UTU News Digest - Wednesday, August 25, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, August 25, 1999

After crippling chaos, Union Pacific says it can see light

HOUSTON -- Some of the signs that Union Pacific Corp. is slowly making progress have to do with speed, like the long plume of grayish smoke trailing almost horizontally from a locomotive as it barrels along here at 50 miles per hour, according to Daniel Machalaba, staff reporter of The Wall Street Journal.

That would have been an uncommon sight around this hub in the troubled period of 1997-98, when hardly anything moved fast enough to generate more than fitful puffs. Union Pacific's merger with Southern Pacific Rail Corp. - melding two cultures, 53,000 employees, 7,000 locomotives, 155,000 freight cars and 36,000 miles of railroad routes covering the western two-thirds of the U.S. - had turned into a nightmare. Freight service had collapsed, stranding Midwestern crops, snarling West Coast ports and delaying shipments of goods from chemicals to paper. A string of fatal accidents had the Federal Railroad Administration blaming a "fundamental breakdown" in safety.

The job of addressing the mess fell to Richard Davidson, Union Pacific's chairman and chief executive, who also was in charge during the railroad's breakdown. For more than a year he has been working to deliver on a promise that he would remake the nation's largest railroad, with new equipment, revamped management and a more open, flexible style. In the process, he has been addressing the martinet within. For Mr. Davidson is a diehard railroad man who can still thrill to the throb of a powerful locomotive at the age of 57, but who must shed an antiquated style of management that has roots in the days when hard-bitten ex-Civil War officers filled the executive ranks of railroad companies.

"You're sort of a gunslinger," Mr. Davidson says. "Sometimes you make the decision and then analyze the problem." His managers use similar language to describe the old days of leading by fear. "When something happened, you pulled out your gun and shot the guy in charge of the territory," says John Rebensdorf, a vice president of the company's railroad subsidiary, Union Pacific Railroad Co. "Now, you find out why it happened and make sure it doesn't happen again."

When inspectors from the Federal Railroad Administration descended on Union Pacific's headquarters in Omaha, Neb., in 1997 following a series of fatal accidents on the railroad, they were surprised by the company's top-down, military culture, which seemed to discourage teamwork and communication. "Their culture was dysfunctional and characterized by noncommunication," says Jolene Molitoris, head of the FRA in Washington. "They were separated from each other in a way that almost guaranteed problems."

Many problems remain. Changing the culture won't happen overnight. "What we are trying to do will probably take five years," says Robert Bauman, a Union Pacific director. But riding with Mr. Davidson on inspection trains through 10 states, it's possible to find a number of places where the company appears to be back on track.

The last car on the inspection train is called the theater car. Its seats face backward, toward a large rear window through which Mr. Davidson and his executives watch the track stretching out behind them. The boss discusses plans to expand mainline tracks in Kansas and Nebraska to handle more trains. He chides his chief engineer for a rough ride the night before. "I had a nightmare that I was on a bucking bronco and was about to fall off the horse," Mr. Davidson says.

At one point in Nebraska, he can hardly contain his glee when his train races between two speeding freight trains on recently upgraded triple track. "This is how it's supposed to work," he says. "Man, man. It's phenomenal."

Another time, though, Mr. Davidson appears glum when he sees that rainy weather has idled work gangs and equipment laying sections of second track. "We're a month behind," he says. "It's a shame."

Mr. Davidson's efforts come at a crucial juncture. Union Pacific is emerging from its worst crisis and one that has spurred a backlash against railroads. Customers angry about lost shipments and delayed freight have been heaping blame on big rail mergers and clamoring for stiffer federal regulation. Although railroads still haul about 40% of the nation's freight traffic, reflecting their lock on bulk shipments of coal and grain, their spotty delivery record has sent many of the more lucrative consumer-goods shipments to trucks. Trucks have boosted their share of the nation's freight bill to 80% from 77% in 1990.

Overhauling Union Pacific is a critical test for Mr. Davidson, the only pure railroader heading one of the major U.S. railroads. He started as a brakeman in Kansas and rose through the operations side. David Goode, head of Norfolk Southern Corp., is a Harvard-educated tax attorney. John Snow at CSX Corp. is a Ph.D. economist and former official with the Department of Transportation. Robert Krebs at Burlington Northern Santa Fe Corp. is a Harvard M.B.A. who worked in railroad operations.

Critics wonder how Mr. Davidson kept his job, and they doubt he can make the needed changes. Tall and brawny with a booming voice, Mr. Davidson is aware of the skeptics. But he says the railroad has learned from its "painful experience."

