UTU News Digest - Wednesday, October 13, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, October 13, 1999

WASHINGTON: Amtrak says Acela sets new national speed record, 168 mph

WASHINGTON -- Amtrak says its new high-speed Acela train has already set a national speed record of 168 mph, but a nagging question remains: When will passengers be able to come aboard?

There's still no clear resolution to wheel problems that have plagued the train in tests, and the precise start-up date is unclear, the Associated Press reported.

Montreal-based Bombardier Inc., which is building the train with Alstom of Paris, says it will announce a timetable by the end of the month, as promised when it divulged on Sept. 1 that the train's wheels were wearing prematurely.

"We're aiming at spring of 2000," Bombardier spokesman Gilles Paget said Tuesday.

On Monday, the second production silver-and-turquoise Acela train hit 168 mph between the Rhode Island cities of Warwick and Kingston during a test of new lines that will provide electricity to the train.

Amtrak said that was a U.S. record for a passenger train operating on a regular track. The previous record was nearly 160 mph, set decades ago when Penn Central was testing Amtrak's then-new Metroliner trains.

"It was a milestone," said Amtrak spokesman Russ Hall. "There was a lot of shaking of hands and pats on the back."

While the first production Acela model has also hit 168 mph since March on closed loop of test track in Pueblo, Colo., this week's record represented another step toward high-speed rail in the United States.

The trains are slated to carry passengers at up to 160 mph, and when they do, it will lead to three-hour service between Boston and New York and 2 hour, 45 minute service between New York and Washington -- a savings of up to 90 minutes and more competitive with airline shuttle service.

Amtrak is hoping that Acela will not only generate $180 million in new profits annually, but that the cash infusion will allow the national railroad to fulfill its promise to Congress of self-sufficiency by 2002. Since 1971, it has required federal subsidies of $23 billion.

Amtrak is also hoping that success in the Northeast Corridor will spur creation of similar service in the South, Midwest, Gulf Coast, California and Pacific Northwest.

Amtrak had planned to run its first high-speed train in November or December, but in September it said the date had been pushed back to next spring. It promised a clearer timetable within 60 days, and Paget said the train makers will meet that deadline.

Asked whether the problems had been resolved, he said: "We're testing components and we're quite optimistic that we'll be able to set the new delivery schedule."

LOS ANGELES: Teamsters, UAW break with AFL-CIO over endorsement

LOS ANGELES -- The Teamsters and United Auto Workers broke ranks Tuesday with the AFL-CIO to oppose the labor federation's anticipated endorsement of Vice President Al Gore, saying their 2.2 million members need more time to consider the field of presidential candidates, the Associated Press reported.

"It is not anti- any particular candidate. It is because we think it's too early to endorse," said Teamsters President James P. Hoffa, emerging from an hour-long meeting of the AFL-CIO's political committee, which voted to recommend Gore's endorsement.

The federation's executive council and full convention, meeting at the Los Angeles Convention Center, are set to approve the recommendation Wednesday morning, with Gore's acceptance speech already on the agenda.

"It's been a good week," Gore exclaimed at a beachside fund-raiser Tuesday night.

The vice president's aides cast his win as rival Bill Bradley's failure and an energized Gore campaign prepared to launch its first television ad campaign. Shopping now for air time, the campaign was expected to air this first wave of ads, described as largely biographical, starting this weekend or next.

Bradley, Gore's sole rival for the Democratic presidential nomination, will not be too far behind in airing his first ads, Bradley's advisers said.

AFL-CIO President John Sweeney said Gore had won "a very valuable endorsement that really allows for mobilizing 13 million members around the country ... who are looking to support a candidate who has a proven record of addressing working family issues."

Asked if Gore will win the presidency, Sweeney said, "Definitely! You think we would endorse a loser?"

Meanwhile, Gore joined his campaign brass -- including chairman Tony Coelho, campaign manager Donna Brazile and senior strategist Michael Whouley -- in downtown Los Angeles, to thank labor leaders for their early support despite Bradley's lobbying for a delay.

