Mergers in rail industry confront resistant workers

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Works wire mill in Cleveland, workers were asked to vote themselves out from under the basic steel umbrella, accept a $5-per-hour cut in wages and benefits, reduce the work force by 100, and give up all local working conditions. Although USWA District 28 Director Frank J. Valenta argued this might help save their jobs, Local 1298 members rejected the offer by a margin of 500 to 10.

In explaining their vote, Local 1298 members said that an important consideration was the effect this agreement would have on other steelworkers. If they voted themselves out from under the basic steel umbrella, it would allow the company to approach other locals with similar offers and lead to the end of a national contract for wages and benefits.

US Steel's blackmail offer at its Fairfield Alabama Works involved contractIn the March issue of Socialist Action, Shirley Pasholk discussed the recent history and perspectives for the USWAand the need for a fighting leadership. Back issues can be ordered for 50 cents each from Socialist Action, 3435 Army St., Rm 308, San Francisco, CA 94110.

ing out all maintenance work. In other cases, the company demanded combination of production and maintenance jobs.

Opposition to further concessions in basic steel has grown so strong among the union ranks that the International Executive Board unanimously approved a statement Cec. 13 opposing all further wage and benefit concessions in the steel industry. Literature for all three candidates for International president declared opposition to concessions.

In January, US Steel reported losses of $1.16 billion in 1983. (Much of this loss was in the form of write-offs for the closed facilities.) The day after announcing these losses, US Steel announced its plans to spend $575 million to purchase National Steel.

US Steel workers were particularly incensed that a company which supposedly can't find money to modernize its existing facilities had no difficulty coming up with the funds needed to purchase the nation's seventh largest steel producer. They also angrily recall that two years ago, while pleading poverty, US steel was able to buy Marathon Oil Co.

US Steel withdrew its request to purchase National Steel after the Justice Department rejected the original J & LRepublic merger proposal. Regardiess of whether this merger is put into effect, it's clear that the restructuring of the steel industry, while increasing profits and providing huge tax write-offs, will do nothing to benefit workers.

Instead of reacting in shocked disbelief to every new attack on steelworkers, the USWA needs to stop operating in the framework of "what's good for the companies is good for the workers." What's good for the companies is increased profits, lower wages, and worse working conditions. The union needs to mount an offensive against the continued attacks on worker's living standards.

Socialist Action HOUSTON-Workers in the rail transportation industry face early summer contract expiration dates this year. Unions representing some 350,000 rail workers, including engineers and train crews, maintenance and repair, and clerical workers are involved. They will face an industry management looking for openings to impose major changes in pay, benefits and conditions of work.

There is a massive reorganization of corporate structures taking place in the transportation industry, and large mergers of main line railroads are occurring. Workers in the industry have responded to the attacks resulting from the mergers. They have engaged in both strikes and political demonstrations. But at the same time they are aware of the experiences of workers in other sectors of the transportation industry and other major industries like steel production.

Recent Supreme Court decisions [see Socialist Action March 1984 editorial] set the stage for total economic warfare Eugene V. Debs, leader of can socialism, initiated first unions.

between labor and capital. The cumulative effect of clashes between air transportation workers and, recently, bus workers in the "deregulated" transportation sector indicates that this may be a summer of tension, if not outright conflict, in the rail industry.

A massive restructuring of basic industry is developing during the depths of the present economic crisis. Transportation of commodities and raw materials, for which railroads, oil pipelines and truck fleets exist, must take place on terms more profitable to the owners of large capital holdings who control transportation. This restructuring takes place because of trends in the world markets of multinational corporations. In railroads, especially, this is an historic pattern.

In an article on mergers in the railroad industry (Modern Railroads, December 1983), F. Stewart Mitchell states the following:

"It would appear that the present merger movement is more a trend towards regional systems ... Present behavior is much the way the railroad industry consolidated itself in the late 1880s and early 1890s, when, then as now, shifting world trade patterns forced railroads to seek greater economies of scale through acquisition of more and more mileage under the same corporate banner."

The historical consciousness author of these lines is revealing in another context. In the 1880s and early 1890s labor engaged in struggle with railroad companies, suffering defeats and deaths at the hands of "federal deputies" (armed thugs) brought against strikers by the companies. A founder of the U.S. socialist movement, Eugene V. Debs, was arrested for his leadership role in these early struggles. It is interesting that trade journals today are recalling this period of struggle. Are the railroad bosses looking for some old tactics with which to confront the unions this summer?

