UTU News Digest - Thursday, April 1, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, April 1, 1999

(There will be no News Digest Friday due to the Holiday)

FLORIDA: CSXT, Union Pacific reach historic interchange agreement

JACKSONVILLE, Fla. -- CSXT and the Union Pacific Railroad Co. signed an agreement to streamline east-west rail traffic through major gateway connections. Terms weren't disclosed.

In a press release Wednesday, CSX Transportation said the two railroads will use pre-planned, mutually beneficent gateways to match CSX Transportation's expanded network with Union Pacific's system.

As reported in The Wall Street Journal Feb. 9, Union Pacific, which continues to recover from massive congestion and shipment delays, recently coordinated similar train dispatching in key areas with its rival, Burlington Northern Santa Fe Corp. CSX said it expects transition to the new routing to take six months to a year.

Although railroads traditionally "pre-block" freight cars for connecting railroads, this is the first time the process will use a formal, structured plan to direct flows through the most advantageous gateways, which will speed traffic and maximize the use of each interchange point.

"Customers will be the big winners as a result of this cooperative effort between our two railroads," said Aden Adams, senior vice president-merchandise sales and marketing at CSXT. "This agreement means each railroad will be able to offer run-through service at key gateways, eliminating delays and improving cycle time on these movements."

"It is very important that Union Pacific be able to move freight across the country as seamlessly as possible," said Jack Koraleski, UP executive vice president-marketing and sales. "This agreement will organize our traffic, allow us to do better planning and make the best use of our system."

CSXT's and UP's major interchange points are Chicago, St. Louis, Salem, IL, Memphis and New Orleans. Transition to the new routing is expected to take six months to a year.

ILLINOIS: Decision on trucker’s license due today

SPRINGFIELD, Ill. -- The Illinois secretary of state's office will reveal later today whether the truck driver involved in the fatal Amtrak crash two weeks ago will lose his driver's license.

John Stokes was driving the semi that was on tracks in Bourbonnais when a train slammed into it killing 11 people. Stokes was driving on a provisional license at the time because of previous moving violations. The secretary of state's office has revealed that Stokes was charged with an additional serious traffic offense for which he was given court supervision and should not have been issued the provisional license.

WASHINGTON: Some minor disruptions expected with Conrail split

WASHINGTON -- CSX Corp. and Norfolk Southern Corp. are bracing for minor service snags as they prepare to split Conrail routes between them two months from today.

Seeking to play down the significance of any problems, officials from the two companies said Wednesday that the transition will not be error-free and that disruptions are inevitable.

They said they have maximized planning and capacity so that any problems do not lead to a service meltdown similar to one that faced Union Pacific Railroad following its 1996 merger with Southern Pacific Rail Corp.

"We expect things will go bump in the night, so we have contingencies ... and more assets and people than you really need," said John Snow, CSX chairman and chief executive.

Slowdowns will occur in the first several hours of the transition as computers are shut down and reprogrammed, forcing a temporary shift to manual operations, Snow said.

The $10.3 billion takeover of Philadelphia-based Conrail by CSX and Norfolk Southern, now scheduled for June 1, has come under scrutiny because of the Union Pacific problems.

Snow likened the adverse effects from the computer shutdown and other, unforeseen problems to those of "a freak ice storm that slows the railroads for a little while."

"If we fail there is no doubt we will set railroading back a long way and we will invite enormous government attention to the industry," Snow said.

Rail gridlock in the East this year would be particularly inconvenient for the rail industry as Congress is weighing whether to give shipper interests more weight in reauthorizing the Surface Transportation Board that oversees rail mergers and dispute between railroads and shippers.

Snow said Union Pacific's success in restoring western rail service had helped the industry's cause. "We are confident the improved service pattern will take some steam out of re-regulation efforts," he said.

The Union Pacific gridlock in the West and Midwest lasted several months and caused major delivery delays. It spawned several lawsuits by shippers and a drive in Congress to give federal regulators more oversight over the rail industry.

