A deeply divided Surface Transportation Board raised more questions than answers last week when it ordered Norfolk Southern to show the board why it shouldn't force the railroad to keep its Hollidaysburg, Pa., car shops open. First, some background. Now NS says it can't afford to keep the money-losing shops in light of the soft economy, the downturn in traffic levels, and the need to cut costs and shed excess shop capacity. And it says its pre-merger commitments were merely projections that didn't pan out despite efforts to insource car repair business. A labor coalition, joined by elected officials from Pennsylvania, asked the STB to examine whether NS violated pre-Conrail merger agreements it had made to keep the shops open and invest in them.
Labor contends that the shop turned a profit last year.
The STB largely agreed with labor and Pennsylvania officials, who cheered the ruling, announced May 21. NS says it will fight the order. It clearly contemplates an extraordinary break from precedent, putting the STB in the position of directly managing a railroad business and potentially harming the health of a rail system for the sake of a single facility, regardless of economic conditions. Nonetheless, we will provide the required additional information and will argue to the STB that we must maintain our ability to make business decisions that reflect current economic, operational, and business realities. As NS notes, the issue is bigger than just the Hollidaysburg shops and the 300 or so workers it employs.