.) appropriations subcommittee on transportation to mark up its fiscal 2000 funding bill on Tuesday afternoon, May 25, and are mobilizing to petition their lawmakers for backing.

In particular, passenger rail proponents are hoping Congress will earmark at least $571 million for Amtrak, while giving the carrier the right to spend the money on both maintenance of way and maintenance of equipment.

The full committee, chaired by Sen. Ted Stevens (R-Alaska), likely will take up the bill Thursday morning. Also that day, there is a possibility the House Appropriations Subcommittee on Transportation, chaired by Frank Wolf (R-Va.), will mark up a House counterpart bill.

Those wishing to urge the lawmakers to support Amtrak can reach any congressional office by calling the Capitol switchboard at (202) 224-3121, or can visit the web site run by the National Association of Railroad Passenger (NARP) at http//www.narprail.org/links.htm#congress for ways to make contact by e-mail.

TEXAS: BNSF plans to cut 1,400 Jobs

FORT WORTH -- Burlington Northern Santa Fe Corp. (BNSF), the second largest U.S. railroad, said Friday it was slashing a total of 1,400 jobs, cutting capital spending and naming a new president as part of a plan to boost profits.

The railroad said the moves were aimed at cutting costs because revenues are slipping below year-ago levels. As a result, it said its second-quarter earnings will fall below both the current Wall Street consensus estimate of 60 cents per share and the 58 cents per share reported for the 1998 quarter.

Four hundred, or about 7%, of the railroad's salaried positions are slated for elimination by the end of the second quarter, and 1,000 hourly union positions will be scrapped by the end of 1999.

BNSF employs about 39,000 hourly union employees.

At the executive level, Matthew Rose, senior vice president and chief operations officer, was named president and chief operating officer, effective June 1. Robert Krebs relinquishes the title of president but remains chairman and chief executive.

"These steps that we announced today are necessary if we are to continue to make progress," Krebs said in a statement.

"In addition, if current revenue trends continue into the second half of 1999, these changes will cushion the impact on our profitability," he said.

Capital spending will be cut to boost cash flow and allow for a share repurchase, the railroad said.

Total capital spending in 1999 will be reduced by another $100 million to $2.275 billion. In April, the railroad said it would cut capital spending by $150 million.

In 2000, capital spending is expected to drop to $1.8 to $1.9 billion, Burlington Northern Santa Fe said.

Analysts characterized the planned job and capital spending cuts as a step in the right direction.

"It's a good thing because their traffic has been awfully weak," said Douglas Rockel, transportation industry analyst at ING Baring Furman Selz LLC. "Their revenues are lower than expected, so now they're going to try and hit the cost side a little bit."

Severance expenses will cost the railroad between six cents and eight cents per share but will be offset by 1995 merger-related severance reserves that have not been used, a railroad spokesman said.

The merger of Burlington Northern and Santa Fe Pacific Railroad in 1995 created a company with 34,000 route miles covering 28 states and two Canadian provinces.

CANADA: Composite Fiberglass Bus Makes Debut in Toronto

TORONTO -- North American Bus Industries Inc. (NABI) Friday rolled out what they are calling the transit bus of the new Millennium: the light-weight, fuel-efficient and long-life CompoBus, sporting a one-piece composite glass-fibre and polyvinyl resin body.

The futuristic, low floor vehicle made its debut before several thousand industry officials attending the City Transport Exhibit 99, sponsored by the International Union of Public Transport (UITP) at the Metro Toronto Convention Centre. The exhibit runs through Thursday, May 27.

"The CompoBus is the answer to the prayers of public transportation officials in North America and Europe," boasted Peter Rona, founding chairman of NABI. "They have asked for a bus that consumes less fuel, is kind to the environment, lasts a long time and is simple and easy to repair. CompoBus does it all."

The bus bodies are built for NABI by TPI Composites, Inc. of Warren, R.I., with materials commonly used in the construction of speedboats and yachts. TPI employs a patented, glass-fiber-reinforced resin molding process known as SCRIMP. The result, said Rona, is an exceptional strength to weight relationship. At 22,000 lbs.-- about 7, 000 lbs. lighter than a conventional bus -- CompoBus operates comfortably with reduced-power engines. Consequently, it consumes less fuel and emits less exhaust into the environment, Rona claimed.

The 40-foot prototype on display in Toronto is powered by a clean-diesel fueled engine and other standard systems, but CompoBus can also be paired with alternate-fueled power sources such as compressed natural gas (CNG) or the new hybrid technologies.

NABI also expects the CompoBus to cut expenses for fuel, tires and brakes by as much as 25 percent and to yield significant repair and corrosion savings. In small quantities CompoBus is expected to cost about 15 - 20% more than a conventional bus; however, under-full scale production, the price of a CompoBus should approach that of its conventional counterparts.

WASHINGTON, D.C.: DOT to name high-speed train finalists

WASHINGTON -- U.S. Department of Transportation (DOT) Secretary Rodney Slater is to announce next week that Baltimore, Pittsburgh, Atlanta, and other cities will share $12 million for studies on trains that can travel up to 310 mph, an official says.

