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Engineers’ union throws support behind Norfolk Southern, criticizes activist investor proposals

The Brotherhood of Locomotive Engineers and Trainmen today said it will “vigorously oppose” an activist investor’s attempt to gain control of the Norfolk Southern board and oust CEO Alan Shaw and Chief Operating Officer Paul Duncan.

Cleveland-based Ancora Holdings is waging a proxy battle and has proposed a slate of eight directors and is touting former UPS President and Chief Operating Officer Jim Barber as its CEO candidate and former CSX operations chief Jamie Boychuk for the NS chief operating officer position.

“From our vantage point and from what we’ve learned from our union brothers and sisters at CSX, Boychuk was reckless and ran CSX operations into the ground before he was run out by CSX’s management team,” said BLET General Chairman Scott R. Bunten, one of the union’s officers representing members at Norfolk Southern. “Ancora wants to turn back the clock and return to the failed Precision Scheduled Railroading business model with Boychuk’s help that the other Class I railroads are now abandoning.”

Like other rail unions, BLET lost membership as the big three U.S. railroads deeply cut their workforces while adopting PSR operating models since 2017.

Ancora has been highly critical of Norfolk Southern’s financial and operational results, and has blamed the February 2023 hazardous materials derailment in East Palestine, Ohio, on a poor safety culture at the railroad. The National Transportation Safety Board says the catastrophic failure of a wheel bearing likely caused the wreck.

The engineers’ union praised moves Shaw has made to improve safety. “Since the derailment last year, NS’ CEO has risen to the occasion and, through his leadership, NS has become a safer, more efficient and customer focused company again,” said Jerry G. Sturdivant, another BLET General Chairman at Norfolk Southern.

The union praised, among other things, Norfolk Southern’s decision to become the first Class I railroad to participate in the confidential close call reporting system.

“Having a CEO like Barber with zero railroad experience and a chief operating officer such as Boychuk wedded to the worst aspects of PSR would likely lead to more, not fewer costly train wrecks,” Sturdivant said.

The union was critical of Ancora’s proposal to add former Ohio Gov. John Kasich to the NS board.

“It’s disappointing to see former Ohio Governor Kasich involved with this effort to make a quick buck at the expense of rail safety,” said BLET Vice President Rick Gibbons. “His involvement with an effort to reinstitute PSR at Norfolk Southern and push back against safety efforts is shameful.”

The union pledged to back NS in the proxy contest. “I can assure you I will be voting all shares in favor of Alan Shaw and his team. The leaders of our union and our members see the potential for increased revenue for Norfolk Southern with him at the wheel. In contrast, Ancora would be bad for investors. It’s easy to imagine a train wreck under their proposed plans, both literally and figuratively speaking,” BLET General Chairman Dewayne Dehart said.

The BLET said this may be the first time in its 161-year history that the union has taken a side in a proxy contest at a Class I railroad. SMART-TD, which represents conductors, and the Brotherhood of Railroad Signalmen also have expressed support for NS.

Ancora said its plans for NS have “no emphasis on cost cutting, headcount reductions, or short-sighted tactics.”

“Policymakers and labor leaders should be able to take comfort in our slate’s commitments to honoring union agreements, leveraging the company’s existing workforce and investing in a network strategy that drives growth,” Ancora said in a statement.