With the learning has come revamping in all directions. To send a message that every worker counts, Mr. Davidson has granted 200 stock options to each of his 53,000 employees. He is setting up a unit to coordinate planning between the company's sales force and its operating managers, and boosting capital spending to make up for years of cutbacks.

Last September, Mr. Davidson met with 100 Union Pacific field officers in Kansas City, Mo., and urged them to undergo a personal transformation. Then he shared the results of a review by his senior managers that depicted him as cold, aloof, too demanding, resistant to innovation and reluctant to praise. "It's like an alcoholic," he says. "To get better, you have to admit your weakness."

Mr. Davidson is shifting authority from the Omaha headquarters to managers in the field. Central management was making many of the daily decisions such as when and how to run trains. "We're a detail business, but it was too much detail at the wrong level," says Brad King, a Union Pacific Railroad executive vice president. Some executives are now urging Mr. Davidson to vacate the railroad's command center in Omaha. Already, some dispatchers have been moved to Houston, Fort Worth, Texas, and Southern California to be closer to their territories.

The devolution began to make itself felt after the railroad's breakup into three regions last summer. Jeff Verhaal, who heads the company's western region, sent out roving "strike teams" of repairmen to the California desert to handle emergencies faster. "We couldn't wait for Omaha to do it," he says.

Steve Barkley, head of the southern region, says he reorganized the operating plan in the Houston area to move trains more efficiently. Shifting cars had entailed moving trains back and forth, yo-yo fashion, on a single track and often blocking traffic. Mr. Barkley devised a way to move cars through a loop that kept those single tracks open on a regular basis. The new setup cuts 24 hours from many shipments and keeps more than 400 freight cars a day out of busy yards.

To counter fatigue, the railroad is phasing in new work arrangements with assigned days off. It is also arranging for hotels to be built for its crews (and other guests) that will feature noise-abating walls and windows, heavy curtains to seal out light and 24-hour diners. And it is letting crews nap aboard trains as long as 45 minutes under certain conditions.

All this is a departure for Mr. Davidson, who remembers when railroads didn't pay to lodge train crews away from home. When he was a brakeman in Kansas, a conductor let the future CEO sleep on his couch. As a manager, Mr. Davidson says he fired at least a dozen people for sleeping on the job. But with recent evidence that napping can lead to safer operations, Mr. Davidson says, "you really have to put old habits behind you."

Maybe not all of them. Mr. Davidson's personal style still draws criticism. Union Pacific managers say he remains brusque and impatient. "Put a blowtorch to his a--," he told his chief engineer when informed during a track inspection that a crew boss was running behind schedule.

But progress has been made elsewhere, with the man and the railroad. Union Pacific executives say Mr. Davidson is more relaxed now that the trauma of the service crisis is behind him and the company has sold off businesses he didn't care about. (The latest slated for disposal is trucking firm Overnite Transportation.) His personal life, too, has settled down. Twice divorced, Mr. Davidson last year married a woman who worked for Union Pacific in community affairs for nearly 20 years.

He keeps his old workaholic ways, arriving at the office by 6 a.m., and says he doesn't have time for hobbies except raising cattle in his hometown of Allen, Kan., and working out. A former baggage car on his inspection train has been converted into an exercise room.

On the business side, freight-car inventory, a measure of congestion, is 15% better than at the worst of the crisis. Average train speeds - a key measure for timely delivery - are up, which means that trains are less frequently having their top speed of 70 mph dragged down by being stalled or forced to roll at a snail's pace through congested yards. The number of sidings blocked by stalled trains is down, which is essential in the many places where sidings provide two-way traffic for single tracks. Even in Houston, the center of the service meltdown, the tracks are clear. A year ago a long row of parked freight trains there was "like a big billboard saying, `We're screwed up,'" Mr. Davidson says.

Financial results are improving. Analysts expect Union Pacific to earn between $2.90 and $3 a diluted share this year. That is still less than the $3.38 a share the company earned from continuing operations in 1996, when it bought Southern Pacific, but better than last year, when the company posted a net loss of $633 million, or $2.57 a share.

To this day, Mr. Davidson's view of the service debacle differs from that of most people. He blames Southern Pacific's equipment problems, train accidents, weather and track repairs. But many people also blame Union Pacific management. They say Union Pacific tried to cut costs during the integration, not hiring enough people and cramming freight cars into fewer yards.

"They did almost everything wrong you can do," says Phillip Yeager, chairman of Hub Group Inc., a Lombard, Ill., freight-marketing company. "Union Pacific was trying to maintain their stock performance and failed miserably." Union Pacific shares, which got as high as $72.4375 in New York Stock Exchange trading in July 1997, before the merger problems surfaced, closed yesterday at $54.50, up 68.75 cents.

