When California regulators open hearings today on the gigantic merger of the Union Pacific and Southern Pacific railroads, the deal will be endorsed by an unlikely ally: the unions.
Citing gains promised by the railroads and the likely futility of opposition, the two unions representing a majority of the railroads' organized workers will testify in favor of Union Pacific Corp.'s $4-billion purchase of San Francisco-based Southern Pacific Rail Corp.
It marks the first time in two decades that labor has backed a rail merger. The unions' new posture not only defies their long-standing opposition--mainly on grounds that such deals can cost thousands of jobs--it also runs counter to the staunch rejection of the UP-SP merger by the AFL-CIO, the umbrella group for America's labor movement.
As such, it reveals a rift in how different sectors of organized labor are adjusting to the flurry of corporate mergers of the 1990s.
"We have withdrawn our opposition and are supporting the merger," said J.P. Jones, California director of the United Transportation Union, which is backing the deal with the Brotherhood of Locomotive Engineers.
The unions represent the companies' engineers and switch operators. Together they represent 60% of the railroads' unionized workers, and 40% of their combined work force of 53,000 people.
The BLE and UTU broke ranks after reaching agreements with Union Pacific that they hope will soften the merger's impact on their members, in part by having UP increase financial benefits for laid-off workers.
They said the unions also want to establish a more amicable relationship with Bethlehem, Pa.-based UP in advance of the merger, after acknowledging that past rail mergers generally were approved no matter how loudly they cried foul.
"No merger in the last decade-and-a-half has been turned down due to the concerns of organized labor," James Brunkenhoefer, the UTU's national legislative director, conceded in a recent memo to the union's state leaders.
In an interview, Brunkenhoefer said: "We have to find benefits out of the realities we're now dealing with. Our view is that doing things the old way in some cases does not work."
The merger would create the nation's largest freight railroad in North America, with 31,000 miles of track. It would have about 8,200 workers in California, although UP has estimated that the merger eventually would eliminate nearly 3,400 jobs, including 1,940 in California.
The merger would also leave California with only two major railroads--UP and Burlington Northern Santa Fe--which has some shippers worried about reduced competition. They are expected to oppose the deal in testimony before the state Public Utilities Commission, which is holding public hearings today in San Francisco and Friday in Los Angeles.