ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Wednesday, April 9, 1997 TAG: 9704090057
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: JEFF STURGEON THE ROANOKE TIMES
MEMO: ***CORRECTION***
Published correction ran on April 10, 1997.
The photograph of the Roanoke railroad yards on Wednesday's front
page was shot from the Fifth Street bridge.
Several lines were dropped from a story Wednesday about the
agreement between Norfolk Southern Corp. and CSX over how to split
Conrail routes. The incomplete paragraphs should have read: "NS also
operates major rail yards in Roanoke and houses marketing offices at its
downtown Roanoke office building. "One Roanoke-based railroad union
official said before Tuesday's announcement that rail union leaders want
to protect their members from any unforeseen fallout."
No Roanoke layoffs are called for in the agreement to divide up Conrail.
Norfolk Southern Corp. will emerge from the breakup of Conrail with the same or greater employment in the Roanoke area and equipped to offer local companies direct shipping to more markets, such as New York, a company official said Tuesday.
Hours earlier, NS and CSX - longtime rivals for East Coast rail markets - agreed how to split Conrail's routes. The pact ended the key dispute in a business tug-of-war that began in October.
NS spokesman Bob Fort reaffirmed the company's previous predictions that the deal won't hurt Roanoke's oldest surviving industry. He also disputed speculation that heavy borrowing to finance the deal will devalue the investments of NS shareholders, who are concentrated in the Roanoke area.
"We feel quite the contrary," Fort added. Overall, "there's nothing in here but the promise of growth."
The two Virginia railroads announced the agreement late Tuesday, after stock markets had closed and industry analysts were no longer available to react to the news.
NS said it will pay $5.9 billion for a 58 percent share of Conrail. CSX agreed to contribute $4.3 billion for a 42 percent share. The deal would transfer to NS about 6,000 miles of Conrail's lines, increasing Norfolk Southern's lines by 42 percent. CSX would pick up 5,000 miles of track, for a gain of 27 percent.
To take effect, the agreement still needs approval of the Surface Transportation Board, the federal agency that oversees railroad mergers.
NS and CSX plan a joint filing with the agency in June. That's when they'll reveal details such as which railroad would own Conrail's Altoona, Pa., railcar-repair shops and which would pick up Conrail's nearly 23,000 employees and in what numbers.
Norfolk-based NS is the Roanoke area's second-largest employer, with a local payroll of 3,200. Its railcar-repair shop has appeared to some to duplicate Conrail's Altoona shops, and this has raised questions about whether the Roanoke operation would continue at its current size were Conrail to be divided. Fort's statement Tuesday indicated no cuts are planned at the Roanoke shops.
NS also operates major rail yards in Roanoke and houses marketing offices at its downtown Roanoke office building.
One Roanoke-based railroad union official said before Tuesday's announcement that rail union leaders want to protect their members from any unforeseen fallout.
"The thing that we're going to aim for is the protection of our workers, the protection of their income and their jobs. It is the biggest issue," said Dave Benson, a general chairman in the United Transportation Union which represents about 100 NS Roanoke railroad engineers and rail yard employees, among others.
"We want to protect our workers from any damage that would be done to them from the merger. You're going to see all kinds of golden parachutes and everything else floating around. I think our members deserve the same protection as management is going to receive," Benson said.
Fort said NS interfered with CSX's solo bid for Conrail with the hope that the two railroads could compete in the lucrative Northeast markets. Conrail largely operates a monopoly, Fort said. The agreement "gives us what we wanted from the beginning - balanced competition," Fort said. And yet, he said, both companies stand to grow.
``This transaction will usher in a new era in transportation for the East," said David R. Goode, Norfolk Southern's chairman. "Norfolk Southern will reach important new markets and provide new and better services for customers.''
CSX Chairman John Snow said the split will create ``a rail balance in the region.''
``We have produced a result that will be embraced broadly by the communities and the states and the shipping public,'' Snow said.
"Conrail shareholders are obviously going to get more than they bargained for," Fort added.
Conrail stock was trading for between $70 and $80 per share when CSX first offered to buy Conrail. Tuesday's agreement means those shareholders would receive $115 per share.
NS will try to grow by offering its freight-hauling services to a much larger territory and to companies that currently ship by truck. Today, NS can't haul a load to the northeast without a delay when freight cars are switched to a different railroad. Under the plan, that delay would vanish and make rail hauling more attractive, Fort said.
"We're going to compete for business that is now on the highway, that could and should be moving by rail," Fort said, referring to railroads' chief competitor, the long-distance trucking industry. Part of that business, he said, is on Interstates 81 and 95.
LENGTH: Long : 107 lines ILLUSTRATION: PHOTO: DON PETERSE THE ROANOKE TIMES. The late afternoon sunby CNBglows off the rails as a Norfolk Southern engineer makes one of many
stops to switch the tracks night trains follow to the Roanoke yard.
The photograph was shot from the Third Street Bridge in downtown
Roanoke. color. Graphic: Map by RT. color.