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(Rule of Ratemaking)



Washington, D.C. The committee met, pursuant to adjournment, at 10:35 a.m. in room 5110, New Senate Office Building, Hon. Warren G. Magnuson (chairman of the committee) presiding.

The CHAIRMAN. The committee will come to order. Mr. Emile Robillard, secretary-treasurer of the General Drivers and Helpers, Teamsters Local Union 95, Kenosha, Wis. We will be glad to hear from you. Your testimony is short, so I suggest you read it in full.

Mr. ROBILLARD. My name is Emile Robillard, secretary-treasurer
of General Drivers and Helpers Local Union 95 of Kenosha, Wis.

I will attempt to confine my remarks chiefly to the effect the ICC policy in approving selective rate cuts has had upon the auto transport industry in Kenosha, Wis.

American Motors Corp. is engaged in the manufacture of Rambler and American cars in Kenosha.

Previous to November 1955 the dealers of American Motors cars had a choice of the mode of transportation they desired as they paid the carriers the freight charges. After November 1955 American Motors instituted prepaid freight and assumed jurisdiction over the mode of transportation without regard to the wishes of the dealer.

At the change of models that took place in September of 1960 American Motors Corp. went into the piggybacking of automobiles to the west coast.

This resulted in the permanent layoff of 600 drivers for one company, Kenosha Auto Transport, and 100 drivers at Highway Transport Co., of Des Moines, Iowa, who maintain a terminal at Kenosha, Wis. Shortly after the first of the year 1961 another piggyback movement was started from Kenosha to Watervliet, N.Y., serving the Boston area, and Jersey City, N.J., serving the New York area. This resulted in the layoff or another 100 men between Kenosha Auto

Transport and Arco Auto Carriers, another carrier operating out of Kenosha.

In April of 1961 another movement went by trilevel railroad car to the Atlanta and Florida zone which resulted in the loss of 50 percent of the traffic of Speedway Transports and caused a layoff of every driver from No. 90 on the seniority list, a total layoff of 81 employees.

The layoffs to date have resulted in approximately 900 drivers in this local union who have lost their jobs, alorg with another hundred mechanics and welders who were needed to service the equipment. The payroll loss suffered by these employees amounts to approximately $8 million per year out of Kenosha, Wis.

This added traffic to the rails, I am advised, has not resulted in increased employment to railroad workers but has actually been the cause of the layoff of 20 to 25 employees who were formerly engaged in the switching of boxcar traffic at the American Motors Corp. plant. The 1960 Annual Report of the Chicago Northwestern Railroad, which handles the rail move out of Kenosha, Wis. (p. 26), shows net income for the past 10 years. In 2 years, 1954 and 1956, the company showed a loss; the other 8 years a profit.

In 1959, before piggybacking of automobiles, the Chicago & North Western Railroad had a net income of $2,634,000. In 1960 after piggybacking had started, they had a net income of $245,000. In this same period of time they showed 18,229 employees in 1959, and 17,311 in 1960, or a decrease of 918 employees.

In this same period of time the report shows an increase from 60.7 percent to 63.1 percent cars per train.

In other words, an increase in tonnage, but a decrease in revenue, a decrease in the number of employees, and a decrease in profit. The same annual report, on page 30, shows a total operating ratio to revenue of 86.2 percent. Of this ratio the amount charged to transportation is 42.8 percent, which would represent out-of-pocket costs upon which piggyback rates are filed. Maintenance of way and structures, maintenance of equipment, traffic, general and other miscellaneous costs amounting to 43.4 percent are not charged or taken into consideration in the filing of a selective rate cut. Such costs must obviously be charged to other traffic, principally to so-called captive commodities which then bear an unjust share of such expenses.