Union Pacific directors say they are happy they stuck with Mr. Davidson. "If we were to look around the country for a guy to deal with the crisis, Dick was the guy. There wasn't anyone with his credentials and knowledge," says Richard Cheney, the former secretary of defense who is chief executive officer of oil-services giant Halliburton Co. and a Union Pacific director.

Customers still complain about service. "It's too much of a crapshoot," says Dennis Williams, manager of transportation services at Roseburg Forest Products Co. in Roseburg, Ore. "You just can't count on them to deliver on time." The American Trucking Associations in Alexandria, Va., recently suggested that truckers could do a better job running railroads.

Mr. Davidson acknowledges that Union Pacific "still has a long way to go" to satisfy customers. But he dismisses the trucking group's offer: "I wouldn't be so bold to offer to run their trucks for them, and I really don't think they want to run the railroad industry."

Meanwhile, Mr. Davidson reinforces his push for greater flexibility by showing he is willing to try anything. He recently reinstated quality programs that had lapsed during the company's merger problems. He bought back a rail line in Kansas that had been sold in a cost-cutting move. Even the old way of slamming freight cars into one another in giant "hump yards" is giving way to a gentler approach; Union Pacific recently opened a spiffy new yard in California with such gradual slopes that cars glide to a stop.
He wants to use the Internet and make it easier to do business with railroads. When Union Pacific sent salespeople to the Los Angeles area, some potential customers didn't know anything about the company. "They think Union Pacific was a movie made in 1939," he says.

There's a lot at stake, says Dennis Duffy, executive vice president of operations of Union Pacific Railroad, and some say a potential Davidson successor. "If we don't change, we'll be a dinosaur and lucky to be alive," Mr. Duffy says.

Back in Kansas City, Mr. Davidson is showing off a Union Pacific freight yard when he sees a coal train so long that it requires locomotives at both the front and back. "I'm still old-fashioned," Mr. Davidson says. "I always expect to see a caboose on the end."

Union Pacific announces completion of triple-track project

OMAHA, Neb., Aug. 24 /PRNewswire/ -- One of the biggest railroad construction projects in modern history has been completed along the world's busiest freight route, Union Pacific Railroad (NYSE: UNP) announced today.

Completed after four years and costing $327 million, the new triple track route runs 108 miles across Nebraska and is designed to handle today's volumes, which average 140 trains per day. It links UP operations along the West Coast with vital rail hubs in Chicago and Kansas City as well as Mississippi River gateways to Eastern markets and Gulf Coast ports.

"This is truly a crown jewel in our franchise," said Dick Davidson, Union Pacific chairman and CEO. "We transport billions of dollars worth of our customers' freight through the Central Corridor. The new track will allow us to do that faster and more efficiently."

The expanded route, which will allow UP trains to run at 70 miles per hour, stretches between North Platte, Neb., and Gibbon, Neb., and is among America's most historic. It was originally built in 1865 as a single line on the first transcontinental railroad. The line was double-tracked in 1908. But in the early '90s a surge in new business, particularly coal from Wyoming's Powder River Basin mines, seriously strained capacity. Nearly 500 engineering and maintenance-of-way employees were deployed in 1995 to undertake the massive construction project.

The expanded route includes concrete ties, head-hardened rail, remote control track switching, speed-sensitive gates at highway-rail crossings and turnouts that allow trains to change tracks at high speed. All drainage structures were built to withstand a 100-year flood and crossings were re-built with pre-cast concrete surfaces.

Workers rebuilt the two existing tracks and spread all three tracks far enough apart to allow normal train operations even when one track is out of service for maintenance. The two existing tracks were rebuilt along with the new one.

Building just the third track alone required the following:

* 35,000 carloads of sub-ballast and ballast rock.
* 800 strings of rail in 1,440-foot lengths.
* 280,000 concrete ties.
* 200 carloads of switch components, crossing materials and other items.

"The true engineering challenge was planning, logistics and completing the work on schedule while keeping the nation's busiest freight corridor operational and fluid," said Darrel Deterding, UP's chief engineer-construction. "It was quite a balancing act."

Trial seeks to set blame in fatal '97 Amtrak yard shootings

PHILADELPHIA - The scenario has become depressingly familiar: An emotionally troubled loner comes to work or school concealing guns and starts shooting, according to Joseph A. Slobodzian of the Philadelphia Inquirer.

Yesterday, a federal court jury in Philadelphia began listening to testimony in what could become an increasingly familiar aftermath: a trial to see who - if anyone - is held financially responsible for the death and injuries caused by such deranged gunmen.

