Transportation Secretary Drew Lewis yesterday rejected a $229 million plan of wage and benefit concessions for Conrail proposed by representatives of its management and employes, saying the savings wouldn't be enough to keep the federally subsidized rail system in business.
Instead, Lewis campaigned for the administration's Conrail plan yesterday, announcing that 15 major Conrail users -- including the big three auto manufacturers, General Electric, Bethlehem Steel and several major trade associations -- were all in the administration's corner.
One government body -- the Interstate Commerce Commission -- is among the 15 major Conrail users listed. The others are General Motors Corp., Ford Motor Co., Chrysler Corp., Sears, Roebuck and Co., Du Pont Co., PPG Industries Inc., K mart Corp., General Electric Co., Bethlehem Steel Corp., American Transport Association, National Industrial Traffic League, American Farm Bureau Federation, American Paper Institute, and Chemical Manufacturers Association.
Lewis has asked Congress to make three fundamental changes in Conrail's structure: reducing operating costs along the 17,000-mile system, partly by shaving $400 million in labor costs by ending the guarantee of "lifetime" salaries for rail workers; transferring Conrail-operating commuter operations to passenger transportation agencies; and restructing and reducing freight terminal operations in the Northeast rail corridor served by Conrail.
Once these changes have been made, Conrail can be sold to one or more profitable, privately owned rail systems, Lewis contends.
To had off the administration's plan, Conrail's labor and management representatives last week gave tentative approval to $229 million in wage and benefit concessions. The system's 14 unions would defer $200 million in future wage increases; the rest of the savings would come from nonunion and management employes.
Lewis said the plan was "very satisfactory" and a "very important step." But, he added, "Unfortunately it's insufficient to solve the problems of Conrail."
He said the Reagan administration will not compromise on its goal of getting the government out of the rail business, adding that before Conrail can be said, its labor costs must be reduced. The administration has proposed to give a "very generous severance" payment of $30,000 to Conrail employes who no longer are working because of declining freight shipments on the system, Lewis said, and in return it wants Congress to nullify the current legislation guaranteeing rail workers full salaries until their retirement, whether or not they are employed.
Such payments would amount to $400 million, the largest part of the $1.2 billion to $1.5 billion the administration is willing to spend in additional payments to Conrail to prepare it for sale to private railroads.
Meanwhile, a House subcommittee is scheduled to resume consideration today of several approaches to Conrail's financial woes. Rep. James J. Florio (D-N.J.), chairman of the House subcommittee on commerce, transportation and tourism, is sponsoring legislation that would give Conrail three more years to become profitable, with the help of $600 million in additional federal subsidies, including about $300 million in severance pay for Conrail workers. Several Republican committee members are backing a compromise in between the administration's plan and Florio's.