Norfolk Southern spokeswoman Susan Terpay said her company had contingency and backup plans to address problems as they occurred.

Teams from Conrail, CSX and Norfolk Southern will spend the next several weeks testing their computer systems and running through scenarios that could cause problems.

The deal, approved by the federal Surface Transportation Board last summer, is the most complex and most extensive rail transaction in U.S. history, covering nearly 45,000 miles of tracks among the three railroads.

WISCONSIN: Residents back trains in survey by railroad

MILWAUKEE -- Most Wisconsin residents support the use of limited state funding to expand passenger train service, according to a statewide poll commissioned by a railroad that wants $75 million in public money to do just that.

Wisconsin & Southern Railroad Co., which is working with Amtrak on a plan to run passenger and express-freight trains from Madison to Chicago, said 56% of poll respondents support spending up to $100 million in state money to upgrade tracks and buy trains for new or expanded passenger rail service.

But that support falls as spending levels rise, with 31% backing spending up to $150 million and only 4% supporting spending up to $250 million. Another 11% didn't want to spend anything, and 33% voiced no opinion.

The Milwaukee railroad also said 84% of residents polled support a Madison-to-Chicago line, with equal support for a Madison-to-Milwaukee line, 81% support for a Milwaukee-to-Green Bay line and 77% support for an Eau Claire-to-Twin Cities line. Also, 88% support upgrading Amtrak's current Milwaukee-to-Chicago service.

Chamberlain Research of Madison conducted the telephone survey of 600 residents, distributed proportionately statewide, from Jan. 27 to Feb. 11. Its results have a margin of error of 4 percentage points in either direction.

Wisconsin & Southern announced last July it was discussing a Madison-to-Chicago line, dubbed the Wisconsin Express, with Amtrak. Those discussions are continuing, Wisconsin & Southern lobbyist Jeff Wiswell said.

Separately, Gov. Tommy G. Thompson has thrown his support behind the $3.47 billion Midwest Regional Rail Initiative, a nine-state effort to create a Chicago-based network of fast and frequent trains. That plan would run high-speed trains to link Milwaukee, Chicago, Madison and the Twin Cities, with regular-speed service from Milwaukee to Green Bay.

Wisconsin Central Ltd. and Amtrak also are discussing passenger and express-freight service from Milwaukee and Chicago to Fond du Lac. No one has proposed service from Eau Claire to the Twin Cities, but Wiswell said it was included in the poll because of population growth in northwestern Wisconsin.

TEXAS: Capital Metro might build light rail system

AUSTIN, Texas -- The Board of Directors of Capital Metro, which has flirted with the idea of passenger rail for more than a decade, agreed Monday to ask Austin-area residents to vote by November 2000 on a public transportation system that could include light rail.

What they haven't decided, saying they want to await the results of a lengthy campaign to seek public opinion, is just what sort of system they'll offer voters. Options could range from several different rail routes to a system of dedicated bus lanes.

"To me, that probably will flow out of the public process," said Board Chairman Lee Walker.

Capital Metro board members say that although they've promised all along to let the voters decide, Monday's step is significant because it commits them to a referendum.

But it's also an attempt to stave off legislative action, including a bill by state Rep. Mike Krusee, R-Round Rock, to determine just what voters should decide. Krusee's bill would call for a referendum in November and would allow voters to decide whether to spend a quarter-cent of Capital Metro's one-cent sales tax levy on light rail and on the proposed Texas 130 highway.

It's unclear whether committing to a referendum by a certain date will garner more support for Capital Metro in the Legislature. "My hope is it will be helpful," Walker said. "I have no idea what the effect on the Legislature is going to be."

FLORIDA: IC's McPherson leaving for Florida railroad

ST. AUGUSTINE, Fla. -- Illinois Central President John McPherson is leaving the carrier and is scheduled to move to Florida East Coast Industries Inc.