The case is that of Bonnie Jensen, who has sued Amtrak over the April 10, 1997, death of her husband, John J. Jensen, killed in an early morning shooting rampage at Amtrak's Wilmington maintenance yard.
Jensen, 41, a locomotive repair gang foreman, was killed and two others seriously wounded when Richard Herr, a 40-year-old veteran machinist, came to work and began hunting his coworkers.

Herr, a 20-year Amtrak employee who was taunted and dubbed "pigeon man" by some coworkers because he claimed to receive messages from the birds, was killed by Wilmington police in the shoot-out.
Jensen's lawyers say the 1997 shoot-out was the inevitable result of Amtrak managers' failure to respond effectively to Herr's increasingly bizarre and confrontational behavior the year before the shooting.

"It was clear that Amtrak had both the legal duty and a recognized corporate responsibility to provide for workplace safety," Mark T. Wade, a lawyer for Bonnie Jensen, said in his opening statement.
Wade said Amtrak's medical director rejected ordering a psychiatric exam for Herr as "premature and not warranted" even after Herr in late 1996 told safety manager Robert Duncan that "pigeons were giving him instructions."

It was not until Feb. 26, 1997, six weeks before the shoot-out, that Amtrak managers at Wilmington called Herr and union officials to a meeting at which Herr was told they were considering requiring a psychiatric evaluation for him to continue working.

Wade said that Herr, ordinarily a quiet, passive man who kept to himself, reacted uncharacteristically, becoming angry and insulting. He refused to cooperate. Amtrak did not press the issue again before the tragedy.

But Amtrak lawyer Mark Landman told the jurors that they were being asked to hold the passenger railroad to an impossibly high standard because of the current atmosphere of violence in America and "a lot of Monday morning quarterbacking."

"There really is only one crucial question: What did Amtrak know on the day of the incident . . . about Mr. Herr's propensity to commit this horribly violent act?" Landman said.

Landman said there was no documentary evidence about Herr's referring to any potential for violence - even from Jensen, who had written a letter of reprimand about Herr's workplace behavior. Before Jensen's reprimand, Landman added, Herr had never received such a letter in his 20 years at Amtrak and had no criminal record.

"Did they think he was an odd duck?" Landman asked. "Yeah, but is that where we are now, that every time we think someone's an odd duck we send them for a psychiatric evaluation? Think how many times we would get sued then."

Yesterday, as Jensen and her 17-year-old daughter, Virginia, listened sadly, the jury also heard from one of those wounded in the shooting, John Morrison Jr., and five other witnesses, several of whom maintained that Herr's shaky mental state was anything but a secret at the Wilmington yard.

George Coleman, a boilermaker and welder at whom Herr took aim and then spared at the last moment, told about a conversation three weeks before the shooting when Herr stopped him and spoke about how some coworkers were taunting him as the "pigeon man."

" 'George, if those people don't stop, I'm going to kill them,' " Coleman recalled Herr saying. "I said, 'Herr, you've got that kind of conversation in every shop.' "

Coleman said he told one union official about Herr's threat but did not go to Amtrak officials, adding, "I was under the impression myself that they knew about it."

Morrison, Coleman, and four others also told of the feverish atmosphere in the Amtrak infirmary on April 10, 1997, as company nurse Loretta Burton tried to stanch the blood flowing from Morrison's wounds in the elbow and shoulder while shots still rang outside.

All six testified that Burton, who first responded to Herr's complaints of hearing high-pitched or "ultra-sonic" noises a year earlier, was extremely upset and kept repeating that Amtrak officials had ignored her warnings about Herr's dangerousness.

"It was like she was confessing to me," Morrison testified, his voice cracking with emotion. "She kept saying to me, 'Jack, this was over my head. Trust me, I did everything possible to keep him from coming back. I knew this was going to happen.'"

Burton is expected to testify when the trial resumes today before U.S. District Judge J. Curtis Joyner.
Morrison, 37, of Newark, Del., returned to work as an electrician in January 1998. The other wounded worker, Jonathan Fedora, 41, of Secane, who was shot nine times, requiring removal of half his liver, has returned to work in a supervisory role.

Both men settled their lawsuit against Amtrak last August in a confidential arrangement that one legal source familiar with the case said was worth about $1.5 million.

Cost of a new Laguna Niguel MetroLink station nearly double the original budget

LOS ANGELES - The new MetroLink station in Laguna Niguel will cost nearly double its original estimate and possibly much more, sending county officials scrambling to find millions in additional dollars to fund the long-planned South County station, according to Megan Garvey writing in the Los Angeles Times.