After a full-court final press from Gore, his aides, his allies and President Clinton, the vice president dropped by the convention hotel, in between fund-raising appearances, to thank some of the unions that had been on the fence until very recently -- including the Steelworkers, Paperworkers and building trades.

The Teamsters, with about 1.4 million members, and the UAW, with 800,000, did not represent enough votes to block the endorsement actively advocated by Sweeney. UAW Vice President Elizabeth Bunn made clear to the AFL-CIO political committee that her "no" vote, like the Teamsters', was not anti-Gore or pro-Bradley, Sweeney told reporters after the closed-door session.

In a statement earlier Tuesday, Hoffa said he polled his members and "they need more time to see the candidates in action. ... No one should construe our position as favoring or opposing one candidate over another."

Coelho emphasized triumphantly, "Bill Bradley, at one point, thought he could stop the endorsement. Bradley fought us very hard."

Bradley spokesman Eric Hauser countered: "The entrenched power that the vice president had here was a dramatic advantage. The case Bill Bradley made to labor will continue to resonate."

Gore's win with labor did not come without a glitch.

Tennessee AFL-CIO President Jim Neeley, attending the convention, made excuses for the vice president, whose campaign hired a non-union contractor last week to do the initial wiring of his new Nashville, Tenn., headquarters.

Modern Electrical Contracting had 30 phone and computer lines installed for Gore by last Friday, when the New York Daily News first reported the contract. They were pulled from the job Friday night.

WASHINGTON: Conrail problems dampen earnings

WASHINGTON -- Third-quarter rail earnings should rise approximately 15% overall, but ongoing problems with the integration of Conrail Inc. continue to cast a shadow over the industry's results, the Journal of Commerce reported.

Those are the key messages that industry analysts expect when carriers begin to report their results next week.

"The headline for the quarter will look good because the recovery of Union Pacific is by far the biggest story from an earnings point of view," said independent rail analyst Anthony Hatch. "They are going from a just dreadful performance a year ago to a very solid one."

Consensus earnings estimates from First Call/Thomson Financial indicate that UP will earn 82 cents a share, or approximately $250 million, in the third quarter.

Last year, UP produced $38 million in net income, or 13 cents a share. UP's return to profitability in the third quarter of 1998 followed a loss of $191 million from continuing operations during the first half of the year.

Earnings are expected to be flat at Burlington Northern and Santa Fe Railway, UP's Western rival.

UP's expected financial improvement reflects an 8% rise in total shipments handled during the third quarter.

That performance was a bright spot in the total North American rail traffic picture that showed total intermodal and carload traffic rose 0.7% for the third quarter and the year-to-date. Intermodal loads rose 5% in the third quarter, but carloads declined 1%.

While UP appears poised to boost earnings by at least $200 million over last year, analysts saw few bright spots in the East, where CSX Corp. and Norfolk Southern Corp. continue to try to improve service on portions of Conrail they began operating on June 1.

"The problems in the East are bad but are not as dramatically awful as the ones in the West were," Hatch said. "NS is still earning money. This is the depths of the NS problems."

"Merger expense is still with us at a level greater than expected," said ING Baring analyst Doug Rockel.

"There are a few little extra things in the estimates. We can blame it on higher fuel costs and a little on Hurricane Floyd, but the overwhelming majority is Conrail integration costs," Rockel said.

Analysts believe NS will fare worse than CSX. Consensus estimates show NS at 13 cents a share, a 68% drop from last year. Some analysts have pegged NS earnings as low as 7 cents a share.

Rockel said weak coal traffic in the East put added pressure on earnings, as did the loss of business due to poor service.

"Despite what we have said about service and integration costs, I still think this will be CSX's first positive earnings comparison in eight quarters," said Rockel, who noted that the third quarter of 1998 was weak for CSX.

