Metro General Manager Paul J. Wiedefeld’s financial “action plan” to save the struggling transit agency borrows a few pages out of a Boston playbook.
At the Massachusetts Bay Transportation Authority, transit officials have moved aggressively toward privatizing parts of the system, outsourcing tasks such as cash management and parts warehousing, and seeking to spin off some work such as bus maintenance.
The MBTA also has used the threat of privatization as a negotiating tactic, pressuring the agency’s largest union to offer concessions — such as delays to scheduled wage increases, lower pay for new workers, and limits on overtime hours — to protect jobs.
Combined, those changes are expected to save the Boston transit system nearly $400 million over the next 10 years, officials there said.
“We’ve been relentless in our focus for cost controls,” said Brian Shortsleeve, chief administrator and acting general manager for the MBTA.
While Metro’s average weekday ridership is about 35 percent larger than MBTA’s and its workforce about twice as large (because the Boston system outsources commuter rail and paratransit services), their budgets are comparable.
Despite the differences, Wiedefeld thinks Metro can employ some of the MBTA’s methods to curb costs.
He’s had meetings and phone calls with Shortsleeve and other senior MBTA management to learn more about their approach. And he’s not just looking at opportunities to privatize peripheral jobs such as cash management or warehouse operations. He also wants to consider outsourcing bus maintenance.
And once the second phase of the Silver Line opens in 2020, Wiedefeld said he would consider contracting out jobs such as station managers and track inspectors for that stretch of the system.
But during a time of strife in union-management relations at Metro, with members holding large-scale protests at two board meetings and a sickout Friday, he will face challenges winning the union’s support.
“To the extent that privatization can claim any savings, it is by driving workers into poverty and intentionally creating a turnover rate that keeps workers at the bottom of the wage scale forever,” said Larry Hanley, international president of the Amalgamated Transit Union, the umbrella organization for Metro’s largest union as well as Boston Carmen’s Union Local 589.
Hanley said the deal between the MBTA and the Carmen’s Union was made out of desperation.
“They blackmailed the workforce. It was like, ‘Either you participate in this by giving up your wages or we’re going to lay you off,’ ” Hanley said.
At the MBTA, commonly known as the “T,” the push toward privatization started with the harsh winter of 2015, which included snowstorms that brought the agency to its knees. The system’s aging infrastructure became inoperable. Tracks and trains were out of service for days. The repeated transit shutdowns had a significant economic impact on the region. And riders and local leaders wondered: Why can’t the MBTA find the money to fix itself?
At that point, annual operating costs were projected to grow three times faster than revenue for the foreseeable future.
“You couldn’t even describe this organization as dysfunctional. It was nonfunctional,” said Andrew Bagley, vice president for policy and research at the Massachusetts Taxpayers Foundation, a fiscal think tank.
With a new Republican governor in office, change was swift in the aftermath of that winter. The general manager resigned, and the governor appointed a fiscal management and control board to rein in the agency’s finances and find money for long-term capital repairs. And to bolster its efforts for cost savings, the state legislature agreed to institute a three-year hiatus on an existing law that made it difficult to outsource new work at the T — a law that originally was put in place to prevent lucrative contracts from being awarded to the friends of politicians.
So far, MBTA officials say the opportunities to outsource work have been hugely beneficial. They trot out impressive statistics about the extent of the savings and efficiencies. After 15 straight years in which the growth of annual operating costs fluctuated between 2.4 and 9.7 percent, for the first time in recent memory, annual costs decreased last year — by 0.3 percent. They expect this year’s costs to stay about the same.
And MBTA officials say their approach can be adopted by other transit systems, as long as they enforce stringent benchmarks and requirements with outside contractors.
“Whether it’s D.C. or Boston, we have to take the steps and make the tough decisions to get these agencies working better,” Shortsleeve said. “We’re still early in the process of getting the T back on track, but it’s great to see that many of the same issues are being addressed in a similar way to get these agencies to run better.”
They also say that outsourcing at the T has improved the quality of services. In the case of the outsourced warehouse operations, spare parts that once took days to be delivered from the warehouse to MBTA repair facilities are now delivered overnight. The agency is seeking to potentially outsource bus repairs — a practice that has already been implemented at most of the state’s smaller transit agencies.
“It does make strategic sense that the T, which has so many things that are broken, might be able to carve out areas that aren’t core [to] the mission, so they can devote their resources to operations and improving infrastructure,” Bagley said.
But Craig Hughes, special representative for the Boston chapter of the International Association of Machinists and Aerospace Workers, argued that the mechanics already working for the T are specially trained to deal with problems particular to the T’s fleet — and are best equipped to help find cost savings.
“Yes, we can find ways to save money. But we need to work together on that,” Hughes said. “We want to be part of the solution.”
And there has been pushback. Earlier this month, the Massachusetts congressional delegation sent a letter to the governor and transportation secretary, urging them to negotiate with the union to save bus maintenance jobs rather than opting for privatization.
“We as elected officials do not attempt to insert ourselves into the substance of collective bargaining,” the letter said. “However, we firmly believe that such good faith negotiations over the wages, work conditions, and benefits can have a positive effect for employees and management.”
There’s also skepticism from people like Rafael Mares, vice president at the Conservation Law Foundation, a Massachusetts organization that advocates on behalf of riders. Mares said he supports cost savings that can help preserve services for riders and finance infrastructure investment — but he fears that some of the outsourcing serves more as a political message. In some cases, he said, “the push for privatization has felt more like a goal in and of itself, rather than a way to fix the T.”
“The jury is still out on this,” Mares said. “The challenge with privatization is that the challenges are always great, but reality sets in after the decisions has been made . . . and only then do you see whether this is a good idea or not.”