Mr. McPherson, with 32 years of rail industry experience, will become executive vice president of rail operations at FEC Industries in St. Augustine, Fla., on July 1, the same day the $2.4 billion merger with CN is completed. He also gains the title of chief operating officer of Florida East Coast Railway. That carrier operates between Jacksonville, Fla., and Miami. Marshall Deputy, senior vice president of transportation, currently is responsible for FEC rail operations.

Mr. McPherson will be the second top executive to leave Illinois Central. Donald Skelton, senior vice president of marketing and sales, departed last year. Both executives were part of a group of 29 senior managers who were granted severance packages with up to three years' salary, incentive pay and enhanced pension benefits.

Mr. McPherson, 52, spent one year at the helm of IC, considered to be North America's most efficient railroad because its operating ratio was below 70% for most of the 1990s. Mr. McPherson began his railroad career in 1966 as a switchman on the Santa Fe Railway. He held a variety of positions in the operating department including trainmaster, superintendent and regional manager before becoming assistant vice president of operations. He left that post in 1993 to become vice president of operations at IC.

CANADA: Canadian Pacific completes $220 million issue of shares

CALGARY -- Canadian Pacific Limited announced today that it has completed the issue of its 5.65% Cumulative Redeemable First Preferred Shares, Series A. The company arranged the issuance and sale of eight million eight hundred thousand preferred shares at an issue price of $25.00 per share. The issue, arranged through a group of underwriters led by Nesbitt Burns, raised gross proceeds of $220 million.

The First Preferred Shares Series A carry an annual dividend of 5.65%, payable quarterly. The preferred shares, which are rated P-2 by CBRS and Pfd-2 by DBRS, have been accepted for listing on the Toronto, Montreal and Alberta stock exchanges. Proceeds from the issue will be used to reduce outstanding short-term debt and for general corporate purposes.

This announcement does not constitute an offer to sell or the solicitation of any offer to buy the securities in any jurisdiction. The securities have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States except pursuant to applicable exemptions from the registration requirements.

ENGLAND: Royal train could be rented

LONDON -- The royal train could be rented out for corporate trips in a plan to cut its annual $2.4 million operating costs, The Times reported Wednesday.

Under the plan, companies and charities will be allowed to hire the train for events "deemed to be in the national interest,'' the newspaper said.

Requests would first be made to Buckingham Palace and then approved by the deputy prime minister, the newspaper said.

According to the newspaper, the proposal is part of a cost-cutting arrangement Buckingham Palace has agreed with the government that also involves hiring the train to Prime Minister Tony Blair and his ministers.

"This is an opportunity to recoup the costs of running the train, which is underused,'' The Times quoted a Buckingham Palace spokesman as saying.

Palace officials have been under pressure to scrap the train as part of a program to trim the royal family's budget. The train was used just 19 times in the last financial year and the average journey cost $107,000. The train is mostly used by Queen Elizabeth II and her heir, Prince Charles, for long overnight journeys to northern England and Scotland.

The office of Deputy Prime Minister John Prescott, said the train already has been rented out once -- by Prime Minister Tony Blair's wife, Cherie, who used it to entertain wives of leaders of the world's leading industrialized nations during a summit last year.

CENTRAL AMERICA: No celebration for Chiquita’s 100th

SAN JOSE, Costa Rica -- Not everyone in Central America is celebrating the 100th anniversary of the United Fruit Company, today known as Chiquita Brands.

Trade unions and non-governmental organizations (NGOs) in Costa Rica, affiliates of the umbrella organization "Foro Emaus," sent the company a message protesting its lack of respect for the freedom to organize.

They also demanded that the problems of sterility and congenital malformations associated with the use of the DBCP agrochemical be addressed.

In Guatemala, arrest warrants have been issued for some 80 union leaders, who protested widespread lay-offs in the wake of hurricane Mitch, which churned through the region in late October and early November, causing more than 10,000 deaths and billions of dollars in losses.

