UTU News Digest - Friday, February 11, 2000

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Friday, February 11, 2000

CANADA: Tellier remarks on rail merger off track; MP says Parliamentary committee promises lengthy examination of CN-Burlington Northern planned deal

OTTAWA -- The co-chairman of a parliamentary committee studying the planned merger of Canadian National Railway Co. and Burlington Northern Santa Fe Corp. said that despite comments by CN's chief executive officer, the deal is not a fait accompli, the Toronto Globe and Mail reported.

Winnipeg South MP Reg Alcock said yesterday that his committee will give the deal a lengthy examination and will recommend legislation to block the deal if it sees fit.

Mr. Alcock said he was concerned about recent statements CN chief executive officer Paul Tellier made that suggested the deal was as good as approved.

"These rails run under Transport [Canada] legislation that's passed by [the House of Commons]. That company [CN] acts under a mandate granted by this House. To suggest the government of Canada is powerless in this is silly," Mr. Alcock said in an interview Wednesday.

"What I'm simply going to do, along with some of my colleagues, is look at this from the perspective of the people we represent. If we think the deal is a good thing, we'll say so, and if we think there are things that need to be fixed, we'll say that too."

In a conference call with analysts last month, Mr. Tellier – a former clerk of the Privy Council, the highest bureaucratic position in the country -- said he had assurances from Transport Canada that there would be no legislative roadblocks to scuttle the deal.

Mr. Alcock called Mr. Tellier's comments "arrogant" and said they reflect the "cozy relationship between CN and the department."

While Ottawa currently has no legislation in place that allows it to review such rail mergers, sources have previously told The Globe and Mail that legislation aimed specifically at the proposed merger of CN and BNSF is being contemplated. The Canadian Transportation Act is due for its five-year revision this summer, and the source said the proposed amendments would give the federal government the power to review and possibly prevent deals such as the CN-BNSF merger.

The deal also has yet to be approved by shareholders and still faces scrutiny from the U.S. Surface Transportation Board.

"This is a huge deal. It does tend to reduce the very limited competitive options that exist in the West," Mr. Alcock said. "We're going to look at this in some detail."

He said that while the deal has obvious benefits -- such as continuous rail service extending from northern Alberta to the Gulf of Mexico -- he's concerned about its potential impacts on prices, on the level of service provided to grain farmers and on volume going through the Port of Vancouver.

On Wednesday, Transport Minister David Collenette said he'd given Mr. Tellier no assurances the deal will go through.

"I think what [Mr. Tellier's] referring to is that reactions he had when he announced it that were certainly not negative," he said. "That doesn't constitute approval or disapproval."

NEBRASKA: Judge finds against BNSF over surveying on private property

BRIDGEPORT -- Burlington Northern Santa Fe Railroad cannot compel landowners to allow surveyors onto their property as it scouts for a new route, a judge ruled, a wire service reported.

"Wow! That makes me feel good,'' said rancher George Anest, one of at least 31 area landowners who feared the track would threaten farming and ranching and disturb the environment.

The railroad said it had the right to enter and survey the proposed route under the legal doctrine of eminent domain. It argued that the proposed line would ease the climb for locomotives hauling coal and grain and would benefit the area and Nebraska in general.

The landowners contended the track would benefit only the railroad's bottom line, not the public. And Morrill County District Judge Randall Lippstreau sided with the landowners Tuesday.

Railroad surveyors had no right to ``invade private lands to conduct surveys or testing,'' Lippstreau said.

Burlington Northern Santa Fe spokesman Steve Forsberg in Kansas City, Mo., had no comment Wednesday.

NEW YORK: Survey finds disparities in train service

NEW YORK -- Residents of Brooklyn, Queens and the Bronx pay substantially higher fares than suburban commuters do for traveling the same distance on the Long Island Rail Road and Metro-North, but their service is more sporadic and their stations are much more dilapidated, according to a survey of the commuter railroads released yesterday by the Public Advocate's office, the New York Times reported.

The disparity is more troubling, the survey contended, because New York City provides 48 percent of the railroads' operating subsidies, even though city residents make up only 10 percent of the ridership.

