Version XX - This Was The Week That Was

September 21, 2001

The end of the second week after the World Trade Center, Pentagon and airline hijacking travesties has seen our country come together in ways not seen since the beginning of World War II or the arrival of the first man on the moon. Unfortunately, we have also seen some use this time for lying. Here are some horrid examples:

1. Their word is no good, not even to their longtime employees. So said one deadly serious observer of one of the most shameful chapters in American corporate history. Amtrak is the culprit here, and there is absolutely no excuse for what has happened.

   As reported in this space before, Amtrak constructed a buyout plan for almost all of its 2,900 management employees during the summer months. The separation plan for younger employees was not generous, but was taken by some anyway. The retirement plan for employees aged 55 to 62 was much better, and embraced by many.

   But, Amtrak senior management miscalculated their resources. Most of the managers who embraced the plan and were ready to voluntarily leave the company have been told that whoops! we made a mistake. We can’t live up to the offer we made you in writing.

   You are reading this correctly. Amtrak made an offer in writing that was accepted by hundreds of employees. Now, a letter has gone out to these employees informing them that their retirement plans are changed, that Amtrak cannot afford to keep its word based on the original written offer.

   Qualifying employees between the ages of 55 and 62 were having necessary years of service added to their existing tenure to equal what they would accrue at a normal retirement age. This would “make them whole” for leaving early, and would still be receiving a living wage in retirement. Additionally, they would receive a cash bonus for retiring, plus be placed on retirees health and other benefit plans.

   Now, Amtrak tells these people they cannot add the years of service because the company cannot afford it. They will still receive the cash bonus and retirement health and other benefits, but will in some cases have drastically reduced retirement income benefits.

   Because of this, many who were planning to retire will now not do so. They have to stay and work so they can eventually afford to retire under the normal system with a livable income.

   Consider several things: How productive will these employees continue to be? Many were already burning up vacation time in anticipation, some had already moved their primary residences, others put houses up for sale, and still more had spouses make perhaps unchangeable retirement plans based on Amtrak’s promises.

   How many lives have been disrupted?

   The culprit in this is that Amtrak senior management did not do its basic homework putting this plan together. They did not do the necessary calculations and forecasts. What type of amateurs are running this company? How could this have happened? How culpable is the board of directors? If Amtrak cannot figure out how to do basic math to ensure they have enough resources to meet retirement plans, how can they be trusted on any other subject?

   Let’s see now, they lied to Congress and the administration about the continual glide path to self-sufficiency that was allegedly just around the corner, they lied to the American public about the Market Based Network Analysis that is now dead, and they have lied to their own employees about something as basic as the retirement system. How can any rational or reasonable person believe anything these people propose or say?

   Fool me once, shame on you; food me twice, shame on me; fool me three times …

   One last thought: the voluntary separation and voluntary retirement program was vastly under subscribed. What would have happened if the company had met its goals? And, now, who outside of the senior management ranks will be fired to make up for these deficits? Even some more innocent people are about to be hurt.

2. Amtrak is taking advantage of the “me, too!” syndrome asking for bailout money from the federal government because of the national emergency. Keeping in mind that Amtrak’s charter is for a NATIONAL passenger railroad, the emergency requests appear somewhat lopsided towards the northeast. Once again, Amtrak senior management can’t quite fathom the idea that all of us pioneers live west of Harrisburg, Pennsylvania.

   Here is the breakdown of Amtrak requests, verbatim from their materials:

   Systemwide Security Target Hardening - Access control; incident command system; satellite communication on trains; train locator and tracking system; aviation unit expansion; hazmat detection & response, etc. - $160 million

   Security Personnel - 150 uniform PO; 250 security officers; terrorism/crimes analysis intelligence; special units K-9; applicant & investigation unit; rapid response team - $41 million

   Corridor Security - Fencing with gated access, cameras and facility lock down in NEC - $250 million

   Subtotal Security - $471 million

   Tunnel Life Safety New York - Amtrak/LIRR/NJT shares to complete life safety program - $898 million

   Baltimore - Rehab existing tunnel - $60 million

   Washington - Rehab 1st Street tunnel - $40 million

   Subtotal Life Safety - $998 million

   NEC Amtrak and Commuter Capacity South End - Bridges, track, interlockings, facility and power improvements to accommodate 20% more traffic reliably and reduce travel time - $525 million

   North End - Bridges, SGR, Hellgate, Metro North, and other capacity improvements to accommodate 20% more traffic and reduce travel time - $243 million

   New York - Penn Station vertical circulation to handle passenger traffic - $101 million

   Stations - BWI, Metropark, Washington Union lower level - $80 million

   Subtotal NEC - $949 million

   Equipment Capacity Fleet Wreck Repair - Bring 5 locomotives and 45 passengers cars out of wreck storage into service [NOTE: There is a presumption these are Intercity cars at Beech Grove] - $17 million

   Fleet Capacity/Reliability - Immediately upgrade of 11 locomotives and 18 passenger cars scheduled for retirement; remanufacture, upgrade and overhaul of 22 locomotives and 213 passenger cars; repairs to Superliners; replacement of 10 switchers [The origin of these cars and locomotive are unknown and the amount of Superliners is unknown] - $219 million

   Fleet Growth - Authorization to procure new trainsets for corridor service to accommodate reduced airline capacity (e.g., could purchase up to 10 Acela trainsets with 10 passenger cars each - 33% increase in seat capacity on NEC) - $420 million

   Subtotal Equipment - $656 million

   Post-September 11th Operations Incremental Costs - Initial estimate of costs for emergency deployment of additional personnel/overtime for inspection of track, interlockings, bridges, tunnels; overtime for ticketing, call center, and customer service; and additional passenger, mail and locomotive equipment - $204 million

   Incremental Revenues (offsetting) - Initial estimate of potential offsetting revenues from near-term ridership increases - based on historical operating ratio. Net impact could be higher or lower depending on fast-moving market conditions - ($128 million)

   Subtotal, Incremental Operating Cost - $77 million

   Grand Total - $3,151,000,000

   [End of Amtrak source material}

   Using the most generous estimate, a whopping $236 million would be spent on non-NEC cars and equipment repair and upgrades. This includes no new equipment for any trains other than Acela. By the way, if the whole $236 million is spent completely outside the NEC, then all of what is now Amtrak Intercity and Amtrak West will receive what is left after 92.5% of this emergency money is once again spent on the NEC. Yes, All of the states outside of Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland and the District of Columbia can split up rebuilt or repair older equipment while $2.9 BILLION goes to the NEC.

   Keep in mind that we have seen reports on the All-Aboard list this week from lower level company managers that PAID ridership on the NEC had actually dropped from previous week levels, which goes against official company reports that NEC ridership could be up as much as 9%. Doing some back of the envelope math, if you add the number of special trains transporting dignitaries and others to New York to respond to the tragedy, plus the company’s correctly generous policy of transporting fire and police personnel at no cost, then a 9% increase could quickly be reached. Could this be yet another example of Amtrak senior management telling the truth, just not all of the truth?

We end another week on the supremely sad note that Amtrak senior management can’t even properly manage a simple retirement program, and they have yet again broken their word. The large question looming over towards the shadows is, how much longer are those in control going to allow this to go on? How many times do we all have to suffer the consequences of these people consistently lying to the government and American people? When will something be done?

Bruce Richardson
Jacksonville, Florida