Merger is the topic of conversation in the railroad industry, according to Interstate Commerce Commission sources. With several proposed mergers in the works, hearings held yesterday and continuing today on the subject have acquired added importance.
A preliminary report in mergers by the ICC's Rail Services Planning Office initiated the hearings, at which several insustry spokesmen responded to the study's findings.
The report made several recommendations, including a preference for end-to-end mergers over parallel ones, voluntary restructing by the industry instead of mandates and minimum government interference in management-labor cooperation.
The study also said the ICC should be more concerned with protecting and providing essential services than protecting existing corporate entities. The report said the commission should also be interested in minimizing adverse environment and community impact because of mergers and maintaining or improving national defense and environmental considerations.
Further, the study called on the ICC and the Department of Transportation to "clarify specific procedural issies which the Rail Services Planning Office believes presently impede the merger planning process."
According to Alan M. Fitzwater, Director of the Rail Services Planning Office, "While carrier mergers are not a panacea for all of the problems of the rail industry, they can be a valuable tool in improving service and reducing costs in many situation."
The none-month study was, according to ICC sources, released to coincide with an expected increase in merger activity.
The consensus of industry leaders was that the report was a worthy effort.
One statement in the study that won considerable attention was, "The commission should declare that mergers are not a proper or effective method for dealing with marginal carriers and that the commission's primary responsibility is to assure adequate service rather than to preserve corporate untities."
In a letter to the ICC, Burlington Northern vice president and eastern counsel L.L. Duxbury said the possibility of a forced inclusion of a marginal or losing railroad into "an otherwise well-conceived merger would subject the merged company to strains, financial and otherwise, which few members of the industry would be strong enough to easily absorb."
Duxbury said forced inclusion"may well be the biggest deterrent to merger proposals."
"We agree that the merger process is not the proper means to deal with marginal carriers in those areas of excessive trackage," said attorney John Humes, Jr., representing the Florida East Coast Railway Co.
"We are no more willing to advocate the wasting of tax money to support a non-essential rail line than is anyone else," he said.
Asking the commission to avoid forcing "involuntary inclusion" of redundant rail properties in the name of preservation of adequate service, Southern Railway System's lawyer Allan Wimbash also said that forcing marginal railroads into mergers could "lower the overall level of service provided by the merged railroad."