Trade unions in the region maintain that beyond the real damages caused by what has been described as the worst Atlantic storm in 200 years, Mitch is also being used by companies as a convenient excuse to sack workers.

The arrests of four union leaders were reported yesterday. One of the detainees was Jorge Estrada, coordinator of the USTG's "Asesoria Juridica Sindical" (trade union legal advising office). Another union, "Unidad de Accion Sindical y Popular" (UASP), has threatened to hold street demonstrations and take other measures to protest the arrests.

UASP leaders said the detentions were in line with "government directives in concordance with the owners of the banana plantations" of the eastern Guatemalan Department of Izabal, where the largest plantations in the country are concentrated.

Irene Barrientos, with the "Union Sindical de Trabajadores de Guatemala" (USTG), said her organization was unable to prepare any protest activity against Chiquita due to the difficult situation in which it presently found itself. But she added that the union would take action "in the future, and by surprise."

But she told IPS that although Cobigua -- the name under which Chiquita Brands operates in Guatemala -- had dismissed half of its 6,000 workers, it had begun to rehire them as the plantations have been restored to operating condition.

Massive lay-offs also came close to occurring in Honduras, where the Tela Railroad Company, a local subsidiary of Chiquita Brands, suspended 7,500 of its 10,000 workers in the wake of Mitch’s devastating visit, which cost Honduras the equivalent of two years of banana production.

Tela Railroad had originally planned to sack the 7,500 employees in November. It refrained, however, due to protests by the union movement and pressure from the Honduran government, which demanded a show of reciprocity for the good treatment the company had received at the hands of the state.

Just days before the company announced its plans for the massive lay-off, for example, Congress approved a reduction in export duties from 50 to 10 cents per box of bananas. In the end, Tela Railroad decided to extend a family allowance to the suspended workers for six months, after which it would rehire them to work on reconditioning plantations.

In Costa Rica, the NGOs and unions linked in the Foro Emaus planned to mark the 100th anniversary of United Fruit/Chiquita Brands with a series of 100-minute rallies, said Oscar Boschini, in charge of public relations in the "Coordinadora de Sindicatos Bananeros."

The statement released by Foro Emaus complained that "both on the plantations owned by the company and on those with which it does business, labor and environmental situations can be seen that are neither appropriate nor fitting for a company that is turning 100 years of age." The umbrella organization also demanded attention to the serious health problems associated with the use of the agrotoxic DBCP.

With respect to labor relations, the message stated that "it is impossible on your plantations to get anyone to join the union, because they are immediately dismissed. Union leaders suffer ongoing and constant persecution." Boschini said that in Costa Rica, "the labor rights of workers are violated minute by minute."

He pointed out, for example, that workers had seen virtually no increase in their real wages over the past 10 years, because the raises decreed by the government only apply to workers who are paid a daily wage, while most workers are paid on a piecework or by-the-job basis.

Boschini also underlined that "when unions submit an affiliation request to the companies, to get the union fee discounted from the worker’s pay, the companies take measures for dismissal." He added that this did not only happen in Chiquita Brands, but in all of the banana companies operating in Costa Rica.

Chiquita Brands, for its part, stressed in a written report that it provided direct employment in Costa Rica to 6,300 workers, whose wages were twice the national average for agricultural laborers, and all of whom were entitled to medical care, labor benefits and long-term disability coverage.

The benefits mentioned by the firm were child-care centers set up on plantations along the Atlantic coast, which, according to Chiquita Brands, have helped stabilize employment, housing, schools and basic services at subsidized rates for workers and their families.

The company also pointed out that it contributed an annual $200 million in wages to the economy of Costa Rica, paid social security contributions, local taxes and export duties, purchased local goods and services, and bought fruit from associated producers.

Costa Rican historian Gerardo Contreras said the process of consolidation of the big banana monopolies in the 20th century was far from rectilinear, as demonstrated by the various names under which United Fruit has operated.