"We found that city riders are really getting a raw deal in several ways," said Mark Green, the public advocate, whose office inspected 12 Metro-North and 22 Long Island Rail Road stations last summer.

Many of the stations, the surveyors found, had the feel of ghost towns, lacking basic amenities like benches, pay phones, adequate lighting and signs. Some in the poorest parts of the city -- the Long Island Rail Road stop in East New York, Brooklyn, and Metro-North's Marble Hill stop in the Bronx, for example -- also had decaying stairs and platforms, the survey found.

Contributing to the impression of abandonment is the fact that some railroad stations in the city, including those far from subway lines, have infrequent service even during the morning rush, the survey found. Long Island Rail Road trains stop only once every 80 minutes -- meaning three times during the morning rush -- at the St. Albans station in Queens, for example. In the Bronx, only two trains stop at the Tremont station and three at the Melrose station on Metro-North during the rush.

But the prices paid by riders commuting between points in the city or between the outer boroughs and the suburbs are sometimes two or three times more expensive than those paid by suburbanites commuting the same distance or longer.

For example, a trip from Bellmore to Rockville Centre on Long Island, a 6.3 mile ride, costs $1.75 one way during rush, or 28 cents per mile. But a trip from Forest Hills to Laurelton in Queens, roughly the same distance, costs $5.50 one way, or 86 cents per mile.

On Metro-North, which has increased its reverse commuter ridership by lowering many of its outbound city fares, prices were more in line. But trips between Manhattan and the Bronx are still more than twice as expensive as those between stations within Westchester or between Westchester and the Bronx.

Officials at the Metropolitan Transportation Authority, the parent agency for the railroads, would not discuss the survey's findings yesterday. "We are looking at the report, and we'll withhold comment until we've reviewed it," said Tom Kelly, a spokesman.

Mr. Green contends that higher fares, long waits and stations that appear to be neglected cause a downward spiral, discouraging ridership and providing incentives for the railroads to further neglect or even close stations in the city.

The most devastating effect, he said, is the obstacles created for many people in the city's poorer neighborhoods who are seeking work in the suburbs.

After Metro-North lowered its reverse commuting fares, for example, its Fordham Road station in the Bronx became the fourth busiest in the system. "If the goal is to be a regional, seamless transportation system, as the M.T.A. says it wants to be, why not apply that same strategy to the other stations?" Mr. Green asked.

WASHINGTON: January traffic increases modestly

WASHINGTON -- Major U.S. and Canadian railroads started January with a large traffic increase, but then trailed off, ending with a 2% carload increase and a 3.6% intermodal gain for the month, the Journal of Commerce reported.

Carloadings actually declined in the third and fourth weeks, after showing gains the first two.

Intermodal containers, a mix of international and domestic traffic, were up 10.7%, the largest increase for any freight category. Intermodal continued its long, steady shift to containers, as trailers, which represent a portion of domestic intermodal business, declined 10.4%.

Coal, the industry's largest single commodity, was down 1.5%, despite comparisons to a weather-depressed January 1999. High utility stockpiles and a weak export market affected CSX Transportation and Norfolk Southern, which handled some 12,000 fewer cars than were handled by CSX, NS and the former Conrail a year earlier.

Motor vehicles and equipment was a bright spot for the Eastern carriers, as the two railroads originated 64,148 carloads of cars and parts, virtually the same number as the three Eastern railroads originated a year earlier.

NS and CSXT, in reports filed at the end of the month, indicated they each could see an improvement in their congestion problems.

In the West, Burlington Northern and Santa Fe Railway and Union Pacific Railroad had coal increases of 1.7% and 4.1%, respectively, as low-sulfur Western coal continues to increase market share and penetrate Eastern utility markets.

Coal accounted for 51.4% of BNSF's carloadings, the highest percentage of any commodity for any railroad.

All other commodity groups showed increases in January, with metallic ores and minerals up 10.4%. Motor vehicles and equipment shipments increased 7.8% as the automobile industry continued to produce new cars and trucks at record levels.

