UTU News Digest - Friday, September 25, 1998

UTU Daily News Digest

Information of interest to operating railroad and transportation employees
For
Friday, September 25, 1998

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USS/Kobe Steel to hire "ghost company" to handle rail operations

LORAIN – USS/Kobe Steel Co. is planning to switch to a company to handle its rail in-plant rail operations that doesn’t yet exist and is being created to specifically rid the plant of a unionized railroad, the United Transportation Union has learned.

The Lake Terminal Railroad with 170 union employees has been the only railroad company to service the steel plant since 1894.

George Babcoke, president of USS/Kobe Steel, yesterday told the Cleveland Plain Dealer that his company needs to trim $80 million to survive so it's switching to a rail company that offers a competitive price.

However, Babcoke didn’t tell the newspaper that the rail company he is planning to switch to does not yet exist and does not own one piece of rail equipment nor have a single employee. He also did not say that the company, which sources inside USS/Kobe Steel say will be called Industrial Rail Switching Services, is being created on-site on December 28 to get rid of union railroad workers.

"There is no way a legitimate company like the Lake Terminal Railroad that cares about worker safety can compete against a ghost company that’s being formed to get rid of union workers," said Tim Smith, UTU general chairperson on the Lake Terminal Railroad. "Babcoke is a pretty good fiction writer, but we know the real story. There is no way any company can compete economically against a company that doesn’t yet exist."

Babcoke's remarks came a day after more than 200 people, including members of the UTU, UAW and USWA, rallied at Lorain City Hall to protest the unfair loss of the contract and about 170 jobs.

Community reaction to Babcoke’s plans to get rid of the Lake Terminal Railroad after 104 years of service have been overwhelmingly negative against him.

Babcoke falsely told Ohio’s largest newspaper that the work was competitively and fairly bid. He said USS/Kobe "challenged Lake Terminal Railroad to become a competitive supplier of transportation services or risk losing all or part of its business with us at the end of the 10-year agreement, which expires Dec. 28, 1998." Lake Terminal failed to meet the challenge, he said.

"We are a very competitive railroad on a level playing field," said Smith. "But when George Babcoke rigged the game to get rid of the Lake Terminal and its hard-working union workers, there is no way his false challenge can be met."

Amtrak board names Tommy Thompson chairman

WASHINGTON --The new board overseeing Amtrak voted Thursday to name Gov. Tommy Thompson of Wisconsin as its chairman and former Massachusetts Gov. Michael Dukakis as vice chairman.

Thompson, a Republican, served as a director of the national railroad from 1990 to 1994. Dukakis, the Democrats' 1988 presidential nominee, has been a longtime advocate of passenger rail in the Northeast.

Late last year, Congress told Amtrak to become self-sufficient by 2002. To help reach that goal, lawmakers approved a one-time capital investment of $2.2 billion.

President Clinton proposed an additional $621 million in subsidies for the fiscal year starting Oct. 1, and Congress is being asked to grant steadily declining subsidies until 2002.

Last year's reform legislation also reconstituted the Amtrak board, which held its second meeting on Thursday. Besides Thompson and Dukakis, the board includes Mayor John Robert Smith of Meridian, Miss., and Transportation Secretary Rodney Slater. The Senate has not confirmed four other nominees.

AAR: rail freight traffic shows gain for week ended Sept. 19

WASHINGTON – Double-digit gains in loadings of motor vehicles and equipment and crushed stone, sand and gravel helped push freight traffic on U.S. railroads during the week ended Sept. 19 ahead of year-earlier levels, the Association of American Railroads (AAR) reported today.

Carload freight totaled 362,237 cars, up 2.3% from the comparable 1997 week, with loadings up 2.9% in the West and 1.7% in the East.

Intermodal traffic, which is not included in the carload data, totaled 182,810 trailers and containers, up 0.5% from last year.

Total volume was estimated at 27.4 billion ton-miles, up 3.4% from the corresponding 1997 week.

Motor vehicle and equipment volume was up 24.9% from last year during the week, and loadings of crushed stone, sand and gravel registered a 16.1% gain.

On the downside, coke volume was off 24.9%, primary forest products declined 14.4% and metallic ores trailed last year by 11.2%.

AAR also reported the following cumulative volume for the first 37 weeks of 1997: 12,920,627 carloads, up 2.1%; 6,208,212 trailers and containers, 0.5% ahead of last year; and total volume of an estimated 971.0 billion ton-miles, up 1.1% from last year. Railroads reporting to AAR account for nearly 93% of U.S. carload freight and 98% of rail intermodal volume.

Railroads provide about 40% of the nation's intercity freight transportation, more than any other mode, and rail traffic figures are regarded as an important economic indicator.

Canadian railroads reported a drop in both carload freight and intermodal during the week ended Sept. 19. Canadian carload volume totaled 55,313 cars, down 0.8% from last year.

