UPSWING, NEW WORK RULES COULD BOOST RAILROADS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, January 26, 1992                   TAG: 9201280267
SECTION: ECONOMY                    PAGE: 18   EDITION: METRO 
SOURCE: DANIEL HOWES BUSINESS WRITER
DATELINE:                                 LENGTH: Medium
UPSWING, NEW WORK RULES COULD BOOST RAILROADS
The recession of '91 may prove a distasteful memory for Norfolk Southern Corp. and other Class I railroads this year, as the economy recovers and savings come from new two-man crews and changed union work rules.
It's already happening: Rail stocks were up 58 percent last year and could well be a good buy again this year.
"There's no question [they] substantially outperformed the market," said Jeffrey Medford, a transportation analyst for Wheat, First Securities in Richmond.
The long-held perceptions that railroads hold little potential for growth, are shackled by arcane work rules that keep labor costs high, and operate under stifling federal regulations are no longer true, analysts say.
"It's a year when the railroads are gaining a significant amount of control," said Joel Price of Donaldson Lufkin & Jenrette in New York. "It's going to be the cost side that does it."
Analysts and company officials predict a slight rebound in business this year but caution that continued softness in the related steel and auto businesses could dampen revenues for another year.
Norfolk Southern's coal haulings should improve over last year, officials said, though they quickly point out that '91 performance was second only to '90 - the best year in the history of the company.
Last year's coal haulings - some 40 percent of the company's total revenues - were plagued by utility customers' "inordinately high" stockpiles and decreased power demand from industry, said Mark Bower, the coal division's manager of new business development.
Changing political conditions abroad - the collapse of the Soviet Union and the end of coal subsidies in Germany and the United Kingdom - augur well for Norfolk Southern's export coal business, said Tom Rappold, director of international ore traffic.
"We think the underlying strength in Europe is still there," he said, predicting increased demand from Germany, Sweden, Finland and the United Kingdom in the coming year.
The move to two-man crews on through freight trains is sure to reduce NS's work force but officials still are not sure what the impact will be.

by Archana Subramaniam by CNB