Canadian National and Canadian Pacific railroads had carload increases of 9% and 1.4%, respectively, led by sharp gains in automotive and agricultural traffic at CN, and motor vehicle loadings at CP.

Canadian grain shipments in the first quarter of 1999 were depressed by weak exports to Asia and the Canadian Wheat Board's decision to hold back shipments in the hope of getting higher prices later.

CN-owned Illinois Central, which still reports traffic data separately, had a 17.5% gain over January 1999. CN and CP intermodal volume was up 15.5% and 12.7%, respectively.

Western carriers again demonstrated that congestion problems of 1997 and 1998 are behind them.

UP, which a year ago still was recovering from its service crisis, had a 3% carload gain and an 8.8% increase in intermodal loadings. BNSF had a 1% carload increase and a 4.7% intermodal gain. BNSF figures for January 1999 included some traffic that normally would have been handled by UP.

Norfolk Southern and CSXT still are comparing traffic data with a period before their June 1 division of Conrail and their ensuing service problems.

WASHINGTON: CSX's earnings slip

WASHINGTON -- CSX Corp., after delaying its fourth-quarter financial report last month because of accounting difficulties related to its sale of Sea-Land Service Inc. assets, on Thursday said it earned $44 million, before one-time items, compared with $108 million a year earlier, the Journal of Commerce reported.

Including the nonrecurring items, the company had a net loss of $25 million. One-time items affecting fourth-quarter 1999 results were an after-tax charge for a work-force reduction program of $34 million at the rail and intermodal units and an incremental after-tax loss on the sale of Sea-Land's international liner business of $35 million.

CSX said on Jan. 27 that fourth-quarter operating results were hurt by a significant loss at Sea-Land's international business as shippers shifted cargo bookings in anticipation of the sale of the carrier's international business to Maersk Inc.

Earnings also were affected by substantially higher costs incurred by the railroad in handling heavy fourth-quarter traffic on its network, which grew substantially with the June acquisition of certain Conrail assets.

"Results for 1999 were extremely disappointing, reflecting the difficulties we experienced implementing the Conrail integration," said John W. Snow, CSX chairman and chief executive. "Railroad earnings continued to be weak in January, reflecting high overall operating expenses associated with the integration and sharp rises in fuel and labor costs."

He added that while CSX expects to cut costs substantially this year, earnings for the current quarter will be well below a year ago.

"Results should improve over the course of the year as demand for rail service strengthens and our productivity increases," he said.

Fourth-quarter operating income was $157 million, compared with $276 million for the prior-year period. Including the one-time expenses, operating income for the 1999 quarter was $40 million. Operating revenue for the 1999 quarter totaled $2.7 billion, vs. $2.5 billion a year earlier.

For the year, CSX earned $339 million, compared with $428 million in 1998, excluding one-time items for both years. Total 1999 operating income was $1.02 billion, compared with $1.13 billion in 1998.

WASHINGTON: STB to examine aftermath of Conrail breakup

WASHINGTON -- The Surface Transportation Board, eight months after the division of Conrail was completed, has initiated a review of the merger, the Journal of Commerce reported. (This was reported yesterday in the UTU Daily News Digest.)

The STB is requesting comments on the implementation of the Conrail transaction and how the various STB conditions are working. When the STB approved the joint acquisition and division of Conrail assets by CSX Corp. and Norfolk Southern Corp. in July 1998, it set conditions that included a five-year oversight period.

The STB, as it has in other rail mergers, retained jurisdiction to impose additional conditions and/or take other action if it determined it necessary to address harmful effects of the transaction.

Under that jurisdiction, the board also requires quarterly reports from Union Pacific Railroad and Burlington Northern and Santa Fe Railway on the implementation of UP's 1996 purchase of Southern Pacific Rail Corp. and the granting of trackage rights by UP to BNSF to maintain rail competition in parts of the West.

In its July 1998 decision, the STB said it would monitor implementation of the Conrail transaction to ensure that CSX and NS adhered to the promises they made in the Conrail merger proceeding.