City officials say the station will cost far more than the $2.75 million budgeted, despite efforts by planners to take out all the frills--even down to removing colored tile from the train platforms.

On Monday, Orange County Supervisor Tom Wilson, who is also board chairman of the Orange County Transportation Authority, asked staff to find a way to cover the funding shortfall. "I've been watching commuters in South County be frustrated for years just trying to get on MetroLink," Wilson said. "It's a solution that's long overdue."

The supervisor's request gave supporters new hope for the troubled plan.

"This is the best news we've had in a while," said Ken Montgomery, Laguna Niguel's director of public works

The new station would be on Forbes Road, near the junction of the San Joaquin Hills Toll Road and Interstate 5. The stations closest to the proposed one--Irvine and San Juan Capistrano--are overcrowded, and parking lots fill up day after day.

"The ones waiting patiently are truly the potential riders," said Peter Hidalgo, spokesman for MetroLink, which serves about 5,300 people a day on its Orange County line.

Work on the station had been scheduled to be underway by now, and a grand opening had been planned for June 2000.

Funding for the 400-space parking lot and train platform was slated to come from cities, state grants and county tax dollars, including $1.9 million from Measure M, the half-cent supplemental sales tax passed by county voters in 1990.

But plans for the station hit a major snag this summer when construction bids came back far higher than anticipated. City officials were caught off guard by bids that were $2 million to $4 million more than available funding.

Now, a bare-bones plan for the Laguna Niguel-Mission Viejo station, which had already been scaled back before, will be put out for bid again in the hopes of finding someone capable of doing the work for less, said Montgomery, the public works director.

The funding problem is the latest in a series of setbacks for planners who have been working since 1993 to make the station a reality. Originally, it was to be built in Mission Viejo just north of Oso Parkway. When that land was deemed too expensive, Mission Viejo officials worked with neighboring Laguna Niguel to find another suitable location.

Until this week, city planners had been pushing an alternative "half station" plan with a platform on only one side of the tracks. That plan called for the remainder of the station to be built later when more funds would become available.

But county transit officials rejected that plan as too costly, requiring a $1-million switching station that wouldn't be needed if the plans for a complete station were followed.

DJ Outdoor Systems ups shelter standards, care after death

PHOENIX (Dow Jones)--Outdoor Systems Inc. (OSI) has agreed to make sure its 475 San Diego-area bus shelters meet California's electrical code and to upgrade shelter maintenance, according to Rick Jurgens of the Dow Jones News Service.

The company agreed to take steps to ensure safety at the transit shelters it owns after engineers found poor grounding caused an Aug. 8 accident in which a San Diego man was electrocuted.

Outdoor Systems said in a release that the shelter had been acquired in a 1996 deal and that it had been built and maintained by outside contractors.

Employees and an independent consultant will also inspect all of the 9,500 bus shelters owned by the Phoenix outdoor advertising company in New York, Los Angeles, Philadelphia, San Francisco, Atlanta, Phoenix, New Orleans and Louisville, the spokesman said. An unknown portion of those shelters are electrified.

The costs of the inspections and new maintenance procedures have not been determined but are not expected to affect earnings, the spokesman said. "I am not anticipating it to be an exorbitant cost," he said.

Engineers hired by the Metropolitan Transit Development Board in San Diego and Outdoor Systems found that electrical lines serving the bus shelter in which 20-year-old Brian Keith Williams was electrocuted were not properly grounded.

The transit board engineer also said that inspection and maintenance procedures were inadequate. Outdoor Systems said it had "clarified" a requirement of regular inspections in its contract with the firm that maintains the San Diego shelters.

The transit engineer also said that it was not "prudent" to hook up shelters to 5,000 volt power lines like the one that supplied power to the site of the accident. In San Diego, 32 shelters were connected to such lines.

The Outdoor Systems spokesman said he was not aware of any other shelters in the company's nationwide fleet that were hooked up to high voltage lines, but that would be determined in the current inspections.

On Tuesday Williams' family filed a wrongful death lawsuit which included as defendants Outdoor Systems and Sempra Energy (SRE). The Outdoor Systems spokesman said he had not yet seen the lawsuit and couldn't comment on it. Sempra Energy could not be reached immediately for comment on the lawsuit.

Bombardier profit soars on aircraft, railcar sales

MONTREAL, Aug 24 (Reuters) - Bombardier Inc. announced on Tuesday a 38-percent jump in second-quarter profit, led by strong sales of its aircraft and railway vehicles.

Montreal-based Bombardier, which is the world's third-largest civil aircraft maker and also makes railway cars and personal recreational vehicles, said net income in the second quarter ended July 31 was C$169.1 million, or 23 Canadian cents a share. That was significantly higher than net earnings of C$122.7 million, or 16 Canadian cents a share, recorded in the year earlier period. Sales were C$3.2 billion versus C$2.5 billion.