Rockel predicted solid earnings contributions from CSX Intermodal and improved profitability at Sea-Land Service Inc. could enable CSX to beat last year's weak third quarter earnings by 23%.

Better results at Sea-Land will be driven by the continuing economic recovery in Asia, Rockel said.

The pending sale of Sea-Land to Maersk Inc. is expected to result in a $325 million pretax charge to write down Sea-Land's assets to the market value of the $800 million Maersk will pay for the ocean carrier, Rockel said.

"In the fourth quarter, we are optimistically assuming that CSXT will contribute better numbers," Rockel said. "As they get further into the transition, they will run smoother and smoother."

Traffic trends at NS and CSX are affected by changes in reporting of carload and intermodal freight.

NS and CSX volume during September included traffic from the portions of Conrail that were reported separately by that carrier last year.

Including business from former Conrail territory, NS posted a 35% carload increase in September and CSX volume rose 7% in the same period.

Although total NS and CSX carloadings increased by a total of 108,000 cars last month, the 1999 performance reflected a 10% drop in Eastern rail carloadings from the same month of last year.

Among individual traffic segments, continued growth in import traffic produced a 7% increase in September intermodal traffic. That growth rate exceeded 5% year-to-year growth during the first eight months of 1999.

"Intermodal is finally kicking in with strong growth in the West," Hatch said. "The numbers could have been better if there were not service problems or the image of service problems in the East."

UP posted a 14% improvement in intermodal traffic last month, while BNSF was up 4%. Eastern intermodal volume was flat.

Western grain also was a bright spot. Burlington Northern and Santa Fe Railway increased September grain traffic by 18% and UP agricultural traffic improved 10%. Rockel said movements of grain from storage and higher exports due to a weak dollar were the forces behind the improved grain traffic.

CALIFORNIA: Davis vetoes bill designed to protect MTA bus workers

LOS ANGELES --In a defeat for organized labor, Gov. Gray Davis has vetoed a bill sponsored by the unions representing Metropolitan Transportation Authority drivers and mechanics that would have made it extremely difficult for other transit operators to take over MTA bus routes in the San Fernando and western San Gabriel valleys, the Los Angeles Times reported.

The measure, sponsored by Sen. Kevin Murray (D-Culver City), would have required any new operator of the bus service to pay wages and benefits similar to those now received by MTA workers.

Despite strong backing from labor, Democrat Davis vetoed the bill on Sunday. In a terse veto message released Monday, Davis said: "I do not think it is appropriate for the state to mandate how local public agencies conduct collective bargaining with their employees."

The governor also said he would prefer that MTA recognize "existing collective bargaining agreements and not use the establishment of transportation zones as subterfuge for denying worker rights for which they have already bargained."

Davis' action surprised and outraged labor leaders, who said the bill's protections were important for MTA drivers and mechanics currently serving the Valley.

"I'm shocked the governor would do this," said Neil Silver, president of the Amalgamated Transit Union, which represents MTA mechanics.

"It's extremely disappointing," Silver added during a break from the AFL-CIO convention in Los Angeles. "I can't believe the governor doesn't care about the working men and women."

A spokeswoman for Murray also said she was "extremely disappointed" with the veto.

The unions pushed for passage of the bill as a way to stop creation of a new San Fernando Valley transit zone and expansion of Foothill Transit into the western San Gabriel Valley.

Foothill already runs low-cost and high quality bus service in the east San Gabriel Valley using only private contractors to operate and maintain the buses. They earn substantially less than most MTA drivers and mechanics. The MTA's unions fear that creation of a transit zone in the San Fernando Valley and any expansion by Foothill into more of MTA's territory in the San Gabriel Valley will threaten their jobs.

If all the bus lines in question were spun off to different operators, the shift could affect the jobs of more than 1,000 MTA bus drivers and hundreds of mechanics.

