UTU News Digest - Monday, January 18, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Monday, January 18, 1999

UTU member killed along with engineer in Conrail Ohio train collision

NAPOLEON, Ohio -- Fog that limited visibility to a few feet may have contributed to a crash of three freight trains that killed two crewmembers, investigators said. The United Transportation Union Safety team is aiding in the accident investigation.

Killed were Raymond Corell, 52, of Angola, Ind., who was a legislative representative and secretary-treasurer of UTU Local 227 in Huntington, Ind., and R.H. Bell, 57, of Oregon, Ohio,

Corell and Bell were thrown from the engine of the mail train and died of head injuries, said Williams County Coroner John Moats.

The crash early Sunday scattered cars over a quarter-mile on Conrail's busiest route in the Midwest. One engine burned for hours and a handful of homes in Bryan, about 50 miles west of Toledo, were evacuated for several hours.

It was too early to determine a cause, Jay Kivowitz, investigator for the National Transportation Safety Board, said Sunday night at a news conference in the nearby town of Napoleon.

"It's hard for me to speculate, but we'll be looking into the weather conditions," Kivowitz said.

Dozens of freight cars and pieces of the trains were scattered across the two tracks that run parallel through the flat farmland of northwest Ohio.

A train taking mail from Morrisville, Pa., to Chicago hit another westbound train carrying trailers and containers from Boston to Chicago, said Bim McGeehan, a spokesman for Philadelphia-based Conrail.

A third train, with 50 empty cars, hit debris from the crash within seconds. The train was traveling east from Portage, Ind., to River Rouge, Mich., near Detroit, McGeehan said.

Investigators plan to interview the crews from each train today. The on-site investigation will take at least another three days, Kivowitz said.

The three trains had a total of eight locomotives and 149 cars.

McGeehan said track, computer and electronic signals are supposed to keep trains from getting close. ``Those systems are designed to prevent these kinds of things from occurring,'' he said. Investigators did not know how fast the trains were going when they hit.

The rail line is Conrail's primary link between Chicago and the East Coast. Train traffic was being rerouted through a line in Michigan until debris can be cleared and the track repaired.

BNSF performs best in 4^th quarter

NEW YORK -- As the U.S. railroad firms grease up for what analysts say will be a "better" business environment for 1999, the Burlington Northern Santa Fe Corp., the nation's second largest railroad, emerged as the top operator in the fourth quarter.

West coast railroad operators will post better results than East coast operators due to lower coal exports in the East, according to Douglas Oare, of Warburg Dillon Read LLC, who agreed with other analysts polled by Reuters that Burlington has the most "normalized" earnings and will continue to be a strong performer.

For the fourth quarter, analysts polled by First Call expect Burlington to post 63 cents a share compared to 58 cents a share in the year-earlier period.

Analysts say the company has been the beneficiary of Union Pacific Corp.'s post-merger ails with Southern Pacific.

"When Union Pacific merged the companies' computers, it was like a domino effect that kept getting uglier," said analyst William Fiala of Edward Jones. "They lost traffic and customers to competitors and paid penalties. It was apparent they needed to invest more in technology, which all the rails have stepped up too."

As the nation's largest railroad, Union Pacific is getting back on track since posting losses in the first half of the year and is expected to earn a fourth quarter profit of 31 cents compared to a loss of 41 cents a year ago. But analysts say it could take up to one year before the company is back to "normal."

Peter Jacobs of Ragen MacKenzie expects Union Pacific to earn about 35 cents a share in the fourth quarter and sees continued quarterly improvement in 1999.

For 1999, rail analysts are taking seats for the Conrail watch.

In May 1997, CSX Corp. and Norfolk Southern Corp. purchased Conrail Inc. for about $10 billion. CSX and Norfolk, with a 42 percent and 58 percent stake respectively, will split Conrail's network to create two railroads operating east of the Mississippi River.

Both companies have incurred higher than expected expenses relating to the transaction. The split date, already six months late, is now projected for March 1999.

"We're watching the Conrail (situation) very closely to see how successfully each player consolidates their portion," said David Leibowitz of Burnham Securities. "Both companies have management adept at making acquisitions work, and given the significance of the project, they'll be doubling efforts.

But the ultimate goal of the Wheaties of the industry is to have coast-to-coast tracks going east-west and north-south," he said. "And that's probably three to five years away."

Both CSX and Norfolk will report lower fourth quarter earnings compared to last year. Wall Street estimates CSX will post 58 cents a share compared to 97 cents a share in its fourth quarter 1997 and Norfolk to post 44 cents a share compared to 58 cents a year ago.

"We're taking a wait and see attitude for the Conrail carve-up," said analyst S. Scott Nicholls Jr. of Gilford Securities. "But through the first half of 1999, we'll see the trend of weak exports on the West Coast being offset by stronger imports from Southeast Asia due to the devaluations."