"Higher revenues and net income are attributable to a good performance in the aerospace and transportation sectors," Bombardier President and Chief Executive Officer Robert Brown said in a statement. "Aircraft deliveries increased in the aerospace sector while Bombardier Transportation benefited from an increase in activities in North America and Europe."

The company's aerospace division, which makes the 50 and 70-seat Canadair Regional Jet and de Havilland Dash-8 family of turboprop planes, posted pretax income of C$195 million in the quarter, up from C$128 million a year earlier.

Its transportation division, which makes railway and urban rail transport vehicles in Europe and North America, posted a pretax profit of C$50.4 million, against C$33.3 million in the previous second quarter. Its recreational products division, whose results have been hurt by flagging sales of Sea-Doo and Ski-Doo personal motorized vehicles, posted a C$1.1 million operating profit even though sales slipped 18 percent year-over-year.

Bombardier's said its order backlog was C$26.0 billion, up 40 percent from a year earlier. That was split between backlogs of C$17.6 billion in aerospace and $8.4 billion in transportation. Bombardier Class B shares rose 20 Canadian cents at C$22.75 on Tuesday on the Toronto Stock Exchange.

Thomas-Built buses completes purchase of new plant for transit bus production

HIGH POINT, N.C., Aug. 25 /PRNewswire/ -- Thomas Built Buses, Inc., has completed the purchase of a 250,000-square-foot building in Jamestown, N.C., which will be dedicated to production of the company's new transit bus. The new facility, formerly owned by Precision Fabrics Group, represents a $12.5 million investment by Thomas.

The new mid-size, low floor transit bus product was acquired through the joint venture agreement finalized in June between Freightliner and Mayflower Corporation. The joint venture company, Thomas Dennis Co., LLC., will manufacture the product and Thomas Built Buses will distribute it throughout North America.

"By locating this plant close to Thomas' High Point headquarters, we will be able to draw on the company's manufacturing expertise and customer support resources as we introduce this product to the North American bus market," said Freightliner Corporation President and CEO Jim Hebe. "Combining Thomas' knowledge and distribution with the proven design features of this low-floor bus gives us tremendous advantages to offer customers. And we intend to immediately be a dominant player in the mid-range commercial bus market as a result."

Thomas employees will immediately begin completing built-up units shipped to the Jamestown plant from the United Kingdom. Production will be phased in during the remainder of 1999 and early 2000, with assembly in full swing by late 2000. Thomas estimates that 175-200 employees will be added at the new facility over the next year.

Freightliner has appointed Anthony Domabyl general manager of Thomas Dennis Co., LLC. Domabyl will oversee the joint venture company including the start up of manufacturing at the Jamestown plant.
"This unique product has revolutionized the European transit bus market and we expect it to be equally well received in the North American market," Hebe said. "Its innovative design and construction give it the durability of a heavier transit bus but with much lower fuel costs and other performance advantages."
Based on the Dennis Dart chassis and the Walter Alexander ALX200 body, the new Thomas bus is ideally suited for a variety of city transport applications such as airport transportation, paratransit, and others.

RailTex claims it may now be on track

AUSTIN, Texas (Dow Jones)--RailTex Inc. (RTEX) is a short-line railroad operator, not a bullet train, according to Bob Sechler of the Dow Jones News Service.

The San Antonio-based company runs short-line, or feeder, railroads in more than 20 states. Mostly, it hauls coal, lumber and other commodities to main-line tracks; long-distance railroads haul the loads the rest of the way.

RailTex stock has had a lot going against it. It's part of the stodgy railroad sector, and a small-cap stock to boot. Both categories have been out of favor for a while. The stock has suffered, too, from RailTex's unpredictable, often disappointing earnings.

The stock has moved erratically, but mostly horizontally, for the past two years. But recently RailTex shares inched above 15, and it may be time to get aboard.

The company has quietly put together four consecutive quarters where it has met or exceeded earnings expectations by small amounts. Most recently was the second quarter, when RailTex earned 33 cents a share, excluding items, on $44.9 million in revenue. That topped consensus estimates by a penny and compared with 27 cents a share a year ago, excluding items, on $39.1 million in revenue.

More importantly, Wall Street has been impressed with the company's energetic new chief executive, Ron Rittenmeyer, whose tenure began in August 1998 and corresponds closely to the company's four improved quarters.

