Railroads Claim Budget Requires Furloughs While Still Using Contractors

In actions reminiscent of the railroad industry of the 1960s and 1970s, two Western mega railroads, the UP and BNSF furloughed thousands of BMWE members this year. Union Pacific, still reeling from its BMWE-opposed merger with the Southern Pacific, claimed that the service gridlock that resulted from the merger caused UP to use up its capital budget at a faster pace than expected. UP also told the Journal of Commerce that the BMWE furloughs would help give the UP better third and fourth quarter financial reports. According to reports provided BMWE, 3,600 BMWE members will receive pink slips on the UP and 2,600 BMWE members will receive layoffs on the BNSF.

This type of downsizing is nothing new in the railroad industry. It's one of the principal reasons that railroads were unable to compete with the trucking industry during the 1960s and 1970s. The technical term for this is deferred maintenance. Due to the fact that construction and maintaining the right of way, bridges and buildings is costly, railroad management of the 1960s and 1970s always believed they could put off maintenance until the day after tomorrow. Unfortunately, such thinking leads to a rapid deterioration of the track structure.

As the track structure deteriorates, track inspectors are compelled, at threat of their jobs and personal fines, to slow order the track. The slow orders make it impossible for the railroads to meet shipping schedules -- schedules which are based on higher train speeds. The railroads must then either give shippers slower schedules or fail to meet schedules that are based on a higher class of track. As a result of having to either lower the class of track (and thus the speed the trains can go over it) or fail to meet schedules based on a higher class of track that is slow ordered, the railroads lose market share in the highly competitive freight transportation market. Trucks begin to move freight that was being moved by rail.

President Mac A. Fleming, when asked about the furloughs on UP and BNSF stated: "The railroads' decisions are penny dumb and pound dumber and their budgetary rationales may not be true. In the short run, the railroads are paying a large number of our members protection payments to sit home as a result of these massive furloughs. While our skilled and qualified members sit home, wanting to work, the track deteriorates, despite the railroads using less skilled and less qualified contractors to perform work that our members sitting at home under pay should be performing. In effect, the railroads are paying three times for one sub-standard product. Supposedly, one of the purposes of deregulation was to end these exact types of policies.

"Railroad management should recognize that deferred maintenance means substantial decline in revenues. If the railroads can't provide reliable, rapid freight transportation, then other modes of freight transportation will. Our brothers and sisters who operate the engines cannot move their shipments at speeds faster than the track conditions allow. It's just as simple as that.

"And given the massive abandonments of track which occurred in the 80s and early 90s, there already is a capacity problem -- meaning that there is a need for more routes. The track that is left is used to capacity, meaning it is subject to rapid deterioration when maintenance is deferred. And in the intermediate and long run, these decisons mean that shippers at an increasing rate will find rail transportation to be increasingly unreliable.

"If the railroads want to play in the unregulated market they created, they need to practice what they preach by expanding the existing track network and maintaining what they have at high class levels. Otherwise they pay workers who are sitting home, lose market share and current and future revenues, suffer greater damages to freight, more derailments and more injuries to the public and to their workers. UP and BNSF deferred maintenance policies, no matter how they try to dress them up into intelligent business decisions, simply hurt our industry. On the stupidometer, the decisions by the UP and BNSF management is an eruption of historic magnitude."

All furloughed members should read the article in this Journal (see page ___ ) about the Feb. 7 job protection agreement as well as contact their system office about claims and any questions about their rights under Feb. 7.