UTU News Digest - Thursday, July 8, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, July 8, 1999

WASHINGTON: NS offers bonuses to workers who skip vacations

WASHINGTON -- Seeking to restore normal operations, Norfolk Southern Corp. offered a sweeping incentive bonuses of up to $3,000 to 30,000 union workers if they put their vacation plans on hold and remain available for service every day for the rest of the summer, the Journal of Commerce reported today.

NS and CSX Transportation have been struggling to overcome widespread operating problems and shipper dissatisfaction due to lengthy delays, misrouted cars, congested terminals and computer problems since NS took over its portion of Conrail, Inc. on June 1.

CSX has had a more modest incentive plan in place since June 1 that offered $500 to train crew workers on some portions of the railroad if they make themselves available for service every day during a two-week period.

The dollar value of the program, if all NS union workers were to accept, is $90 million. The actual financial impact, which will be reported as part of third quarter earnings, is less because the money will be paid in the form of contributions to individual workers' accounts under the company's 401k program.

The NS offer was made in a bulletin circulated over the signature of Chairman David Goode.

"The month of June was particularly demanding for all of us," the bulletin said. "July and August will be challenging months. We must continue to concentrate on improving the quality of service to our customers. In recognition of the level of dedication that will be required to successfully complete the tasks at hand, the special availability bonus program ... is being placed in effect."

The NS and CSX approaches were not the first time a railroad offered financial incentives to employees during an extended period of service problems.

During the Union Pacific Railroad's extended service problems in 1997 and 1998, the railroad offered bonuses to train crew workers who made themselves available over holidays. Those incentives weren't offered to shop, track and clerical workers on UP.

"The availability of train and engine service employees is crucial to operating our trains and moving customers' freight quickly and on time," said NS spokeswoman Susan Terpay. "We want to be sure we are adequately staffed in all areas of operations," she said.

She said the incentive program was being made available to all union workers as a matter of being fair and equitable to agreement employees.

"We have congestion in northern terminals," she said, referring to former Conrail territory. "We are eager to return to normal operations as soon as possible. This is one of many steps we are taking."

CSX's offer, which is made in the form of a contribution to an employee stock ownership plan, was part of an agreement made last year to become effective when Conrail was divided.

CSX spokeswoman Kathy Burns said CSX did not expect the offer would remain in effect much longer, though she did not identify a specific time period.

The CSX offer, open to workers who run trains between St. Louis and Baltimore, and in Detroit and Chicago, has been accepted by 20% to 30% of the 5,500 eligible employees, she said.

Last week, NS announced other steps meant to help restore normal operations. Those included offers to hire back recently retired Conrail train crew members, proposals to furloughed Union Pacific and NS workers to run trains on newly acquired lines for up to 90 days.

In addition, NS has leased at least 90 more locomotives and has made arrangements with short-line railroads to handle inter-city traffic that typically would have moved over NS.

Ms. Terpay said a similar incentive plan would not be offered to the railroad's 5,500 management employees.

She said there were no numbers available yet on the number of workers who were participating during the first eligible pay period.

The bonus will be paid in $600 installments for each of five pay periods that stretch from early July through late August and early September.

Union workers at NS have the option of not working on scheduled days off during one or more of the pay periods without losing eligibility for the incentive payout during times when they would be willing to work every day. NS employees who have already scheduled vacation time can take it and be paid for it, if their supervisor agrees, the bulletin said.

WASHINGTON: NS, CSX fail to eliminate delays and congestion

WASHINGTON -- Norfolk Southern Corp. and CSX Transportation, Inc. made little apparent progress last week in overcoming recent delays and congestion as performance measures such as train speed and freight car switching efficiency showed little or no progress, the Journal of Commerce reported.

A more complete picture of recent NS and CSX operations will become available later in the week when an expanded weekly data filing is made at the Surface Transportation Board.

Those reports will show the number of delayed train departures, blocked sidings on main routes and terminal status in major service areas such as Detroit, Philadelphia and northern New Jersey where both railroads have operations.

The weekly NS and CSX data are made available through the Association of American Railroads as part of weekly performance measurement reports that major carriers began to provide in January 1999.

There are no year-to-year comparisons or data on Conrail operations before the railroad was divided on June 1.

Both NS and CSX reported that average train speeds were slower last week. NS train speed averages slipped 6% to 16.5 miles an hour, the worst since the Conrail breakup on June 1. CSX fell to 18.1 miles an hour from 18.2 miles an hour, which also was its lowest level since June 1.