I presume it has already been brought to the attention of the committee that the dealer of automobiles or the customer gets no reduction brought about by the cheaper rate but pays the same truck rate he previously paid. The saving accrues to the shipper which amounts to roughly $50 per car from Kenosha, Wis., to the west coast. The shipper then makes a profit on transportation as well as on his manufactured product. This bonanza to the shipper is enjoyed at the expense of the State-a loss of license fees and fuel tax-and also at the expense of the Federal Government, in the loss of highway use tax, rubber tax, not to mention income taxes paid by drivers. It is also reflected in losses to the small businessman such as hotel and motel operators, restaurants, laundries, auto and truck parts dealers, et cetera. The saving of $50 per car or $300 per load in the above instance represents about the amount a driver to the west coast would spend for lodging, et cetera, and which small business no longer enjoys. A large percent

age of the drivers, about 80 percent of the men who have lost their jobs, have had their equipment repossessed because without earnings they have been unable to keep up their payments. This has meant a real financial loss as many have mortgaged their homes to finance a downpayment on their tractors which represent an investment of $10,000 to $15,000 per unit.

The national average of children in a family is three, with the husband and wife making a family unit of five. One thousand men losing their jobs in Kenosha represents a loss of income for 5,000 persons. Multiply this by the number of areas where this has taken place and you begin to realize the seriousness of the problem which can only be aggravated further if something is not done.

We believe the answer lies in S. 1197, and we humbly submit, Senators, should not the human rights of the people be considered above the purely profit motive of the rails and shippers aided and abetted by the Interstate Commerce Commission in approving of “selective” rate cuts ?

The CHAIRMAN. Are there any questions?
The Senator from Wyoming.

Senator McGEE. You separate in your figures at the early stage of your statement on the very rapid decline of employment at Kenoshayou say that some 600 drivers for 1 company, for example, have been permanently laid off because of the decision in September, last year, to piggyback the cars to the west coast.

Were the piggyback operations of last September as large as the ordinary transport of autos was the year before, for example?

Mr. ROBILLARD. Yes. In the American Motors plant, when they changed models in their production, their schedule was kept at the same basis as it was the previous model year, and it was not until March of the following year that there was a cutback. But they were producing as many cars at that time in the fall of 1960 as they did in 1959. It is not reflected in any decline of business at that time. This was the initial move of piggybacking of the American Motors plant.

Senator McGEE. The subsequent decline in auto movement, by whatever means, would have taken some total employment of the drivers, would it not?

Mr. ROBILLARD. It would have taken some total in March.

Senator McGEE. This was not the reference of your figure in September 1960 ?

Mr. ROBILLARD. No, that is not reflected there.

Senator McGEE. Would it be a fair statement to say that in any event there would have been some decline?

Mr. ROBILLARD. There would have been possibly a 10-percent decline in the number of drivers.

Senator McGEE. You allude, on page 2, to the question of employment on the railroads. Again here we are concerned in part with the employment question. Often if somebody gains some jobs, somebody losses them, and vice versa.

Your suggestion is that the employees of the railroads have not gained jobs out of the piggybacking of automobiles, is that correct?

Mr. ROBILLARD. No, they have not. There has been plenty of them permanently laid off. Five have been placed on the extra board, be

cause with the piggybacking it has meant a rescheduling of automobiles to certain areas and zones. If they run cars to the east or the west, they produce them that way. And on those days there is no boxcar movement and the cars are not loaded. So 2 or 3 days out of the week they may load boxcars and then they call in these five extra people who are now reduced to a 2- or 3-day week.

Senator McGEE. It is in Kenosha itself—the basis of your statement was applied to Kenosha itself in the decrease in the employment of some railroad workers? Mr. ROBILLARD. That is right.

Senator McGEE. What is the basis for your figure that you cite in connection with the Chicago & North Western Railroad on page 2, suggesting that whereas they had 18,000-plus employees in 1959, there were only 17,000-plus in 1960, a decrease of 900 ?

Mr. ROBILLARD. That was a figure from their annual report in their entire system, which showed a decline of that number.

Senator McGEE. Are you using that to suggest that piggybacking did not create employment for the railroad? Mr. ROBILLARD. That is right.

