Norfolk Southern says activist investor Ancora Holdings violated the Railway Labor Act when it negotiated a deal with the general chairmen of the Brotherhood of Locomotive Engineers and Trainmen in exchange for the union’s support in its proxy campaign.
The BLET in February was vehemently opposed to Ancora’s plan to oust Norfolk Southern’s management and implement a full-blown version of Precision Scheduled Railroading. But on Friday the BLET changed its tune and threw its support behind Ancora following a meeting with its CEO candidate, former UPS executive Jim Barber Jr., and its chief operating officer nominee, former CSX operations chief Jamie Boychuk.
On Sunday, the SMART-TD union that represents conductors made public a memorandum of understanding that the general chairmen reached with Ancora Alternatives President James Chadwick.
If Ancora’s proxy battle is successful, the BLET would win a number of concessions. Engineers also would no longer be required to work as conductors, and NS and BLET would end a related federal lawsuit that the union brought in 2021.
“Ancora’s actions are a blatant attempt to buy votes through backdoor deals to take control of the company,” Norfolk Southern said in a statement today. “This desperate effort by Ancora, if successful, provides concessions to the BLET that limit operational flexibility and destroy significant value for the company.”
NS also said that Ancora’s negotiations with the union violated the Railway Labor Act, which grants exclusive negotiating authority to NS representatives.
“Ancora has demonstrated that its own nominees are not independent and are beholden only to Ancora,” NS said. “Clearly, Ancora is willing to take any steps to get its nominees elected to the board, including making unauthorized commitments to Norfolk Southern’s employee unions to cover up its own management candidates’ abhorrent track record with labor.”
Ancora said it was proud that its board nominees “could align with unions on non-binding concepts and non-binding principles for how underserved workers should be treated, especially in the wake of recent dangerous accidents. Our nominees have displayed the constructiveness, experience and relationships that they will bring to the boardroom.”
Ancora said on May 1 that its memorandum of understanding with the BLET is a non-binding deal that commits to further discussions with the union. And because it’s a non-binding memorandum, the deal is not a violation of the Railway Labor Act, as Norfolk Southern contends.
The point of the document, Ancora says, is simply to have NS live up to its current labor agreements with the operating craft labor unions.
Engineers would not be regaining remote control jobs now held by conductors. Rather, Ancora says it’s committed to ending remote control switching operations that occur five miles or more outside of a terminal because it’s inefficient.
Ancora says its talks with rail labor were part of its commitment to sit down with all of the railroad’s stakeholder groups, listen to their concerns, and try to find common ground.
The BLET general chairmen — Dewayne Dehart, Jerry Sturdvant and Scott Bunten — today issued a statement explaining their decision to back Ancora.
“At BLET we believe in loyalty, but not blind loyalty. The Norfolk Southern at the start of the proxy battle is not the same NS as today,” the wrote. “New NS COO John Orr, a Hunter Harrison protégé, is not the same COO as Paul Duncan. NS’ CEO Alan Shaw, who opposed PSR at the start of the battle, now appears to be a cheerleader for it.”
Prior to the proxy fight, the BLET thought that CEO Alan Shaw had a long-term plan to improve safety and working conditions for its members. And morale, they noted, was improving as engineers were pleased with the direction the railroad was taking under Shaw.
“The fact is that in a very short period NS’s current management team has dramatically changed and the strategy has changed. And all along Shaw never committed to mandating two-man crews, despite strong evidence that it could prevent costly accidents and save lives,” the general chairmen wrote.
Shaw has said that the railroad’s resilience strategy remains unchanged, and that NS hired Orr to accelerate operational improvements.
BLET accused Shaw of “backsliding” on the NS earnings call earlier this month, so the three general chairmen held discussions with Ancora representatives about their vision for the railroad.
“BLET entered into a memorandum of understanding that, if Ancora is successful, ends the practice of forcing engineers to work as conductors; offers new seniority protections; gives the BLET a seat at the table in the training of all new hires; tightens up the scope rule on “Road Service” to require that any trains operating more than five miles outside the yard be operated by an engineer whether they are operated by conventional or remote controls, and that within rail yards, only an engineer will operate conventional controls on trains. These are only a few of the items addressed in the agreement reached that will benefit BLET members and boost rail safety,” the general chairmen wrote.
They also claimed that having engineers run remote control switching locomotives will bring safety benefits.
Note: Updated at 1:15 p.m. on May 1 with additional comment from Ancora.
That section of the BLET have become SCABS in order to get under the table payoffs !
A rather novel approach and (potential) application (or interpretation) of the “Railway Labor Act” by current NS management?
In pro sports we call what Ancora did as “tampering”.
Apparently, no lessons were learned from the CSX takeover. Doesn’t go well. To earn the profits ANCORA requires, it will be cut and sell. Those familiar will know what I mean. CSX, will never recover. They do what they can with the resources that are remains. BLET ought to be ashamed. Mr. Shaw is headed on the right track, needs time to recover from the quasi PSR that was in place. I know investors don’t like to hear that. They have visions of BIG MONEY QUICK.
I’m truly sorry but I can’t help but thinking that some extremely thick envelopes changed hands. In Chicago THAT’S what’s called “a memorandum of understanding”.
Does the BLET leadership realize that Jamie Boychuk is going to do the same exact thing with PSR, if not worse? Boychuk comes from the same Harrison tree so don’t try to pull the wool over everyone’s eyes.
That was my thought exactly.
yeah, how can you side with the folks wanting to cut-cut-cut.. to reward investors vs. employees.