More than half of the key terminals on both railroads handled cars more slowly last week than the week before, according to the performance reports. Each railroad reports terminal efficiency at 14 major yards.

However, NS improved switching times at Pittsburgh, Elkhart, Ind., Bellevue, Ohio and Allentown, Pa. on a week-to-week basis. Until last week, switching times at those terminals have been deteriorating since early June.

CSX assistant vice president Bob Haulter said operations have improved significantly at former Conrail terminals in Albany, N.Y. and Indianapolis, which were recent trouble spots.

The next target is CSX operations in Toledo, Ohio, where the average time needed to switch cars between trains last week climbed almost 15% to 51 hours, highest on the CSX system.

The latest performance reports showed that the number of freight cars on NS lines rose by 2,000 cars from the prior week. For the most recent week, the total number of cars was 10% higher than early June. CSX's car count rose by nearly 3,000 cars, but company officials said that number has been reduced this week.

Freight cars on line and other measures are considered to be a barometer of fluidity in a carrier's system. An increase in freight cars on line and slowing of terminal handling and average train speeds are an indicator of growing congestion.

ILLINOIS: Wisconsin Central’s CEO Burkhardt to resign

ROSEMONT, Ill. -- Wisconsin Central Transportation Corp. said today that Edward A. Burkhardt resigned as chairman, president and chief executive, effective Aug. 31, to establish an independent railway investment and consulting firm.

In a press release Thursday, the company said it named Thomas. F. Power president and chief executive. Power was previously vice president and chief financial officer of Wisconsin Central. The railway company also named J. Reilly McCarren president and chief executive of its North American operating units, succeeding Burkhardt.

NEW YORK: Rail earnings down, trucking rises in 2^nd quarter

NEW YORK -- Earnings for the nation's biggest trucking and railroad companies headed in different directions during the second quarter.

The trucking sector is expected to report 10 percent earnings growth over last year due to stable fuel prices and shipments, with Roadway Express Inc. and USFreightways Corp. among the top gainers, according to First Call.

While the railroad sector is also expected to show about 39 percent earnings growth, taking into account Norfolk Southern Corp., CSX Corp., Burlington Northern Santa Fe Corp. and Union Pacific without the latter's driving force, the sector would be down 22 percent, according to Michael Lloyds at Merrill Lynch.

While Union Pacific gained momentum after it announced its earnings would be in line with estimates, most other railroad companies are expected to report profit shortfalls, because of problems in railway integration.

Anthony Gallo at Deutsche Banc Alex Brown believes that the complexity of computer systems and mass of railroad lines in the United States has posed problems for key industry players.

"The rail industry offers comparable shipping costs versus the trucking sector but the consistency is off," said Gallo.

"One aspect could be the increasing complexity of the railway networks," Gallo added.

Last month, railroad operator Norfolk Southern said the integration of its Conrail unit could be more costly than anticipated because of continued computer system glitches.

Norfolk Southern and CSX had announced a split of operations of Conrail on June 1, following their joint $10.3 billion acquisition two years ago.

Norfolk Southern and CSX have continuously been experiencing computer systems problems that have contributed to train backups, delays, routing problems and such.

Wall Street expects CSX Corp. to earn 51 cents per share for the second quarter, according to a First Call consensus estimate, below a profit of 68 cents the prior year and Norfolk Southern to earn 35 cents per share versus 48 cents in 1998.

In addition, industry player Burlington Northern warned of a 5 to 10 percent earnings shortfall for the second quarter, due to disappointing coal shipments, according to Lloyd at Merrill.

Despite most railroad companies expected to report a slump in quarterly earnings, the overall railroad sector is still expected to come in higher than anticipated.

"It's because of Union Pacific Corp.'s positive second quarter outlook," Lewins said.

The nation's largest railroad said in May it expects to report earnings in line with analysts'' estimates of about 70 cents per share, well above a net share loss for the second quarter in 1998 of $1.70.

While railroad companies have been struggling with delays, trucking companies have been making up time.

"The trucking sector is right now generally really good. Most companies should be showing favorable earnings," said Deutsche Banc's Gallo.

"The pricing is favorable for most companies, the shipments are stable and the fuel prices have stabilized," he added.

Gallo believes Covenant Transport Inc. and USFreightways to be among the strongest players for the coming quarter.

Analysts expect Covenant to earn 40 cents per share and USFreightways to come in at 90 cents versus 1998''s 32 cents and 68 cents, respectively, according to First Call.

