ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Friday, March 14, 1997 TAG: 9703140045
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: PHILADELPHIA
SOURCE: DINAH WISENBERG BRIN ASSOCIATED PRESS
It's not clear whether shipping competition will improve, bringing down freight costs and boosting local economies.
Conrail investors could pocket a nice piece of change and many of the railroad's workers could lose their jobs. That much is almost certain.
What's less clear in the $10.5 billion deal that will divide Conrail between Norfolk Southern Corp. and CSX Corp. is how much - if at all - shipping competition will improve, bringing down freight costs and boosting local economies.
Shippers hope the deal will mean greater competition in the Northeast, where Conrail has a near monopoly, although some executives are concerned about losing a carrier in areas already served by two or three railroads.
``While the devil is in the details, we think that what CSX and Norfolk Southern is saying is terrific. It's what shippers have been asking for. It's for balanced and true competition and creating competition where none exists today,'' said Robert Voltmann, policy director of the National Industrial Transportation League, which represents 1,200 companies that ship by land, water and air.
Executives of the two railroads say the purchase will mean improved rail service, more competition with trucking and lower shipping costs.
``While the alternative that has been described publicly seems to be better than any of the previous merger plans of CSX and Norfolk Southern, the Steel Council reserved judgment until member companies have seen more specifics,'' said Harold V. Kelly, co-chairman of the Ohio Steel Council and executive vice president of Republic Engineered Steel of Massillon, Ohio.
Conrail shareholders would be clear winners, making $115 a share for stock that cost $70 before the first proposed merger was announced last fall.
Many of Conrail's 21,000 employees, however, stand to lose their jobs. Unions are preparing to fight the sale and politicians are taking a close look at it.
``In addition to the employees, the American taxpayer and the shippers will be the ultimate losers and will literally be slaughtered like fatted calves on the altar of these corporations,'' said Jed Dodd, president of the Pennsylvania Federation, Brotherhood of Maintenance of Way Employees, which represents 3,500 Conrail employees.
The AFL-CIO is expected to oppose the buyout during a U.S. Senate hearing next week.
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