Rittenmeyer, 52, was chief operating officer for a trucking company, Ryder TRS, and for Burlington Northern Inc. railroad, before it merged and became Burlington Northern Santa Fe Corp. (BNI). Since coming to RailTex, Rittenmeyer has concentrated on shedding underproducing properties, including a $3.2 million sale of the Northeast Kansas & Missouri Railroad, and a $5.2 million sale of the New Orleans Lower Coast Railroad. In December, he sold half of RailTex's stake in a Brazilian railroad consortium for $11 million.

Rittenmeyer describes RailTex as a "transportation company," not just a railroad, a tip-off that his acquisition targets might include nonrail firms, such as repair-and-maintenance operations or trucking companies. He isn't saying what timetable he has in mind or what kind of acquisition.

"There are lots of things that support the rail industry, the list is endless," Rittenmeyer told Dow Jones Newswires. "The question is, would an acquisition in that area add value?"

Analysts are skeptical about how RailTex might incorporate an acquisition, but they are intrigued. Some think RailTex is in the early stages of a turnaround.

"In the last few quarters they've been exceeding estimates by small amounts - a penny or two - but I think that's a really good sign," said Morgan Keegan & Co. analyst Arthur W. Hatfield. He has an outperform rating on the stock.

Most of the analysts who cover RailTex say it's undervalued. They figure the stock should be trading at up to $18 a share. Instead, its 52-week high is only pennies above its book value of $15.54 a share.
RailTex's 9.6 price-to-earnings ratio is less than half the railroad industry average of 22.7. It is low even among short-line operators. RailAmerica Inc.'s (RAIL) is 17; Wisconsin Central Transportation Corp.'s is 12.2 (WCLX).

You don't have to look far for the reason for its low price. In the five quarters before Rittenmeyer arrived, RailTex earnings missed analysts' consensus estimates three times. The company spent nearly a year on the search that found Rittenmeyer, a protracted effort that some observers say caused the company to drift.

"They had a history that usually led to minor disappointments every quarter," said Michael Lloyd, railroad analyst for Merrill Lynch & Co. "They now appear to be on the right road to repairing the damage," said Lloyd, who upgraded the railroad sector this spring, lifting RailTex to accumulate from neutral.

Clearly, RailTex stock has suffered from the industry's troubles. Major railroads have shed track and consolidated routes, which caused temporary traffic congestion and shipping delays on main- and feeder-lines alike. RailTex's market value of $140 million mired it in the small-cap category while institutional investors have been shunning those stocks to buy the more liquid large-cap stocks instead.
Donald Broughton, an analyst at A.G. Edwards in St. Louis, isn't convinced that RailTex's problems are all behind it. He rates the stock maintain, making him the lone analyst among seven polled by First Call/Thomson Financial who doesn't rate it the equivalent of a buy or strong buy.

Still, Broughton's rating is an upgrade from his opinion of the stock last fall, when he was advising investors to reduce RailTex holdings. He upgraded the stock as it dipped below 8, and he didn't think it could get much lower. It didn't; the 52-week low was 7 1/2.

Broughton's primary concern now is with the economy as a whole rather than RailTex specifically. Railroads, which carry commodities such as building materials, are cyclical stocks that perform best at the start of an economic upturn. "We may not be at the end of an economic cycle, but we're certainly not at the beginning of one," Broughton said. "We're in the mature stages of the cycle."

Broughton has been impressed with RailTex's performance over the past year. "I'm beginning to warm to them" under Rittenmeyer's management, he said. "So far, they've done what they've said they're going to do. But we're still in the first inning."

Rittenmeyer said he thinks RailTex is insulated to some degree by the diverse industries it serves. Three freight categories account for about 43% of that freight - coal (17%), railroad equipment (14%) and forest products (12%). The rest of the tonnage RailTex hauls is spread widely among various commodities.

Rittenmeyer says the stock's valuation should be based on the company's performance under his management during the past four quarters. That would give it a value of about $19 a share, he said.
"It's frustrating for me to see the stock modulate around the same number week after week," Rittenmeyer said. "People remember (RailTex) for what it was. But, sooner or later, you pay your penance. It's been four quarters. I don't know what else to do."

Wisconsin Central wins 11th quality carrier award

ROSEMONT, Ill., Aug. 25 /PRNewswire/ -- Wisconsin Central (Nasdaq: WCLX) has been selected as one of the top railroads in the nation, according to an annual customer satisfaction survey by Logistics Management & Distribution Report magazine -- a major trade publication covering the transportation industry. This is WC's eleventh consecutive "Quality Carrier" award, which is a record unmatched by any other railroad.

In its August 1999 issue, Logistics magazine listed Wisconsin Central first in the category of value, which measures price and service among the 14 railroads evaluated by customers.

