January 28, 2016

Railroad Merger Could Hurt West Virginia | Herald Dispatch

Officials representing West Virginia are right to sound the alarm over the Canadian Pacific railroad's attempts to acquire Norfolk Southern, one of the two major railroad companies serving West Virginia.

The basis for their concern comes down to one thing - jobs - albeit from two perspectives. One aspect is the number of jobs that could be lost in the Mountain State if Canadian Pacific is successful in its takeover bid. The other is the potential impact on a project in Wayne County aimed at boosting the number of jobs in our region.

From both viewpoints, the proposed merger would not bode well for West Virginia.

Starting in November, Canadian Pacific began tendering offers to buy Norfolk Southern, proposals that have been rebuffed as inadequate so far. Canadian Pacific's leaders say the merger would be good for the railroad industry, creating a coast-to-coast railroad line that would improve efficiency and particularly reduce rail congestion in the Chicago area.

Of course, rail efficiency in the Chicago area is not a big concern for folks in West Virginia. But Canadian Pacific's record on creating efficiencies is.

According to U.S. Sen. Joe Manchin, D-W.Va., Canadian Pacific has cut 6,000 jobs - or one-third of its workforce - under its current leadership since 2011. That included 1,800 jobs in 2015. Now, Canadian Pacific plans to cut 1,000 more jobs - or 12 percent of its current workforce - this year.

With that track record, concern about what would happen to Norfolk Southern's 990 employees in West Virginia is certainly justified. Counting Norfolk Southern's active employees in the state and 430 retirees, Norfolk Southern pays out wages and retiree benefits totaling $67 million. How big a hit would that suffer if Canadian Pacific takes over?

Norfolk Southern also has been a key partner in the development of the Heartland Intermodal Gateway in the Wayne County community of Prichard. The purpose of the facility, which began operations within the past month, is to provide businesses with a truck-to-rail transfer facility along the 530-mile Heartland Corridor that runs from the Port of Virginia in Hampton Roads, Virginia, through West Virginia to Chicago. Norfolk Southern owns that rail line, and used $90 million Congress allocated in 2005 to raise overhead clearances for 29 rail tunnels to allow double-stacked containers to move through the state. A majority of the land used by the intermodal facility was donated by Norfolk Southern, and the railroad line has committed to making regular stops at the Heartland Intermodal Gateway to help it develop. The West Virginia Port Authority identified 1,500 potential jobs that could be created as a direct result of the Heartland Intermodal Gateway, including the development of warehousing and distribution centers near it.

Would Canadian Pacific maintain that commitment to the intermodal facility? Local and state officials have grave doubts.

Manchin is calling for the Senate Committee on Commerce, Science and Transportation to review the possible merger thoroughly before any transaction is allowed. U.S. Sen. Shelley Moore Capito, R-W.Va., said U.S. Rep. Evan Jenkins, R-W.Va., plan to write to the National Surface Transportation Board - the agency that would review any merger - about how it could jeopardize jobs, rail service and several ancillary industries in West Virginia.

Some analysts doubt that the NSTB would approve the merger if it came to pass, but that's no reason for lawmakers to hold back on raising their concerns about the potential deal. They should continue to watchdog the merger sought by Canadian Pacific because a significant number of jobs could be on the line.