Norfolk Southern Corp. has furloughed nearly 5,100 train and engineering workers this year, about 12 percent of its work force, officials of the giant railroad told financial analysts today.
In their first appearance before analysts here since the June 6 merger of Southern Railway Co. and Norfolk and Western Railway Co. that created the company, officials said the recession is cutting into their business, particularly the hauling of steel-related coal products and manufactured goods.
Robert B. Claytor, chairman and chief executive of the company, said Norfolk Southern has seen no evidence of an economic upturn. "I don't anticipate any substantial upturn before late in the year, if then," Claytor said.
Though Norfolk Southern officials cautioned against quarter-to-quarter comparisons of second-quarter figures, the company reported profits for the period of $138.2 million ($1.26 a share), up 77 percent from $78 million ($1.26) in the same quarter of 1981. Revenues for the quarter rose to $916.9 million, up from $789.3 million. The company also announced that it would pay its first joint quarterly dividend on Sept. 10 of 70 cents a common share to owners of record Aug. 6.
Although the figures are based on the assumption that the two railroads were merged for the entire quarter, Norfolk Southern officials said the calculations do not measure the integration of the two operations and also are being compared to a 1981 quarter when the company's coal shipments were crippled by a major coal strike.
Claytor said that revenues for all major merchandise groups carried by the railroad were down in the quarter, except some intermodal shipments and farm and paper products.
Since coal shipments dominate the railroad's business, with coal, coke and iron ore making up 41 percent of second quarter revenues, Claytor was asked about coal's prospects. He said the long-term outlook is very good, particularly since utility executives have told him that "nuclear power is absolutely dead" as far as new facilities go.
But Claytor said Norfolk Southern is seeing "signs of weakening now," particularly in shipments of coal for export, which he said would be lower for the second half of the year. In fact, the railroad has 9,500 hopper cars in storage, part of a fleet of 38,000 cars in storage awaiting an end to the economic downturn.
The company also faces the possibility of a strike this fall with federal mediation beginning with two unions on Aug. 10. Work rules and not wages are the primary issues in the talks, according to George S. Paul, executive vice president for administration. Eliminating cabooses is "our No. 1 priority in the labor negotiations," Paul said.
On the merger of the lines, Claytor said he expects that by the end of the third year of the amalgamation, the new railroad will realize about $95 million a year in savings. And since the merger, a company "sales blitz" has brought Norfolk Southern new or expanded contracts worth about $40 million a year.
He also reiterated the company's interest in ultimately "offering a total transportation package," which would include truck and water services. With the trucking industry "in shambles," the company is studying possibilities there with an eye on its own cash-rich position.
Norfolk Southern has about $723 million in the bank, and the combined operations of the two companies make it the nation's largest transportation concern.