Among the few disappointments in the trucking sector could be CNF Transport and J.B. Hunt Transport Services Inc. J.B. Hunt said earlier it has been experiencing problems with its intermodal business, a sector, most analysts consider the industry's biggest opportunity and greatest challenge.

Intermodal businesses, transfer facilities, allow for unloading and continued shipment of trailers and containerized freight.

"The intermodal sector is the weak spot in the industry," said Gallo.

Steve Lewins, transportation analyst at Gruntal & Co., agrees that intermodal will post the biggest challenge for the remainder of the year but also believes it to be a vital growth sector of the industry.

"There is no way that highways can handle the increase in traffic in the coming years," Lewins said.

CONNECTICUT: Genesee & Wyoming Inc. wins bid for Mexican rail

GREENWICH -- Genesee & Wyoming Inc. confirmed that its subsidiary, Compania de Ferrocarriles de Chiapas-Mayab, SA de CV ("CFCM") has been awarded the Chiapas-Mayab railway concession by the state-owned rail company Ferronales.

CFCM's bid was 141 million pesos for the concession, or approximately $15 million at current exchange rates. In addition CFCM has committed to purchase locomotives, freight cars, and other assets used on the lines, and to complete significant track rehabilitation on one of the lines.

The Chiapas-Mayab concession is made up of two separate rail lines. The Chiapas is approximately 450 kilometers long (280 miles) and runs between Ixtepec in the state of Oaxaca, and Ciudad Hidalgo in the state of Chiapas. Principal commodities include cement, corn, petroleum products and various agricultural products.

The Mayab extends approximately 1,100 kilometers (680 miles) from Coatzacoalcos in the Mexican state of Veracruz, to beyond Merida in the Mexican state of Yucatan. Principal commodities include cement, silica sand and various agricultural products. The two railroads are connected via trackage rights over Ferrosur (a recently privatized rail concession) and a government-owned line.

The transaction is expected to close approximately August 17, 1999 with CFCM starting operations on September 1, 1999.

GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Australia and Mexico, and provides freight car switching and related services to industries with extensive railroad facilities within their complexes. This year GWI marks the 100th anniversary of its founding as a 14-mile railroad in upstate New York. GWI operations today cover more than 3,900 miles of track in four countries on two continents.

VIRGINIA: Overnite Transportation spurns offer by Teamsters

RICHMOND -- Union Pacific Corp.'s Overnite Transportation Co. Wednesday rejected an offer from the International Brotherhood of Teamsters to end a strike at six service centers in exchange for a meeting to discuss "unfair labor practice charges."

Union Pacific's (UNP) Overnite said the alleged unfair practices are subject to the National Labor Relations Board's legal process, and said "Overnite is content to let the legal process run its course in time -- months, or even years."

Overnite has "no plans to meet with the Teamsters to discuss the charges."

Locations at Atlanta, North Atlanta and Marietta, Ga., Memphis, Kansas City, and Indianapolis were picketed Monday, but remained open and made scheduled pickups and deliveries. Overnite said that all of its 166 service centers were staffed and operating normally after the six locations were picketed by the Teamsters.

The Teamsters represented almost 45% of Overnight Transportation's 8,200 dockworkers and drivers at 38 terminals as of April 28. Overnight Transportation said the Teamsters represent 14% of its total work force of more than 12,500 people.

On June 9, Overnite Transportation agreed to pay $1.6 million to workers for back wages as part of a settlement with the Teamsters. The Teamsters had filed a complaint with the National Labor Relations Board alleging bad faith bargaining, unlawful overtime waivers, pension plan changes, layoffs, discrimination and threats, and other charges.

CALIFORNIA: Longshoremen shut down the Port of Oakland

LONG BEACH - Cargo handling operations at West Coast ports were disrupted for a second day Wednesday as longshoremen refused to work vessels at the Port of Oakland and turned down all requests for extended hours in Los Angeles-Long Beach.

The Pacific Maritime Association, which represents West coast terminal operators, many of which are large steamship lines, filed charges of unfair labor practices against the International Longshore and Warehouse Union. "We're waiting to hear from the NLRB (National Labor Relations Board)," Phil Resch, senior vice president of operations at the employers association, said early Wednesday.

Meanwhile, no date has been set for a resumption of contract negotiations.

The three-year West Coast waterfront contract expired last Thursday. The ILWU headquarters in San Francisco stated that it is not orchestrating the job actions at the California ports. Rather, it said, ILWU locals at the ports are acting on their own.

The PMA says the union's job actions are related directly to the expiration of the contract.

"We deeply regret the union decided to stage these actions at the California ports," PMA President Joseph Miniace stated in a press release.