The objective of the mergers is to consolidate the railroad, trucking and warehousing networks under the control of the large rail monopolies. Short lines and spur lines which used to serve internal markets lie abandoned in the dust of fast moving freights. The railroad workers who were part of the "obsolete" and "unprofitable" portions of rail operations have nowhere to go but the unemployment lines.

This reorganization also affects American Railway Union and pioneer of Ameriefforts to organize rail workers into industrial related manufacturing companies such as track maintenance companies. The December 1983 issue of Modern Railroads put it sharply: "We must produce machines that get on and off the track more quickly and are more productive while they're working"

The track maintenance operations of rail employers, in turn, are reducing road crews and increasing investment in machinery, thereby intensifying the labor of those left on track crews. The needs of rapid freight transit dictate the emphasis on speed and efficiency in all areas of railroad and intermodal transportation. The increased speed-up is now threatening safe working procedures and decent work rules for crews and maintenance forces in the industry.

The driving force animating mergers and reorganization of labor is the need of capital investment to require rapid realization of profits—a tendency based on reduced turn-over time of fixed capital (the time between installation of new equipment and its physical consumption in the production process). This tendency is driven by rapid technological innovation, the objective of which is to realize profit from investment at above average rates (superprofits). This driving force of the world market exerts pressure on all basic industries in the United States— from steel production and coal mining, to transportation of raw materials and commodities. It is why mergers are taking place in major sectors of the produc tive economy.

The reorganization of the railroad industry has benefited from government support. The 1976 "4R" act which created the Conrail system pioneered the current era in railroad reorganization. This act took "unprofitable" rail systems such as the Penn Central Corporation's rail system (Penn Central Corporation still exists, and recently tried to obtain Gulf Oil!), reorganized them at government (taxpayer) subsidized expense, and prepared the new rail system for return to direct private ownership and management. Conrail workers, in the process, suffered job loss and were forced to accept a 10 percent wage differential between their system and Il other systems with union contracts.

The 1980 "Staggers Act" (passed under Carter) set the stage for current restructuring, mergers and rate "decontrol." In a revealingly candid statement concerning "deregulation," Gus Welty, senior editor of Railway Age, wrote in the January 1984 issue of his magazine: "Somewhere, the purposes of deregulation may have gotten lost in political perception: Deregulation was not intended as a vehicle to provide shippers with lower costs, per se; rather, it was intended as a vehicle which would carry transportation companies to a point at which revenues would be adequate to provide for maintenance and improvement of the system, thus removing the threat of a breakdown in the system which would probably lead to nationalization."

The Staggers Act windfall in increasing rates for freight generated proportionally more income for carriers. Interstate Commerce Commission accounting regulations allowing railroads to capitalize and depreciate fixed plant projects, instead of treating them as operating expenses, provided tax incentives (read: lost taxes from railroads) for increasing maintenance-of-way activities. The result has been a rebuilding of main-line roads to high levels of reliability. In the depths of the slump, railroads spent almost as much on maintenance of way as during the last pre-slump period. This reflects the willingness of the government to "interfere" in private enterprise when and where the owners of the companies involved deem it profitable.

Industries related to railroads, such as steel, car and locomotive manufacture, and high-technology applied to railroads, are affected by the restructuring of transportation. Less track mileage translates into smaller orders for steel rails. South Works, Chicago, was supposed to have become a rail production plant, but now, US Steel has decided to close it down.

In addition, merger activity brings company-owned car manufacturing shops into the fray. The Union Pacific shop in Roanoke, Va., is robotequipped, and can mass-produce the needed cars. The overall effect, while opening up some jobs in the transportation companies, is to reduce overall employment. Shorter production runs will translate into more "furloughs" for rail workers and car-building company workers.

The mergers taking place in the railroad industry-the titanic pressures and forces involved-make confrontation with resistant workers more and more likely. Already major strikes-such as the fall 1982 strike by engineers-have resulted from changes in work rules. In the second part of this article the growing resistance by rail workers to the companies' assault-and perspectives for fighting back-will be explored in greater detail.

Socialist Action April 1984

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MERGERS AND BANKRUPTCIES E Business Week duly notes managements' main concern: "The troubled airlines have one overriding problem in industry as a whole provided 19% more output with less than 1% more employees than the 1978 level.

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