(The following story by Walt Frank appeared on the Altoona Mirror website on July 29.)
ALTOONA, Pa. — Conrail — the one-time railroad giant — wasn’t going to make it, so a decision loomed over Blair County: Who would take over the railroad and its workers?
It has been about a decade since talks of a takeover captured the industry and the area. The stakes were high, and the future was uncertain. Ten years later, only a few of the now-faded light blue and white locomotives pass through town, but a look at the impact of the promises made and kept remain at the forefront of Altoona’s culture and economy.
“Looking back in retrospect, it was a better decision than I thought it was at the time,” former U.S. Rep. Bud Shuster, R-9th District, said about choosing Norfolk Southern Corp. over CSX Corp. “The most realistic solution was to cross our fingers, and we chose Norfolk Southern. Thank goodness we made the decision that we made. If the shops were sold to CSX, both shops could have been closed.”
In 1997, Norfolk Southern agreed to pay $5.9 billion for 58 percent of the Philadelphia-based Conrail, which included most of Conrail’s lines and facilities in Pennsylvania and the local shops. CSX paid $4.3 billion for the rest of Conrail.
Rumors swirled that the Juniata and Hollidaysburg car shops could close, former state Sen. Robert Jubelirer said.
Open and close
“There was always a fear the Juniata shops would not survive,” Jubelirer said. “Folks told me they were scared to death of layoffs. I remember the layoffs; they would hire people and then lay them off.”
The local shops had an ally in Shuster, who was chairman of the Transportation and Infrastructure Committee. His committee had jurisdiction over the Surface Transportation Board, the body which reviewed the takeover.
Shuster helped broker a deal between Norfolk Southern and CSX.
“He was an insurance policy that they couldn’t close things here,” Jubelirer said.
Shuster had hoped to save Conrail but realized that was not feasible.
“CSX would have shut down both shops. That was one of my great fears; that motivated me to support Norfolk Southern,” Shuster said.
The bidding war between Norfolk Southern and CSX benefitted the Altoona area. Shuster said he was able to secure a commitment from Norfolk Southern to keep open the Juniata shop.
“I would get them both in my office. They wanted my support. That is why I was able to extract the commitment for the Juniata shop and the best effort to save the car shop,” Shuster said.
Shuster said he knew the days of the Hollidaysburg Car Shop were numbered.
“[Norfolk Southern] said they would invest $4 million. I think they did that. They were very up front about the car shop from the beginning. They knew they had a problem. There was such an overcapacity there. They tried their best to save it, but they couldn’t justify it because it was so huge,” Shuster said.
On June 23, 1997, Norfolk Southern and CSX filed a 15,000-page document spelling out the nuts and bolts of the two railroads’ plans for Conrail’s assets over a three-year period.
Norfolk Southern pledged to invest $67 million in the local shops and add 178 jobs over four to five years.
Norfolk Southern also said it planned to transfer work to Altoona and Hollidaysburg.
Norfolk Southern isn’t releasing specific investment numbers, but the number of jobs at Juniata — about 950 — is about the same today as it was when it took over June 1, 1999.
The Hollidaysburg Car Shop closed July 18, 2002. About 320 people worked there in November 2000 when Norfolk Southern announced plans to close the shop. The number dwindled to about 180 when the shop closed.
Shuster and railroad industry analysts have no reason to believe Norfolk Southern didn’t keep its word.
“At Juniata, they achieved their promises and exceeded their promises. It is a great success story,” Shuster said.
“I would be surprised if they didn’t [keep their promises]. They have always been known as a railroad which maintains its property,” said Tony Hatch, an independent rail transportation analyst based in New York City.
“I know that Norfolk Southern did re-establish the shop as a thoroughbred quality service shop. In addition to servicing their own locomotives, they also did outside contract work for other railroads,” said William C. Vantuono, editor of Railway Age magazine.
Up and down
Employment numbers at the shop have fluctuated.
During the past two years, Norfolk Southern hired about 340 people to work at the Juniata shop. A lot of the jobs were added because of attrition, spokesman Rudy Husband said.
Norfolk Southern’s success can be measured by other means other than just the number of employees.
Norfolk Southern had a net income of $172 million on $6.2 billion in revenue companywide in 2000. In 2006, net income increased to $1.5 billion on $9.4 billion in revenue, Husband said.
The value of company stock has increased from $31 per share when Norfolk Southern took over June 1, 1999, to as high as $59.77 in the past year, an increase of about 93 percent.
Norfolk Southern stock has increased in value by about 13 percent in 2007.
“I would say they have done pretty well. Others have done better, but it has been a decent return,” said Mike Irwin, president of Irwin Financial Inc. of Altoona. “It has worked out well for Norfolk Southern, and they should be pleased they have done above average over that period of time.”
Better down the track
The Juniata shop has become more efficient under Norfolk Southern.
“Today we are doing exceptionally well. We are doing more locomotive work there than we have ever done before; we have invested a substantial amount of money into the shops,” Husband said.
Norfolk Southern overhauled 420 locomotives last year and will overhaul a comparable number this year. Conrail’s annual overhaul numbers previously had been in the low 200 range, Husband said.
Norfolk Southern typically overhauls a locomotive in seven days. Under Conrail, it took about 21 days for a locomotive to get through, he said.
Today, Juniata handles the overhauls on about 95 percent of Norfolk Southern’s fleet of 3,800 locomotives.
“Productivity has increased substantially. They have taken innovative ways to maintain their competitiveness in a global economy,” said Martin J. Marasco, president and chief executive officer of Altoona Blair County Development Corporation. “Jobs have been lost in manufacturing throughout the country and Pennsylvania especially. Those who have survived have increased productivity and are advancing their products. You are seeing that here. They are producing more with the same or less number of people.”
Staying in sight
The Juniata shop is not as prominent these days, but it remains a key player in the community.
“It is not as significant today as it was in the 1950s when we were a railroad town,” Shuster said. “The Juniata shop is more significant today than it was 10 years ago, but the railroad is less significant to Altoona and Blair County than it used to be for positive reasons.
“They have become more diversified, and there has been economic growth in other areas.”
But the Juniata shop today is stronger than when Norfolk Southern took it over, Jubelirer said.
“The important thing is they are still here and have a major presence here,” he said. “There is no longer the concern they are going to close the Juniata shop. That was a real concern not that many years ago.”
After sitting vacant for awhile, a local development corporation purchased the Hollidaysburg Car Shop in 2006 from Norfolk Southern for $3.5 million.
D Holdings Inc., a division of the DeGol Organization, plans to lease the building from the Blair County Development Corporation III, a division of ABCD, and eventually may own the facility.
The DeGol Organization plans to move two of its divisions — Seven D Industries-Truss and Seven D Industries-Window — into the 765,000-square-foot facility.
Manufacturing is expected to begin between October and December, and ABCD corporation is working with other potential tenants for the facility, Marasco said.
“The DeGol Organization hopes to create a manufacturing center in the facility,” Marasco said.