Supporters of spinning off MTA bus lines to other operators hailed the veto, saying it gives new life to the idea of creating a Valley system that provides better service for the transit-dependent at less cost.

"The legislation would have been a real poison pill in terms of creating a Valley Transit Authority," said David Fleming, chairman of the Economic Alliance of the San Fernando Valley and a former member of the California Transportation Commission.

"We would have been saddled with all of the expenses downtown had, particularly with the union contracts. It would not have penciled out," Fleming said.

A group of up to nine Valley area cities is hoping to break away from the MTA and form a Valley transit zone that would operate 27 bus lines that currently are run by MTA serving the Valley and surrounding communities.

A zone cannot be established unless it costs less and provides an improved level of service over what the MTA now provides.

Labor leaders are concerned that to meet that standard, the Valley authority would enter into private contracts that would pay greatly reduced wages and benefits to drivers and mechanics.

"The people would end up working for next to nothing," Silver warned.

Fleming, whose alliance includes the United Chambers of Commerce and the Valley Industry and Commerce Assn., said business and political leaders from the Valley had lobbied Davis hard for a veto.

The County Board of Supervisors and the Glendale, Burbank and Calabasas city councils had all voted to oppose the bill.

The veto is likely to result in a quick application for creation of the Valley Transit Zone and will probably force labor and transit authority proponents to sit down to hash out differences, said zone supporter Richard Close, president of the Sherman Oaks Homeowners Assn. and chairman of the secession group Valley VOTE.

"The veto will allow the process to move forward quickly," Close said. "The bill was viewed by many as making creation of the transit authority very difficult, if not impossible. That has been eliminated now."

"Most people thought he would sign the bill," Close said, adding he believed the governor saw that the zone proposal had widespread support in the Valley.

Former Assemblyman Richard Katz, who has been active in support of the transit zone for VICA, said the veto demonstrates Davis' independent thinking.

"I think he looked at what is in the best interest of the people who ride buses, how it will improve that service," Katz said. "He's made it clear he is going to govern from the middle and he's going to chose good ideas and veto bad ideas, irrespective of where they come from."

Assemblyman Bob Hertzberg (D-Sherman Oaks) voted for the bill, believing it struck a balance between seemingly competing interests, said Paul Hefner, a spokesman for the legislator.

"We thought it was a reasonable step to provide some protections for some of the folks who are doing the job right now in the Valley, while at the same time providing the Valley with the opportunity to create a transit zone," Hefner said.

Glendale Mayor Ginger Bremberg said the governor has saved them a chance of having a better transportation system for the Valley. "We are going to provide a good, sound, reliable, low-cost transit system," she said. "If we had had to pick up the MTA's sins and shortcomings, it wouldn't have worked."

Julie Austin, executive director of Foothill Transit, said the agency's board of directors will have to decide the next step in seeking to take over MTA's bus lines. Nine cities--Pasadena, South Pasadena, Alhambra, Rosemead, Monterey Park, San Marino, San Gabriel, Sierra Madre and Montebello--have endorsed expansion of Foothill's service area.

Austin said Foothill can provide "more bang for the buck" than MTA.

Although the MTA opposed Murray's bill, the agency's chief operating officer Allan Lipsky had no immediate comment on the veto.

MTA project manager Jon Hillmer said the transit agency operates 27 bus lines in the San Fernando Valley that carry about 120,000 boardings on an average weekday. MTA runs 350 buses in the Valley.

Richard Brumbaugh, MTA's chief financial officer, said there are 636 union drivers and 263 mechanics assigned to the Valley bus operations.

WASHINGTON: Amtrak, Alstom win California overhaul contract

WASHINGTON – Amtrak, in partnership with Alstom, has won a $34.7 million contract to overhaul 73 passenger rail cars for the Peninsula Corridors Joint Powers Board (PCJPB) in California. $30.3 million has been authorized for 63 passenger rail cars with an option for the remaining 10 cars at a value of $4.4 million upon funding availability.

