Labor seeks to block proposed freight rail merger

The AFL-CIO’s Transportation Trades Department is seeking to block a proposed merger between Canadian Pacific Railway and Norfolk Southern that has been dubbed a “Wall Street takeover” of a prominent U.S. freight company by critics. 

Calgary-based Canadian Pacific Railway has been making overtures to Virginia-based Norfolk Southern about a potential combination it says would “create a truly transcontinental railroad to better serve customers and the economy.” 

The AFL-CIO has said the proposed combination recalls mergers in the 1980s and 1990s that greatly diminished the number of freight rail companies in the nation and negatively effective railway workers.  

“Over the last several months, Canadian Pacific Railway (CP) has made repeated offers to acquire Norfolk Southern (NS) to create a railroad stretching from British Columbia to the Eastern seaboard and Southeastern United States,” the union said in a policy statement that was posted on its website. 

“Having experienced the wave of mega-mergers during the 1980s and 1990s that have left this country with only seven Class I freight railroads, transportation labor understands — and our members have lived through — the devastating impact these transactions can have on jobs, freight service and safety,” the statement continued.

“Given this history, CP’s current operations, and the company’s public statements about plans for a merged NS system, we approach this potential merger with the highest degree of skepticism,” the labor group wrote. 

Canadian Pacific has painted its proposed merger with Norfolk South as a natural combination that would be benefit both railways. 

The company has said it is “confident that a CP-NS combination would secure regulatory approval as a seamless coast-to-coast single-haul service benefits shippers, the industry and the public, and would generate tremendous shareholder value.” 

Norfolk Southern has thus far rejected previous offers from Canadian Pacific, saying its board of directors “has unanimously determined that your latest revised proposal is grossly inadequate, creates substantial regulatory risks and uncertainties that are highly unlikely to be overcome, and is not in the best interest of the Company and its shareholders.” 

The AFL-CIO’s transportation department said lawmakers federal regulators should step in to ensure the potential merger between Norfolk Southern and Canadian Pacific does not happen. 

“The Surface Transportation Board (STB) and other federal regulators must be in a position to critically review and analyze any potential merger application to ensure that past mistakes are not repeated and that the broad public interest is protected, as required by federal law,” the group wrote. “Congress must also exercise its oversight role to ensure the STB meets its statutory responsibilities and that CP is not allowed to proceed with a transaction that would harm workers and jeopardize our vast and interconnected freight rail system.” 

At least one lawmaker who represents areas served by Norfolk Southern has also called for the potential merger with Canadian Pacific to be blocked. 

Sen. Joe Manchin (D-W.Va.) has called on lawmakers in the Senate to investigate the proposed combination, which he said “creates real and present dangers to hardworking people of West Virginia.” 

“We can’t get any specifics from Hunter Harrison or Bill Ackman about where the $1.8 billion will come from in this deal with Norfolk Southern, but we know the harm they have done at Canadian Pacific,” Manchin said in a recent statement about the proposed merger. 

“I’m calling for a Commerce Committee investigation into this merger because I want to ask Hunter Harrison what they are going to invest in, what they are going to build, and how they are going to help the people and the communities of our state,” Manchin continued.

“West Virginia cannot afford a corporate partner more focused on short-term gains for stockholders than the hard-working men and women who show up to work every day. In this economy, I’m going to fight to protect every single West Virginian job I can.”

Manchin’s office has said the senator wants to put the brakes on the potential merger for good. 

“Sen. Manchin is insisting that the details of this merger be thoroughly reviewed by the Senate Committee on Commerce, Science and Transportation before any element of this transaction is allowed to proceed,” the senator’s office said.

“Canadian Pacific Railway’s attempt to acquire Norfolk Southern is troubling because of Canadian Pacific Railway’s history of cutting jobs to increase investor profits,” Manchin’s office continued. 

“For years, Norfolk Southern has been committed not just to its shareholders, but to its employees and to the West Virginia communities it serves. Norfolk Southern currently employs 990 people and supports 430 retirees in the Mountain State.”