A ceremony is scheduled Monday at the B&O Railroad Museum in Baltimore. Seven projects among 11 applicants will be picked for further studies, and one of those will be selected next year for development and construction.

The studies will look into the feasibility of magnetic levitation technology, which already is being tested in Germany and Japan. The so-called "maglev" trains use electromagnets to lift the train above ground and free it of speed-reducing friction.

While critics say the concept is largely unproven from a revenue-producing standpoint, supporters believe the technology has potential given a strong commitment from the federal government.

The effort got a boost last summer when President Clinton signed a transportation law that authorized $1 billion in federal money to explore and construct such a system.

A Federal Railroad Administration official, speaking on condition of anonymity, identified three of the selected projects Friday:

--A 40-mile system linking Baltimore and its airport with the main train station in Washington, D.C. The trip could take 16 minutes, compared with 40 to 50 minutes by conventional rail.

--A 45-mile system linking Pittsburgh's airport in suburban Coraopolis with the city of Pittsburgh and its eastern suburbs. Proponents eventually want to extend the system to Philadelphia, creating a two-hour Pittsburgh-Philadelphia trip that now takes eight hours on Amtrak.

--A 40-mile portion of the 110-mile Interstate 75 corridor between Atlanta and Chattanooga, Tenn. The system was proposed by Atlanta officials.

The federal official also said a fourth project would be in southern California, but did not specify which one. One proposal would link Las Vegas, Nev., with Anaheim, Calif. The other would connect the Los Angeles International Airport with March Air Force Base.

The Baltimore Sun first reported on some projects in Friday's editions.

The remaining proposals would link Port Canaveral with the Space Coast Regional Airport in Titusville, Fla.; Denver International Airport and Eagle County Regional Airport in Colorado; Hampton Roads and Richmond, Va., with Washington, D.C.; New Orleans with Houston; Birmingham, Ala. with Atlanta; and Huntsville and Decatur, Ala.

Maglev runs on basic magnetic principles: When two magnets are put together, opposite poles attract, similar ones repel. Either magnetic attraction or repulsion can be used to lift or push the car above the guideway. In both cases, the train moves as the magnetic field travels along the guideway.

WEST VIRGINIA: CSXT President cautions coal producers of re-regulation impact

WHITE SULPHUR SPRINGS -- Railroads and their customers must strengthen their alliance to turn back misguided attempts to re-regulate the nation's railroads, A.R. "Pete" Carpenter, president and chief executive officer of CSX Transportation Inc. (CSXT) told a national group of mining executives.

Speaking at the National Mining Association Annual Meeting today, Carpenter issued a clear warning about how re-regulation and excessive environmental regulation could threaten both industries. He pointed out that despite the recent market downturns in export coal, the overall coal market shows signs of promise.

Less encouraging, however, is the notion of re-regulating the railroads, which ignores the significant progress the industry has made since deregulation began with the passage of the Staggers Rail Act of 1980. Since Staggers, accident rates have decreased 70 percent, rail freight shipped on a tonnage basis has increased 49 percent and fuel efficiency has risen 60 percent.

Carpenter spoke about the findings of two separate studies, which confirm that under deregulation, coal shipping prices have fallen significantly since 1990.

* Resource Data International, a respected econometrics firm, found that since 1989, on a nominal basis, delivered coal prices declined more than power production costs. The report also shows that rail rates, measured on a constant dollar basis, have declined 31 percent since 1989, and 57 percent since 1981.

* A U.S. General Accounting Office study agreed with the RDI report, finding that real rates for coal shipments have fallen since 1990. Moreover, the GAO discovered that the average annual rate of decrease for coal was almost 8 percent in the 1990s -- between two and three times the rate of decline in the 1980s.

"We operate in a competitive environment because we know our customers have other choices," Carpenter said. "It's that simple."

He also noted the enormous investment required to operate and maintain the nation's rail infrastructure and equipment -- $100 billion over the past decade.

"As a result of this investment, the U.S. freight rail system is the most competitive in the world," Carpenter said.

Carpenter told the NMA that instead of focusing on the "phantom" issue of re-regulation, the coal industry should focus its efforts on refuting environmental claims that are not supported by quantitative scientific data.

"CSXT has been a strong defender of coal as part of the foundation of our nation's growth and industrial might," Carpenter said. "When ill-founded attempts are made that would force Americans to pay higher electric bills to light and heat their homes, we have been at your side."

Carpenter called on the NMA to once again stand with the rail industry, as it had 20 years ago to champion the cause of deregulation for railroads under the Staggers Act.

"For coal, as for rail, re-regulation is not a policy alternative," Carpenter said. "I have lived through the era of regulation. I am determined that we not go back that way again."

CSXT and its 28,000 employees provide rail transportation and distribution services over an 18,300 route-mile network in 20 states, the District of Columbia and Ontario, Canada. With the integration of Conrail, CSXT will continue to be the largest railroad in the Eastern United States, with a rail network spanning more than 22,000 route miles in 23 states and two Canadian provinces. CSXT is a business unit of CSX Corporation (NYSE: CSX), headquartered in Richmond, Va.