Intermodal volume totaled 27,273 trailers and containers, down 0.4% from the comparable 1997 week. Cumulative originations for the first 37 weeks of 1998 on the Canadian railroads totaled 1,906,232 carloads, down 3.5% from last year, and 953,790 trailers and containers, up 4.6% from last year.

Combined cumulative volume for 37 weeks of 1998 on 19 reporting U.S. and Canadian railroads totaled 14,826,859 carloads, up 1.3% from last year and 7,162,002 trailers and containers, up 1.1% from last year.

Opinion: Europe’s railroads missing opportunity

BRUSSELS -- Europe's railroads are missing an opportunity offered by the single market to pull their networks together into a seamless unit, European Transport Commissioner Neil Kinnock said.

He spoke Wednesday to the first-ever gathering of rail executives from two dozen European countries, who met here to consider ways to unify their disjointed systems. Kinnock has mounted a so-far-unsuccessful crusade to unify railroads within the European Union and make rail freight more competitive.

His efforts have been stymied by protectionist national governments and rail operators, and by a variety of technical problems, ranging from language barriers to differences in track gauge and inconsistencies in electrical and signaling systems and operating procedures.

He said that while there are signs of movement toward a competitive system -- in particular, the separation of infrastructure and rail-operating companies -- the rail freight industry is still in danger of disappearing in Europe.

"If we keep getting this continued defensive attitude from a once-great industry, we will be going to hell in a handcart," Kinnock said.

The meeting, which attracted about 150 executives from about 20 railroads, was organized by Railtrack, the company that owns Britain's rail infrastructure, and by Eurotunnel, the binational company that operates the Channel Tunnel.

EU rail freight volumes have declined 14.6% in the last 25 years, while road freight has increased by 22.8%. During the same period, the scope of the rail network has declined to 97,500 miles from 106,250 miles, while the highway network tripled to 28,960 miles from 9,940 miles.

Japanese railway execs, U.S. politicians, oppose debt plan

TOKYO -- Japanese railway executives are fighting a government plan to impose newly discovered state debts on the nation's recently privatized railroad system, and they are finding some unlikely allies: U.S. lawmakers and investors.

At the heart of the fight is the government's move to try to get the Japanese railway companies, privatized in the mid-1980s, to shoulder more of the old state railways' unfunded pension liabilities than had originally been agreed. Prime Minister Keizo Obuchi and his Liberal Democratic Party late last year demanded that East Japan Railway Co. and its six sister companies absorb an additional 360 billion yen ($2.65 billion) in unfunded pension liabilities of the old national railways. Obuchi hopes to win legislative approval for the plan by the end of this month.

Executives of the railway companies, led by JR East's president, Masutake Matsuda, have complained that the plan makes them scapegoats for the government's problems. Three of the seven JR companies are publicly traded and have attracted significant foreign investment. That fact has caused this domestic Japanese debate to take an unexpected international turn.

U.S. Senators John Kerry, a Massachusetts Democrat, and Alfonse D'Amato, a New York Republican, have criticized the Japanese government's plan, as have foreign investors such as Starwood Hotels & Resorts Worldwide Inc. All complain that Tokyo is interfering with private companies by illegally changing the terms under which investors bought Japan Railway, or JR, stock. They want Obuchi to abandon the plan. Foreign investors collectively own 18% of JR East.

Outreach meetings in Houston on Sept. 29

WASHINGTON -- The Association of American Railroads (AAR) has scheduled the second in its series of customer outreach meetings for September 29 in Houston.

Union Pacific Corp. Chairman, President and Chief Executive Officer Richard K. Davidson, Surface Transportation Board Chairman Linda Morgan, and AAR President and CEO Edward R. Hamberger will all address the meeting.

The meeting will be held at the Hyatt Regency Houston Airport and will last from 8:30 a.m. until 4:00 p.m.

The outreach meetings were first proposed by railroads in April during Surface Transportation Board (STB) hearings in STB Ex Parte No. 575, which examined railroad service and competition issues. As part of its decision in Ex Parte No. 575, the STB directed the railroads to follow through on their proposal. Registration forms may be obtained by sending a fax to John Carroll at 202-639-5546.

More than 300 people attended the first meeting August 31 in Chicago. Additional meetings are scheduled for October 8 in Atlanta; October 22 in Newark, N.J.; and November 9 in Portland, Ore.

Intermodal sector is facing little growth

ATLANTA – Due to chromic rail service problems, intermodal transportation is flirting with a permanent loss of business people attending the Intermodal Association of North America meeting here this week were told by key executives from every corner of the transportation industry.

Rail intermodal volume has grown barely 1% this year after posting an average growth rate of 7% over the previous four years.

"The problem obviously is service," said Robert D. Krebs, chief executive of Burlington Northern Santa Fe Inc. "Customers are voting with their tires and have gone back to the highway. "If it doesn't get resolved soon, the consequences will be severe as customers make long-term decisions."