Should We Take A Risk On Rail Quality?

That's the question the United Steelworkers of America are asking.

The average railroad commuter, passenger, crew member and shipper assumes that our rail transportation is safe. But all across the country — and around the world — customers of one rail-producing company have cancelled orders and returned defective product. Local governmental bodies and labor organizations (including the BMWE) representing rail workers are raising concerns and backing a boycott of the same company. Even Wall Street has downgraded its rating of the company.

The company, now doing business as Rocky Mountain Steel Mills (RMSM), is CF&I Steel, the Pueblo, Colorado, subsidiary of Oregon Steel Mills, Inc.

Late in 1997, its management made a fateful decision after workers in Pueblo went on strike over the company's unfair labor practices. They decided to illegally replace highly skilled and experienced steelworkers with a force of largely untrained and inexperienced substitutes.

The company claimed it could fully train its new workers in a short time to produce rail of high quality required by government safety standards and consumer specifications. But after two years of trying, it clearly has failed, and growing public awareness of this decision to try to manufacture rail with an amateur workforce has led to a national outcry.

Just a few examples include the Board of Supervisors of the City and County of San Francisco which questioned the wisdom of Oregon Steel replacing more than 1,000 skilled workers with an average of over 25 years on the job. Citing the health and safety violations which resulted in "the second largest OSHA penalty in Colorado history," and potentially "serious quality problems" at the company, the Board called for a ban on purchasing rail for track replacement and repair from Rocky Mountain Steel Mills under the current conditions.

CSX questioned "whether to use the RMSM rail in inventory" after discovering a second void (hollow in the rail head) in RMSM rail according to an internal Rocky Mountain Steel memorandum. The memo quotes a CSX official as saying, "this is scary, with RMSM rail falling apart." The report further details the conclusions of an independent laboratory test commissioned by CSX, which "questioned the reduction ratio, number of passes and bloom size" — in other words attributing the recurrent void problem to a fundamental flaw in the method of producing rail at the Pueblo mill.

Canadian Pacific Railway announced its intention to reduce its Soo Line's dependence on rail produced by RMSM. The action came following repeated concerns raised by the BMWE regarding quality of RMSM rail. Continuing to buy from RMSM, the BMWE warned, could mean CP "jeopardizing the safety of its operations, the employees of the company and the general public."

Burlington Northern discovered as many as 150 rails containing voids in RMSM shipments in 1998, according to the Federal Railroad Administration. This is an alarming number considering the potential for disaster represented by just one undiscovered void.

The Egyptian government canceled an order of UIC carbon rail, which Rocky Mountain Steel had publicly touted as proof it was back in the global marketplace. Egypt cancelled the contract after repeated failures of RMSM to produce satisfactory product to fill that order.

Norfolk Southern was Rocky Mountain Steel's sixth largest rail customer, both in tonnage and dollar volume before RMSM replaced its experienced workers. NS has sharply cut back rail orders from RMSM. While NS officials have not commented publicly on the reasons for their decision, its timing raises obvious questions.

The canceled orders, returned product and growing public outcry, said the Steelworkers, are the result of CF&I/Oregon Steel's greed-based decision to illegally refuse to reinstate the 1,000 Steelworkers largely responsible for its previous reputation as a producer of quality rail.

Though the company is attempting to keep a veil of secrecy over its production and quality problems, reports leak out anyway — often by courageous employees who must remain anonymous for fear of reprisals.

The company's rejection rate — with continuing problems of asymmetry (misshapen rail), warped rail (sweeps and hooks) and voids (hollows in the rail heads) — has become difficult to hide.

"Rail finishing has recently gone through several changes in inspection, which were made to prevent the possibility of shipping a defective rail," declared the company's Weekly Bulletin in January 1999 — a virtual admission that the company has shipped defective rail. Trying to replace quality with quantity, the company now assigns more than 30 workers to rail inspection — trying unsuccessfully to do the job once done well by 20 skilled Steelworkers.

A January 13, 1999, handout at a management meeting noted company problems including:

We are the only rail producer with a void problem.
Our short rail percentage is the worst in the business.
Our re-work rate is the highest in the business.
We have the worst delivery record of any rail supplier.
We have lost 17% market share.

The Steelworkers are calling for a commission of government safety experts, rail product users and public interest organizations to jointly assess the many reports to assure that our nation's rail supply has not been compromised with dangerous stock that could spell disaster or death for rail passengers and others who depend on the national rail system.