Norfolk Southern Corp. CEO Alan Shaw vowed to do “everything it takes” for the community impacted by the derailment of a train carrying hazardous materials in East Palestine, Ohio.
The CEO gave testimony to the Senate Committee on Environment and Public Works Thursday, where he was grilled by senators.
Shaw began by saying he is “deeply sorry” for the impact that the derailment has had on the community in East Palestine. In prepared remarks, the CEO pointed to the company’s commitment to reimbursements and investments of more than $20 million for the community, including by helping more than 4,200 families through our Family Assistance Center located in East Palestine.
No one was killed or injured in the derailment, but the incident has been described as a “PR nightmare” for Norfolk Southern and the rail industry. The derailed cars included 11 tank cars carrying hazardous materials that subsequently ignited, fueling fires that damaged an additional 12 railcars, according to the National Transportation Safety Board.
Norfolk Southern’s
NSC,
stock closed down 1.4% Thursday.
“We’re going to do everything it takes,” Shaw said, adding that he has genuine affection for the “folks of East Palestine.” The CEO described seeing yard signs in the community emblazoned with the words “we are East Palestine” and “welcome to America’s greatest comeback story.”
Sen. Tom Carper, the Delaware Democrat who chairs the Senate Environment and Public Works Committee, pressed Shaw on whether Norfolk Southern will provide support for the community’s long-term medical costs as a result of the derailment. “Senator, we’re committed to doing what’s right,” he replied.
Carper also asked Shaw whether Norfolk Southern will provide support for the community’s long-term medical tests. “I am committed to doing what’s right,” the CEO replied.
Shaw was also pressed on whether he would support the bipartisan rail safety bill proposed by Ohio senators Sherrod Brown, Democrat, and J.D. Vance, Republican. “We’re committed to the legislative intent to make rail safer,” he replied, without answering yes or no to the question from Pennsylvania Sen. John Fetterman, which was read out by Carper. In a follow up question, Shaw was asked if there any provisions in the bill that Norfolk Southern will support, even if the company doesn’t support the bill in its entirety. “There are a number of provisions that we support,” replied Shaw, highlighting tighter tankcar standards, more funding for first responders, and the bill’s emphasis on installing wayside detection systems.
Norfolk Southern has cut its spending on train inspection, repair, and maintenance more aggressively than other large railroads, according to a Barron’s analysis released Thursday.
Related: ‘Norfolk Southern will pay for the harm it has caused’ in Ohio derailment, says GOP senator
During Thursday’s hearing Democratic senators Jeff Merkley of Oregon and Debbie Stabenow of Michigan pushed Shaw on Norfolk Southern’s stock buybacks. Merkley asked the CEO if the company will commit to no more stock buybacks until improvements are complete. “I will commit to continuing to invest in safety,” Shaw replied, without giving a yes or no answer. Stabenow slammed Norfolk Southern on stock buybacks, pointing to the company’s $6.5 billion of stock buybacks last year. It would be a better use of the money if the company was investing it in responsible safety measures and making the community of East Palestine, and other communities, whole again, she said.
Democratic Vermont Sen. Bernie Sanders went after Shaw on the issue of paid sick days for Norfolk Southern’s employees, and the company’s use of precision scheduled railroading, which focuses on the movement of individual train cars, rather than whole trains. A key railroad industry trend of recent years, PSR aims to boost efficiency by streamlining operations.
“Wall Street, about a decade ago, in order to increase the profits they were earning in the rail industry, implemented a program called precision scheduled railroading, the result of that is that Norfolk Southern reduced its workforce by almost 40% over six years,” he said. “Wall Street’s goal was achieved, profits soared for Norfolk Southern – you made over $3 billion in profits last year.”
Sanders said he had been told by Norfolk Southern workers and workers from other rail carriers that they are now being asked to do more work with fewer workers, including safety inspections. Sanders asked Shaw whether he would commit to lead the industry in “ending this disastrous precision scheduled railroading, which has slashed your workforce and made railroading much less safe.”
“Yes or no, will you make that commitment?” he asked.
Related: After disastrous Ohio derailment, Norfolk Southern announces 6-point safety plan
“Senator, I understand your concern and I share that concern,” Shaw replied, adding that Norfolk Southern has been on a hiring spree since he became CEO in May last year. The company’s workforce, he said, has grown by 1,500 employees since this time last year.
Pressed again by Sanders, Shaw said he charted a new course for the industry in December by moving away from a short-term focus solely on profits. Instead, he said Norfolk Southern is taking a longer-term view founded on engagement with its craft employees.
Sanders also urged Shaw to commit to paid sick days for all the company’s employees. “Will you make that commitment right now to guarantee paid sick days to all of your workers?”
“I will commit to continuing to discuss with them important quality of life issues with our local craft colleagues,” the CEO replied.
“With all respect, you sound like a politician here Mr. Shaw,” said Sanders.
Now read: Ohio derailment a ‘PR nightmare’ for Norfolk Southern and the rail industry
While Thursday’s hearing was happening, reports emerged of another Norfolk Southern train derailment, this time in Calhoun County, Alabama. Citing information he received from his staff, Sen. Carper said the derailment involved 30 cars, all of which were empty and says that law enforcement report no injuries or property damage. “That’s a good news, bad news story,” the senator added.
