An inter-union alliance of rail workers argued Tuesday that the massive freight train crash in East Palestine, Ohio late last week was a predictable consequence of Wall Street-backed policy decisions that have hollowed out the industry’s workforce, pushed remaining employees to chronic exhaustion, and sacrificed safety for profits.
In an assessment of the Norfolk Southern (NS) train derailment based on currently available information, Railroad Workers United (RWU) wrote that “the root causes of this wreck are the same ones that have been singled out repeatedly, associated with the hedge fund-initiated operating model known as ‘Precision Scheduled Railroading’ (PSR).”
The group noted that the “immediate cause” of the wreck “appears to have been a 19th-century-style mechanical failure of the axle on one of the cars—an overheated bearing—leading to derailment and then jackknifing tumbling cars.”
“There is no way in the 21st century, save from a combination of incompetence and disregard to public safety, that such a defect should still be threatening our communities,” wrote RWU, which supports nationalization of the U.S. rail system.
“Forty percent of the weight of NS 32N was grouped at the rear third of the train, which has always been bad practice and made more dangerous with longer heavier trains,” the statement continued. “This fact almost certainly made the wreck dynamically worse. But increasingly the PSR-driven carriers, driven to cut costs and crew time by any means necessary, cut corners and leave crews and the public at risk.”
According to RWU, “The short-term profit imperative, the so-called ‘cult of the Operating Ratio’—of NS and the other Class 1 railroads—has made cutting costs, employees, procedures, and resources the top priority. In this case, NS and the other carriers have eliminated many of the critical mechanical positions and locations necessary to guarantee protection against these kinds of failures.”
The crash in Ohio “has been years in the making,” the group added. “What other such train wrecks await us remains to be seen. But given the modus operandi of the Class One rail carriers, we can no doubt expect future disasters of this nature.”
“The PSR-driven carriers, driven to cut costs and crew time by any means necessary, cut corners and leave crews and the public at risk.”
Matthew Jinoo Buck, a senior fellow at the American Economic Liberties Project, explained in The American Prospect last year that “using PSR, railroad management’s job is to drive down the ‘operating ratio,’ or operating expenses as a percentage of revenue.”
“In other words, Wall Street judges railroads’ success based in part on spending less money running the railroad and more on stock buybacks or dividends,” Buck wrote. “Theoretically, focusing on lowering operating ratios pushes railroads to be more efficient, to do more with less. But when railroads have the market power they have today, they can instead ‘do less with less,’ as shippers and workers put it.”
Norfolk Southern, the product of a merger between Norfolk and Western Railway and Southern Railway, appears to have followed that model closely.
The company announced a $10 billion stock buyback program last March and has consistently raised its dividend, rewarding shareholders while refusing to provide its workers with basic benefits such as paid sick leave.
For the full year of 2022, Norfolk Southern reported record-breaking operating revenues of $12.7 billion.
As Buck wrote last year, “The driving force behind PSR’s widespread adoption was railroad executive E. Hunter Harrison and investor Bill Ackman, a notorious hedge fund manager.”
“After the two pushed through PSR at the Canadian Pacific railroad, Ackman’s colleague Paul Hilal opened an investment fund called Mantle Ridge, which invested $1.2 billion in CSX and successfully pushed CSX to appoint Harrison CEO,” he continued. “Under Harrison, and with the backing of CSX’s board, who saw larger bottom lines in sight, CSX pushed through PSR despite complaints from shippers who reported long delays or lost shipments. Every other railroad has adopted PSR or PSR equivalents; industry watchers say the one holdout yet to officially adopt PSR, BNSF, has adopted PSR-like measures.”
The crash in Ohio late Friday forced many local residents to evacuate to escape a possible explosion and the release of toxic fumes from the train cars, several of which were carrying vinyl chloride.
RWU said Tuesday that while many people in the area “were and remain evacuated, and property damage to both rail and non-railroad property will no doubt soar into the millions, we dodged a bullet as no rail workers and no trackside residents were killed.”
“This time,” the group added.
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