a OPINION "' S Page 4 Friday, January 8, 1982 The Michigan Daily .I Edited and managed by students at The University of Michigan Vol. XClI, No. 80 420 Maynard St. Ann Arbor, MI 48109 i Editorials represent a majority opinion of the Daily's Editorial Board Wasserman W'TORICAL. AND JUSTIFtcATioi4. Going for the fast buck while productivity declines CHIEF JUSTICE Warren Burger refused yesterday to block U.S. Steel's acquisition of Marathon Oil, thus clearing the way for one of the largest corporate mergers in United States history. Mobil Oil Company, an earlier bid- der for the takeover rights to Marathon, had its motion for a delay of the Supreme Court ruling denied by Burger in the same session. If Mobil had been allowed to acquire Marathon t would have presented itself as a atant and outrageous violation of ; TS. anti-trust laws. However, the U.S. Steel-Marathon merger may present many of the same problems. It will create the nation's 12th largest industrial corporation with combined revenues last year of $23.5 billion. This is not to say that large profits will not eventually lead to a net Nbenefit, it may. But U.S. Steel is taking the quick profit approach to increased Srevenues. They are investing their phoney in the large profit industry of the decade: oil. They make this in- vestment because the oil industry can provide the company with immediate and extraordinary revenues. But this is not the way toward even- tual success within the nation's steel industry. The Japanese and the West Germans invested their profits in capital improvements and research and development. Now Japan produces both higher quality and lower priced steel than its American com- petitors. This draws American dollars out of the United States into foreign markets and furthers the recession currently plaguing the nation's steel industry. U.S. Steel, a company that has recorded substantial losses over the past few years, has decided to opt for immediate diversification of its money, instead of the attempting long run reinvestment in better produc- tivity and higher technology. Now is obviously the time for mergers. The Reagan administration has allowed the Justice Department to relax its prosecution of anti-trust cases. The atmosphere for corporate mergers is perfect given the recent burst of activity in "company buying," such as the Conoco-DuPont deal, or the American Express-Shearson Loeb Rhoades acquisition. Ailing industries, however, should not waste their accumulated profits ($6.2 billion will be spent by U.S. Steel in acquiring Marathon) on investmen- ts that will not directly- benefit their primary production. Instead, a massive long-range program of capital improvement would eventually enable the American steel companies to actively compete in an efficient manner with their foreign rivals. It is popularly believed that cor- porate decisions are always made with the greatest benefit to the company in' mind, and that greatest subsequent benefit to the nation will result. But this notion is a fallacy, as can be seen from the current state of the U.S. auto and steel industries. While Japanese auto producers were busy making sure their plants and technology did not become obsolete, American auto producers kept their stockholders hap- py with high dividends and high im- mediate returns on short-term invest- ment. The Supreme Court has allowed U.S. Steel to spread its hard-earned profits into the oil fields, but it in the process has kept the nation's steel producers moving along the path to eventual complete obsolescence. FOR MNNYATION5 IN THE~ OCCUPIED TRRITOIlES Bo7 a a '"f 0 'N LL~T ALLY gtI46 SEWRtW To I SRZAEIL /74ER5 j ' a 4, j!,f A braindrain.' Iiits Amtrak as Reaganomics hits rails a "WE SHOULD HAVE PEVELOPE])SOMETHING THAT 6OES ZING, THWIRP ANPD BLAM' 7 #~Th By Frank Browning WASHINGTON, D.C.-John Lombardi has worked there for 10 years. Joe Bellino had put in eight; Tom Phoebus, 10; Fletcher Prouty, nine and one-half; Phil Held and R. Hagopian, about the same. They and a score of others like them were widely regarded as the most talented and ex- perienced men on the executive team-people who had been with the company almost from its first day of operations. And then they were gone. The company they worked for is Amtrak, and the official reason they were fired is a 25 percent personnel reduction brought on by the Reagan administration cutbacks. But among many present and past Amtrak em- ployees, there is a growing suspicion that the cuts have been specifically designed to gut the company of the most talented executives and thereby bring about a corporate collapse that could not be affected through direct congressional action. "I'D LOVE to know why they picked so many senior people that no company would eliminate unless there were some other reason," mused Phil Held, a nine- year veteran who has spent his life in the railroad industry. "There's no college that will train somebody in that kind of ex- perience in transportation." Held was fired on May 28, just as he was directing the most sen- sitive reorganization of the Am- trak reservation system ever un- dertaken, an operation that could not be completed for another five months. One week before his own dismissal, Joe Bellino, director of Industrial Liaison at Amtrak, was awarded a special bronze plaque in praise of his work