Analysts believe if grain carload traffic continues to rise and internal efficiencies and route structuring improves, the worst is behind the railroad companies.

"Expectations aren't high for the industry and can easily be exceeded," said Fiala.

The only cautionary flashing signal that railroads can not avoid, however, is Mother Nature.

"This industry doesn't work under a roof. The biggest culprit in the summer of 1997 was bad weather that created logjams and bad traffic," said Nicholls. "It hurt Union Pacific and helped send them in that downward spiral."

Railroad Reporting First Call 1997 Dec. qtr.

UNP.N - Jan. 21 - $0.31 loss ($0.41)

BNI.N - Jan. 26 - $0.63 $0.58

CSX.N - Jan. 21 - $0.58 $0.97

NSC.N - Jan. 27 - $0.44 $0.58

(Figures provided by First Call Corp.)

Alameda Corridor Agency Authorizes Construction on Critical 10-Mile Trench

CARSON, Calif.-- The public agency building the Alameda Corridor rail cargo expressway authorized Chief Executive Officer Jim Hankla on Thursday to issue the final notice to proceed with the Mid-Corridor Trench, clearing the way for construction on the project's biggest and most critical element.

Following a unanimous vote by the Alameda Corridor Transportation Authority (ACTA) Governing Board, Hankla said he would issue the notice Friday to Tutor-Saliba Corp., the contractor building the 10-mile-long, 33-foot-deep trench.

"This notice to proceed starts the clock running on the contractor's deadline to deliver a completed project," Hankla said. "The contract includes a number of provisions to ensure on-time and on-budget work, and we are quite confident that Tutor-Saliba will meet its obligation to finish the job by April 14, 2002."

ACTA, a joint-powers authority between the cities and ports of Long Beach and Los Angeles, is building a 20-mile-long railroad freight expressway linking the ports to the transcontinental rail yards just east of downtown Los Angeles.

The project will speed the shipment of cargo by consolidating rail lines and improve the flow of rail and vehicle traffic by eliminating more than 200 street-level railroad crossings.

The $712 million Mid-Corridor Design-Build Contract, awarded in October to a team led by Tutor-Saliba, calls for construction of a two-track trench along Alameda Street between State Route 91 in Compton to 25th Street in Los Angeles.

Bridges will be constructed to carry street traffic over the trench at 29 crossings. The contractor also must provide job training for at least 1,000 local residents and assign at least 30 percent of all worker hours to local residents.

ACTA issued an initial notice to proceed with limited nonconstruction work on Oct. 28, 1998. Actual construction of the trench is expected to begin in June.

"With the final notice to proceed this week and the sale of bonds next week to complete our funding package, the next step would be to begin full-scale construction work," said Los Angeles City Councilman Rudy Svorinich Jr., chairman of the ACTA Governing Board. "The Governing Board has worked a number of years to get to this point, and we are proud of this milestone."

More than 200 people -- including then-Gov. Pete Wilson, U.S. Secretary of Transportation Rodney Slater and several members of Congress and the legislature -- attended a Dec. 10, 1998, event to commemorate the start of work on the Mid-Corridor Trench.

Tutor-Saliba, based in Sylmar, Calif., has extensive experience with large public-works contracts. The Tutor-Saliba team submitted the proposal with the lowest ultimate cost for the Mid-Corridor contract. The contract requires Tutor-Saliba to pay the first $10 million in any costs for unforeseen conditions. The contractor also must pay damages between $125,000 and $200,000 for every day the project is late.

Canada rail freight down 16.5% in 10 days to Dec. 31

OTTAWA -- Canadian rail freight volume, excluding intermodal traffic, totaled 4.6 million metric tons in the 10 days ended Dec, 31, down 16.5% from a year earlier, Statistics Canada said.

The number of rail cars loaded during the period declined 14.1% from a year earlier. Intermodal (piggyback) volume totaled 391,000 tons in the 10 days. up 15.4% from a year earlier.

Total traffic in the period, including carloadings of freight and intermodal traffic, declined 14.7% from a year earlier. For the year to date, traffic totaled 255.9 million tons, down 3.4% from the previous year.

Ohio town wants whistles stopped

MIDDLETOWN, Ohio --Middletown city officials are asking Ohio's U.S. senators Mike DeWine and George Voinovich and Representative John Boehner of West Chester for help. The city is trying to develop quiet zones where trains wouldn't blow their whistles. The city has unsuccessfully sued railroads over the whistles and the Federal Railroad Administration recently turned down its quiet-zones plan.

The FRA says it can't order trains to cease blowing their whistles in Middletown because there aren't appropriate federal regulations. They say the city's plans are good but not enforceable under federal law. City Manager Ron Olson now is turning to the three Republican lawmakers to intervene.