The board, in its decision on Wednesday to launch the review, said CSX and NS must file progress reports on the Conrail transaction. The STB also said it would examine the effects that the merger has had on the relationship of short-line railroads with the larger railroads, and within the Chicago switching district; the impact on Amtrak passenger operations and regional rail passenger operations; and it would review environmental-mitigating conditions.

MINNESOTA: Northwest Airlines searches home computers of flight attendants

MINNEAPOLIS -- Northwest Airlines last week began court-authorized searches of the home computers of between 10 and 20 flight attendants, looking for private e-mail and other evidence that the employees helped to organize a sick-out at the airline over the New Year's holiday, the Minneapolis Star Tribune reported.

The search has since been suspended pending a temporary settlement of the airline's lawsuit against Teamsters Local 2000, the union representing 11,000 flight attendants. But privacy advocates and attorneys not involved with the case say Northwest's action may embolden other companies to more aggressively monitor what employees say and do online from their home computers.

Companies have rarely sought to search the home computers of their employees. In the past, most such searches usually have been limited to cases involving workers who've been accused of stealing company files, passing on trade secrets to competitors or using insider information to profit on the trading of company stock.

The threat of a court-authorized search of home computers has already had one measurable impact: Postings to a rank-and-file Web site that was openly critical of both union management and the company have slowed to a trickle. Asked why the union didn't fight harder against the effort to search employees' home computers, Billie Davenport, president of Teamsters Local 2000, said the union complied with the discovery request because it felt it had nothing to hide.

ILLINOIS: Senate bill would give rail execs the gate

CHICAGO -- There likely is not a motorist in the south and southwest suburbs who has not had to cool his or her heels at a railroad crossing blocked by a stopped freight train, the Chicago Tribune reported.

Not only are such delays frustrating, but they also create traffic backups that sometimes prove dangerous to motorists and pedestrians and often prevent police and fire department vehicles from responding to emergencies.

Laws exist that permit the ticketing of trains that block rail crossings for excessive periods of time, but such measures usually are little more than a minor nuisance to the railroads.

That could change, however, if legislation currently before the state Senate becomes law.

A bill sponsored by Sen. Patrick O'Malley (R-Palos Park) and approved last week by the Transportation Committee would make it possible to jail railroad company executives whose trains chronically block rail crossings for long periods.

Under the bill, Senate Bill 1393, the Illinois Commerce Commission could, after conducting an investigation, determine that a railroad has engaged in the chronic obstruction of grade crossings.

Once a railroad has been so designated, the commission could then charge the railroad with either a petty offense, punishable with fines ranging from $200 to more than $1,000 per incident, or a Class C misdemeanor, punishable by a fine up to $500 and 30 days in jail. Repeat offenders could be charged with a Class B misdemeanor, punishable with a jail term of up to 6 months and a fine triple the amount of the fine levied for the first offense.

The proposed legislation mandates that railroad executives, not train or rail yard employees, serve any jail time assessed for blocking crossings.

"Trains that block railroad crossings for hours each day restrict access to businesses and inconvenience motorists," O'Malley said. "Blocked crossings also severely limit the ability of public safety personnel to perform their duties."

O'Malley's bill is now before the full Senate for consideration. A similar bill sponsored by O'Malley last year was approved by the Senate, but was derailed in the House of Representatives.

MARYLAND: Railworks reports earnings

BALTIMORE -- RailWorks (Nasdaq: RWKS) today reported in a press release that basic earnings per share of $0.47 for the three months ended December 31, 1999. Diluted earnings per share for the period were $0.43 representing a 72.0 percent increase from the fourth quarter of 1998, when the company reported pro forma diluted earnings per share of $0.25. Diluted earnings per share for the entire year of 1999 were $1.31 compared to pro forma earnings per share of $0.70 for the entire year of 1998, representing an 87.1 percent increase over the prior year.

The company's operating margin for the three months ended December 31, 1999 was 11.3 percent versus an 8.7 percent pro forma operating margin for the same period in 1998. For the year ended December 31, 1999, the company’s operating margin increased to 10.3 percent from a pro forma operating margin of 7.1 percent for the full year 1998.