Senator McGEE. Are there other activities within the railroads that might have accounted for a decline? In other words, couldn't the employment figure have been worse in the railroads without piggyback?

Mr. ROBILLARD. No, I don't think so. I think that the piggybacking hasn't helped them at all. It has actually helped reduce the number of employees.

The fact that they add more cars to a traincrew doesn't require additional people to do the work. Out of that whole rail movement there is one rail employee, and all he does is check the height of the cars, and any repairs that are needed to the equipment itself. So there is only one man on the piggyback operation that is hired as an employee of the railroad.

Senator McGEE. I am interested in your statement on the last page of your testimony referring to the financial bind into which this whole development has forced many of the drivers, not only in regard to jobs, but particularly to those who own their own tractors.

How many of them own their own tractors ? Mr. ROBILLARD. Some of the companies have been operating 100percent broker equipment; others have a partial broker equipment, and partial company equipment.

This particular company where the initial piggybacking started was practically 100-percent broker equipment, owned by the drivers.

Senator McGEE. I visited the stockpile of rusting rigs in Cheyenne some few weeks ago, where 150-some drivers are out of employment due to this very factor. It raises a question in my mind about the contract arrangement with the tractor owners—the tractor partners, at least. I guess none of them really own the tractors; they are making payments on them every month.

It raised in my mind the question that perhaps the drivers were unfairly carrying the whole risk in the ownership provisions of the tractor, of the changing modes of transportation, even though the companies that contract for these were triggering the operation. And that is the reason I was interested particularly in the contract arrangement.

Why doesn't one of the companies follow this uniformly, a practice of owning their own tractors and hiring the drivers to operate them?

Mr. ROBILLARD. Some of the carriers are contract carriers. Some are common carriers. Some are private carriers.

Insofar as the hauling of automobiles the past 20 years, there is a contract provision in which the man owning the power unit gets 65 percent of the freight bill as his share of the earnings for the delivery of automobiles. The companies, the operating companies, in most instances own the trailers.

Where the driver owns a trailer he then gets 75 percent of the freight bill.

Senator McGEE. In other words, he takes on the purchase of a tractor as an opportunity, as a small businessman, to have a chance to make profit

Mr. ROBILLARD. That is right.
Senator McGEE. On the operation.
He also takes on the other chance.
Mr. ROBILLARD. That's right.

Of course, when the move is made from automobiles to piggybacking, the union or the members are not kept up to date as to what is happening.

This thing—they had expected to be called back to work; they were laid off at the model change, and when the model was changed they were not called back to work. The move came so sudden that there was no opportunity for preparation.

Senator McGEE. What about alternative uses, other uses for the tractors, that is, given the shift that has taken place right now that concerns us?

Mr. ROBILLARD. This is a specialized move and I imagine some of the drivers that you are talking about were probably members of our local. We had a lot of people in Wyoming that were hauling out of Kenosha. This is specialized equipment which requires a head ramp over the power unit for a car over the cab. The equipment could be used, but it would be a costly proposition to revamp the equipment.

Senator McGEE. Has any study been made or any attempt been made to anticipate this and to figure out a cost for a changeover to other uses of the tractors?

Mr. ROBILLARD. It would run $350 to $500, depending on the type of equipment a man has.

Many of the people that were going to the west coast had this equipment, which equipment was higher priced and ran $18,000 to $24,000, some of them, with sleeper-cab equipment.

Senator McGEE. They could convert them for other uses for perhaps $300 or $400?

Mr. ROBILLARD. Yes. If there was work available for them.
Senator McGEE. What about the trailers?
Mr. ROBILLARD. The trailers are practically useless.

Senator McGEE. In very few cases are these owned or being paid
on by the drivers ?
Mr. ROBILLARD. No, they are not.
Senator McGEE. Just the tractors ?
Mr. ROBILLARD. That's right.
Senator McGEE. That is all I have.

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