Alstom is the prime contractor, with Amtrak as the major subcontractor. Amtrak currently operates and maintains Caltrain service between San Francisco and San Jose under contract to the PCJPB.

Amtrak will be responsible for a portion of the component work and for final assembly at its Beech Grove, Ind., and Wilmington, Del., heavy maintenance facilities.

As part of its business plan to increase revenue, Amtrak has been marketing the expertise and experience of its highly qualified personnel at its heavy maintenance facilities. Last year, Amtrak won a contract to overhaul passenger rail equipment for the Forth Worth Transportation Authority, and has or is performing work under contract for the Alaska Railroad, NJ Transit, Southeastern Pennsylvania Transportation Authority (SEPTA), the Maryland Rail Commuter (MARC) and the Connecticut Department of Transportation.

"Our partnership with ALSTOM is another example of Amtrak's business strategy in action to drive revenues by teaming up with industry leaders, " said George Warrington, Amtrak's president and chief executive officer. "Winning this contract further proves that our maintenance facilities are staffed by some of the most skilled and experienced passenger rail workforce available anywhere."

The contract calls for the overhaul of 73 stainless steel cars built by Nippon Sharyo from 1985 to 1987, including 52 trailer cars and 21 cab cars. The refurbishment includes truck re-working, installation of new coupler and draft gear, new seats and carpets, and heating, ventilation and air conditioning. The work will be performed five cars at a time and is scheduled to be completed six to nine months after the contract's commencement date.

Amtrak has a long-standing business relationship with the Joint Powers Board and the state of California. In addition to the overhaul work and as the nation's largest provider of contract-commuter service, Amtrak has operated and maintained the Peninsula Commute service since 1992. Amtrak also operates and dispatches the Metrolink service for the Southern California Regional Rail Authority (SCRRA) and operates and maintains the Coaster for the North Country Transit District in the San Diego area. And, Amtrak also provides service on three state-supported intercity routes, the San Diegans, San Joaquins and Capitols. Since 1990, Amtrak and the state have jointly invested more than $1.1 billion in track and signal, infrastructure, rolling stock and station improvements.

NEBRASKA: Missouri Central Railroad acquires 244 miles of UP track

OMAHA -- Union Pacific Railroad announced it has sold the central portion of the former Rock Island Line across central-Missouri to the Missouri Central Railroad.

Financial terms of the sale were not disclosed.

The portion of the line Union Pacific sold to Missouri Central is 244 miles between Vigus, which is west of St. Louis near Chesterfield, to Pleasant Hill. Union Pacific will retain the ownership of the line between Kansas City to Pleasant Hill and Vigus to St. Louis. Missouri Central will be able to operate over those portions of the line through a trackage rights agreement.

The Missouri Central took over operations of the line October 15th.

WASHINGTON: House tries amending truck rule

WASHINGTON -- The Senate is considering changes in a law that now bars the Transportation Department from enforcing civil penalties against truckers who violate safety rules.

The measure passed the House by voice vote on Tuesday.

Rep. Thomas Petri, R-Wis., chairman of the House ground transportation subcommittee, said fixes a "serious unintended effect'' of language aimed at shifting safety operations away from the Federal Highway Administration.

The fiscal 2000 Transportation Department spending bill, signed by President Clinton on Saturday, included a provision that cut off funding for the Office of Motor Carriers, the office that oversees commercial vehicle safety, unless the office is transferred from the Federal Highway Administration.

On Saturday, Transportation Secretary Rodney Slater moved OMC operations away from the Federal Highway Administration and into his office so its staff could continue its safety inspection work.

But federal law states that only the Federal Highway Administrator may assess civil penalties for safety violations, and until the law is changed such penalties may not be levied.

Mike Russell, spokesman for the American Trucking Associations, said his group supported both Tuesday's move to restore enforcement authority and the larger bill to restructure how the Transportation Department oversees safety matters.

The bill is H.R. 3036.