Total revenue for the three-month period ended December 31, 1999 was $142.2 million, a 94.6 percent increase over the same period in 1998 when the company reported pro forma revenue of $73.1 million. Total revenue for the year ended December 31, 1999 was $468.1 million, a 73.4 percent increase over 1998 when the company reported pro forma revenue of $270.0 million.

Net income for the three months ended December 31, 1999 was $6.6 million, a 75.7 percent increase compared to the same period in 1998 when pro forma net income was $3.8 million. Net income for the year ended December 31, 1999 was $20.1 million, a 91.9 percent increase compared to the same period in 1998 when pro forma net income was $10.5 million.

WASHINGTON: Teamsters, Overnight resume contract talks

WASHINGTON -- Contract talks in the 3-month-old Teamsters strike against Overnite Transportation Inc. resumed Wednesday, just after the AFL-CIO gave picketing truckers a boost by pledging $500,000 to help escalate the labor conflict, a wire service reported.

Teamsters spokesman David Cameron said the AFL-CIO money would help finance an advertising campaign to let Overnite customers and the public know about the union's struggle with the company, and to pay to lobby members of Congress and shareholders of Overnite's parent company, Omaha, Neb.-based Union Pacific Corp. to get involved.

"We've joined with the Teamsters in asking Overnite customers to tell the company to respect the decision of its employees to join a union," AFL-CIO President John Sweeney said Tuesday.

Company spokesman Ira Rosenfeld said, "Overnite is hopeful that the Teamsters will in fact agree to the benefits package" offered.

The contract talks in Chicago, which resumed after a six-month lull, cover about 1,800 workers at 22 Overnite terminals where the company recognizes the union. The Teamsters say they have won votes to represent 3,600 workers at 37 of Overnite's 166 terminals, however.

The National Labor Relations Board ruled in November that Overnite engaged in actions that unfairly hindered the Teamsters' five-year effort to organize workers at the Richmond-Va.-based company. The NLRB said the efforts included offering raises and new benefits to workers at Overnite terminals who voted not to unionize.

The NLRB has ordered the company to recognize Teamsters' representation of workers at some Overnite terminals where the company disputed the union's authority. However, Overnite has appealed that decision and accused the Teamsters of causing a breakdown in contract negotiations last fall.

On Oct. 24, the Teamsters started using strike tactics against the company. While many Overnite drivers are continuing to make deliveries, some, joined by Teamsters from other companies, are following Overnite trucks to their destinations and picketing at delivery sites.

Overnite has filed a lawsuit seeking $5.2 million from the Teamsters, accusing them of a string of illegal activities aimed at extorting a contract from the company or putting it out of business.

Police have said several acts of violence appear to be strike-related. The most serious came Dec. 1, when William Wonder, of Evansville, Ind., was shot in the stomach as he drove from Overnite's Memphis hub.

Overnite competes in the less-than-truckload market, consolidating small shipments. The company has terminals in the United States, Canada, Mexico, Puerto Rico and the Virgin Islands.

JAPAN: First female bullet train conductors to make debut

TOKYO -- Japan's first female conductors on bullet trains on the Tokaido Shinkansen Line will make their debut next week, railway company officials said Thursday, a wire service reported.

On Wednesday next week, Rieko Tsujiuchi, 25, and Yuka Sato, 23, will start working the Tokyo-Osaka route of Central Japan Railway Co. (JR Tokai), where bullet trains were first introduced in Japan in 1964.

The two women, who are expected to eventually move to sections in charge of designing new trains and other railroad equipment, will conduct three types of bullet train -- the Kodama, Hikari and Nozomi.

The Kodama and Hikari super express trains travel at speeds of up to 220 kilometers per hour and the Nozomi 270 kph between Tokyo and Shin-Osaka stations.

Japan's bullet train network covers a wide area of the Japanese archipelago from Morioka and Yamagata in the north to Fukuoka in the south.