Reilly McCarren, WC's chief operating officer, credits employees for this achievement. "They have been focused on customer service ever since our start-up nearly 12 years ago. We are particularly pleased with the 'Quality Carrier' award because it comes from our customers."

To be selected as a "Quality Carrier," a transportation provider must be given above-average ratings by customers for on-time performance, value, information technology, customer service, and equipment and operations.

The publication's annual "Quest for Quality" survey of freight shippers, now in its 16th year, is the largest, most comprehensive customer-perception study of transportation companies available.

More than 3,300 readers participated in this year's survey. A total of 67 freight carriers were selected as Readers' Choice winners. The other railroad winners in 1999 are Burlington Northern Santa Fe, Canadian National, CSX Transportation, Florida East Coast, Illinois Central, and Norfolk Southern.
The Wisconsin Central System is comprised of Wisconsin Central Ltd., Fox Valley & Western Ltd., Algoma Central Railway Inc. and Sault Ste. Marie Bridge Company, and operates approximately 2,900 route miles of railway serving Wisconsin, Illinois, Minnesota, Michigan's Upper Peninsula, and Ontario, Canada. Operating headquarters are in Stevens Point, Wis. For more information, see Wisconsin Central's home page: www.wclx.com .

"All Aboard" Art Deco train stamps to be released at NY Transit Museum

NEW YORK, Aug. 24 /PRNewswire/ -- Five Art Deco-style passenger trains of the 1930s and 1940s are making a comeback as commemorative stamps. The miniature works of art will be enlarged to grand scale for a brief ceremony to celebrate the stamp release at the NY Transit Museum at Grand Central Station at 11:00 a.m. on August 26.

The new U.S. postage stamps include images of the Congressional; the Daylight; the 20th Century Limited; the Hiawatha and the Super Chief trains. They pay tribute to American industry and design, and recall the great heritage of our railroads.

The NY Transit Museum at Grand Central Station was selected as the event site because of the museum's success in preserving transportation history, and because the 20th Century Limited once operated from Grand Central Station. The 20th Century Limited, dubbed "The Most Famous Train in the World," carried business travelers between New York and Chicago in 16 hours.

Train enthusiasts and collectors, anxiously awaiting the first day of sale in the U.S., are invited to join Metropolitan Transportation Authority Chairman E. Virgil Conway, Postal Service NY District Manager/Postmaster Vinnie Malloy, and Philanthropist Lawrence Scripts Wilkinson for the event.
A pictorial cancellation, designed for this event and the NY Transit Museum, will also be available.
The NY Transit Museum (an annex of the NY Transit Museum in Brooklyn) is located next to the Station Masters' office inside Grand Central Terminal, 42nd St. & Vanderbilt Ave.

Near-record numbers to travel over Labor Day holiday, AAA says

ORLANDO, Fla., Aug. 25 /PRNewswire/ -- An estimated 34.8 million Americans are expected to travel 100 miles or more from home this Labor Day holiday -- the second highest total ever, according to AAA.
That figure represents an increase of nearly 2 percent over a year ago. The record for Labor Day weekend is 34.9 million in 1997.

This year's near-record number of travelers comes despite an 18-cent increase in gas prices over the same period last year. The AAA Fuel Gauge Report shows the national average price for regular unleaded gasoline is $1.255 per gallon. Approximately 29.2 million will go by automobile, light truck or
recreational vehicle, up 1 percent from last year's 29 million motorists.

Holiday travel by air, bus, rail or ship is expected to reach 5.6 million, an increase of nearly 6 percent compared to last Labor Day.

Most auto travelers will originate in the West, with 7.7 million, followed by the Southeast with 6.8 million; Midwest, 5.6 million; Great Lakes, 4.6 million; and Northeast, 4.5 million.

A majority of travelers -- 23 percent -- plan to visit cities, with another 20 percent going to towns or rural areas and 19 percent visiting oceans or beaches.

Other popular destinations include mountains, 14 percent; lakes, 8 percent; state or national parks, 5 percent; theme or amusement parks, 2 percent; and other, 3 percent. Another 6 percent had not yet determined their destination.

Of those spending at least one night at their destination, 47 percent plan to stay at a hotel or motel while 25 percent will be staying with a friend or relative.

Other overnight plans include: camper/trailer/RV/tent, 8 percent; cabin or condo, 8 percent; bed and breakfast inn, 1 percent; boat/ship, 1 percent; and other, 2 percent. Another 8 percent had not made overnight plans.

AAA's Labor Day travel projections are based on a national travel survey of 1,500 adults by the Travel Industry Association, which conducts special research for AAA.