developiing national emergency contingency plans with the Pen- tagon. At a special ceremony, Amtrak president Alan Boyd per- sonally told Bellino that he had a long future with the company. JOHN LOMBARDI was in charge of planning for Amtrak's forthcoming assumption of the northeast commuter services currently operated by Contrail - a function that will more than double the company's manpower. Tom Phoebus, who had developed the Amtrak ticketing system, the largest and most complex in the country, was released and then rehired as a ticket clerk. C. Dismukes, director of Am- trak's Taxes and Insurance, was responsible over the last eight years for paying some $31 million in local and state taxes throughout the nation. He was fired without notice. A FEW WEEKS before the "May28 slaughter" when most of these firings were announced, Vice President for Operations Bob Herman was removed from his job and given a minor post at. the Washington Union Terminal. Herman had supervised the daily operation of trains coast-to= coast, with special responsibility for the busy Northeast Corridor, where his experience, first with the Pennsylvania Railroad and them with Amtrak, reached more than 20 years. Fletcher Pronty, fired from a job as senior director of Public Affairs in which he wrote all the. key planning documents and speeches for Amtrak's last three presidents, believes the pattern of executive firings is part of a careful strategy developed by the Department of Transportation to wreck the company. Said Prouty: "It is a method of dismantling the corporation, almost innocuously. They're throwing out the real people who have done a good job and leaving behind the crud. The process is under way and it's very effec- tive." PROUTY IS bringing suit against Amtrak for discrimination in its choice of layoffs, charging that there was no equitable policy developed to guide the dismissals. As many as 100 of the 400 laid-off employees are reportedly preparing similar suits. Amtrak President Alan Boyd categorically denies that there was any suchddiscrimination in the dismissals, or that there has been outside administration in- terference in the company's management. Prouty, however, claims that his supervisor, Vice President for Public Affairs Jim Steiner-a former member of -the Reagn administration's transition team-regularly canceled vital public affairs programs that had long been part of Amtrak policy. SPECIFICALLY, Prouty said, he was forbidden to con- tributerarticles on Amtrak to such prestigious almanacs as Janynes World Dictionary of Railroads and the McGraw-Hill Encyclopedia of Science and Technology, both of which solicit material about the passenger trains of the world. Despite early attacks made on Amtrak by Transportation Secretary Drew Lewis last spring, public and congressional support for passenger trains remains remarkably high. Demand for seats has been at record levels throughout the year. Even the Republican- controlled Senate recently spur- ned the president's transpor- tation budget and approved a higher spending limit that would mandate Amtrak to run a money- losing train through West Virginia and Kentucky, although the railroad itself was ready to drop it. "Amtrak was one of the first budget-cutting proposals Reagan made that the public reacted to negatively," said an aide to Rep. Henry Reuss, (D-Wis.), chair- man of the congressional Joint Economic Committee. "Every office on the Hill got huge stacks of mail in support of Amtrak-far more and far sooner than the complaints we heard on school lunches, Medicare cuts, even Social Security." IN PROUTY'S view the selec- tive firings are simply "a clever maneuver to effect broader budgetary cutbacksthat they couldn't accomplish through Congress." More importantly, he argued, reductions in main- tenance, and removal of ex- perienced staff in the main- tenance division, could so ham- string the system that it may cease to operate at all. "Some days last winter we had only 11 spare cars in the whole system. That system will simply stop when it gets as few as eight to 10 cars short. At that point your just can't pull cars off the tracks -or repair them, and when that happens the whole thing will collapse because key connections in the system simply won't be there." The issue for Prouty and many of the other executives who were dismissed is not merely a question of alleged firing discrimination. Rather, they argue, it is a pressing need to+ maintain and expand a coherent passenger railroad system in America at a time when Japan and Western Europe are devoting more resources to rail service as an alternative to the automobile. Pro-rail sentiment also seems to be rising in Congress. If Prouty and his associates are correct in the prediction of a massive breakdown just at the beginning of next summer's high tourist season-a tourist season that also will coincide with many key congressional cam- paigns-then a great many people might conclude that the Reagan transportation policy is no way to cut a budget-or to run a railroad. Browning wrote this article for Pacific News Service. a r r. pZI -.i f / ry / { of / /: ,1 . ,x f E 'I ;- , , - },f ' ej~-, 7st j 1 ", . ,f' Weasel By Robert Lence OPEN IUP~ ARE YOU ED I>EY T Nlcs TRY, K(, L.OOK OFFIHR S, RE MJST BE -RWIE MISTAKE. B.EStDES,T} 'TR Pl Wi' SET eON Cjgi$TMA4 EVIE, if II I 1 I I I.