Employers fear a repeat of the turbulent 1996 contract talks is under way. When those negotiations went past the July 1 deadline, West Coast ports were hit by sporadic job actions.

A dozen vessels have been idled in Oakland since the job action began on Tuesday. ILWU Local 10 is refusing to work the vessels because it wants an additional longshore job assigned to each crane. Employers turned down this demand, saying it was part of the coastwide contract negotiations.

Although cargo is not being moved on to or off of ships, longshoremen are working the gates, said Dan Westerlin, manager of strategic marketing at the Port of Oakland. Since truckers can drop off containers and pick up loads, the port has yet to experience any significant congestion, Westerlin said.

In Southern California, ILWU Clerks Local 63 informed employers Tuesday its members will not be working through meal hours, nor will they work early or late gates, a system known as "flex" gates. During the peak shipping season, which is now underway, terminals often extend their gate hours to keep the cargo moving.

Under normal circumstances, longshoremen willingly work through meal hours and accept flex gate assignments because the work involves overtime pay. Although the inability to work extended hours is starting to have an impact, terminals in Southern California appear to have full gangs for the normal business day, said Don Wylie, managing director of maritime services at the Port of Long Beach.

Despite the labor problems at the California ports, the ports of Seattle, Tacoma and Portland, Ore., were working normally on Tuesday and Wednesday, the PMA stated. The main contract issue involves pension benefits.

The ILWU says retirees, especially those who retired in the 1980s and before, are not receiving adequate benefits. The union is pushing for a significant boost in pensions.

It is rare for either the union or the employers association to discuss the terms of contract offers during negotiations, but the PMA issued a press release late Tuesday. The release discussed the latest PMA offer, which was made over the weekend.

"We proposed a total wage and benefits package that would make the West Coast longshore union members among the highest compensated union workers in America," Miniace stated. "After we met their demand for a 32% increase in pension benefits for future retirees, and had offered a 15% increase for previous retirees, they expressed disappointment that we did not meet their 40% demand for previous retirees," Miniace stated.

The ILWU headquarters had no official comment on the PMA's latest contract offer. However, sources within the union agreed that the main sticking point in the negotiations is pensions. Although ILWU wages are traditionally among the highest in blue-collar America, the union's pension plan until 1993 was unsatisfactory, union sources said.

The contract that was negotiated in 1993 doubled the pension benefits to bring retired dockworkers' benefits up to about 50% of the pay they received when they were active, the sources said.

The ILWU stated publicly before the current negotiations began that improved pension benefits, especially for longshoremen who retired in the 1980s and before, would be a major demand. Past retirees do not have as lucrative a pension plan as do recent retirees.

According to the PMA press release, the employers' proposal also includes generous concessions on medical benefits. "The PMA answered the number one union demand -- expanding the benefits plan by increasing the scope of services to include a single coastwide plan with 100% paid HMOs (health maintenance organizations) and PPOs (preferred provider organizations) including maintenance of benefits," Miniace said.

MICHIGAN: Teamsters ratify contract with car haulers

DETROIT -- The Teamsters union claimed its first major victory under the leadership of James P. Hoffa with the ratification of a four-year contract with trucking companies that haul new cars to showrooms across the country.

The contract was ratified Wednesday by a 4-to-1 margin, the union said.

"This victory was made possible by the newly unified Teamster membership," Hoffa said late Wednesday. "Our brothers and sisters from across the entire nation came together to support car haulers and their families."

The contract dispute was the first test at the bargaining table for Hoffa since he was sworn in four months ago as head of the union once led by his late father, James R. Hoffa. His election followed a campaign finance scandal that had fractured the union, and he has pledged to restore unity.

The agreement was reached June 2, averting a threatened strike that could have sharply slowed car sales.

The contract with 17 trucking companies that hauled more than 15 million cars from assembly plants, ports and rail yards to dealerships last year covers about 12,800 drivers, mechanics and yard and office workers.

Under the terms, drivers who choose to retire after 25 years of work would get better pension benefits, including health insurance for those age 55 and older. Also, retirees over age 65 would get new prescription drug benefits to supplement government Medicare coverage.

Also, additional full-time mechanics hired by the trucking companies could be scheduled to work flexible shifts to help cover weekend hours -- for example, four 10-hour days rather than five 8-hour days.

Also, the union traded a raise for drivers this year for a one-time $1,500 bonus. In each subsequent year of the contract, wages will rise by 50 cents per hour.

Union haulers currently earn about $68,000 a year in wages and benefits, with salaries of $55,000.