AUSTRIA: Labor unions protest government's economic plans

VIENNA -- Austrian labor unions aren't known for their fierce rhetoric. But now that a controversial right-wing government has been sworn in, they are howling in protest, claiming that plans for social and economic reforms place a burden on workers and threaten social harmony, the Wall Street Journal reported.

Angered by last week's coalition agreement between the center-right People's Party and the far-right Freedom Party, union officials have launched mass mailings, threatened strikes and called for demonstrations against the new government. While most of Austria's critics focus on controversial statements by Freedom Party leader Joerg Haider, the unions are calling attention to the government's plans to lower employer costs and to raise the age of retirement.

"The government program is a proposal that is unethical for workers," says Wilhelm Haberzettl, president of the Union of Railroad Workers/OeGB. He also warns that a government refusal to compromise on those issues would mean "that the conflict will be carried out in the streets, ranging from demonstrations to token strikes to actual strikes."

It is warnings like those that signal a turning point in Austria's labor relations. The nation's unions have had a strong influence on political and economic decisions for the better part of the past 50 years. Their close ties to the ruling Social Democrats in particular, guaranteed labor representation in parliament and at the negotiating table. Now that the Social Democrats are in the opposition, however, that model of decision-making has come to a preliminary end.

Confrontation is the most immediate option. The Social Democrats, who previously shared power with the People's Party, "have always sought compromises with union officials before going ahead with decisions," says Helmut Kramer, the director of WIFO, a Vienna economic think tank. "So, in the past there have hardly been any strikes. Now, the unions can take on the government much more aggressively."

Some business leaders and members of the new government believe the change in labor relations is a blessing to the political system. Austria's time-honored mainstream coalition was built on a system of compromise that slowed decision-making and hindered reform, some observers say. The Social Democrats and the People's Party have co-ruled for 34 of the past 54 years.

"A lot of initiatives didn't go anywhere because they were being stalled [in negotiations]," says Lorenz Fritz, the secretary-general of Industriellenvereinigung, the Austrian business association.

Union leaders counter that the consensus system that has defined Austrian post-war politics ensured that decisions reflected the needs of society as a whole. Abandoning that system won't come easy to them. "Conflicts are inevitable if they go ahead with the program," says Fritz Verzetnitsch, president of OeGB, the Austrian trade-union confederation. "But I don't wish to give the impression that I want these conflicts. I'm convinced that it makes much more sense to talk to each other and to find solutions," he says.

No solutions were found, though, when union officials walked out of coalition talks between Social Democrats and the People's Party in December. Their main objection: The party leaders planned to raise the retirement age, which is now low by European standards, by two years between 2001 and 2005.

"From the very beginning, the unions have had a problem" with some of the government's reform proposals, says Ursula Stenzel, a People's Party member of the European Parliament. "If they hadn't, we could have agreed on a coalition with the Social Democrats."

The government's new program -- based on coalition talks between the People's Party and Freedom Party -- in many ways resembles the one that union officials rejected in December. But some changes have added insult to injury. "It's much more hard-headed -- especially in terms of social policies," says Mr. Kramer.

It is true that the previous coalition's program featured proposals that were unpopular with unions. In addition to plans for later retirement, the program also stipulated lower employer-paid contributions such as unemployment and accident insurance -- and the gradual elimination of 9,000 jobs in the public sector. While the latest government proposal picks up and, in some instances, accelerates those plans, a closer look suggests some additional fodder for labor conflicts.

There is, for instance, a reference to a "change of all [employee-protection] regulations that represent a burden for businesses that is out of proportion, when compared with the concrete benefit for employees." The statement indicates a departure from the collective-bargaining tradition that has governed the whole range of Austrian labor issues ranging from working hours to salaries. Union officials also point to a note that authorizes health insurers to make employees pay "up to 20%" of medical bills.

"In the past decades, we've been working jointly on policies to serve the people," says Mr. Verzetnitsch. "Now they are promoting policies that make people serve business."

But others argue that the unions' heated response to the government program shows that the offense is psychological as well as political.

Austria's new ruling coalition is a "big break with the past," says Mr. Fritz. "Everyone will have to reposition themselves. And the first response of the unions is confrontation."