Free enterprise is alive and well at the Florida East Coast Railway. While other railroads bow to union whims and turn to the government for support, the FEC stands as a model of what railroads can achieve if allowed to run their businesses as they see fit.
Much of the credit for the railway's spectacular performance belongs to its president, 49-year-old Winfred Thornton. In his 17 years with the FEC, he has withstood the wrath of powerful unions, politicians, and judges who were determined to bring the maverick railroad into line. Their failure has left Thornton and FEC chairman Ed Ball in unchallenged control of perhaps the finest railroad in the country.
As even a casual visitor to the line can attest, the Florida East Coast is not just another railroad. The signs of difference are everywhere. Freight cars roll over advanced welded rails for most of the distance between Miami in south Florida and Jacksonville in the north. At a time when many other Class I railroads neglect their roadbeds, or use government subsidies to maintain them, the FEC is replacing timber ties with concrete ones of its own invention. These ties will last about three times as long as the wooden ones.
Despite the enormous expense of such innovations, the FEC is almost debt-free. It finances almost all of its improvements through earnings—a remarkable fact when many railroads can only show a profit by letting their roadbeds decay. Thornton's railroad owes its achievement to new work agreements which have shattered traditions established in the last century.
For years, the country's powerful railroad unions have insisted that railroads adhere to outdated work rules. Unions demand that crew members receive a full day's pay for as little as two and a half hours work; if a crew travels 100 miles, for instance, it is considered to have completed a day's job. Extra miles translate into expensive additional compensation. To add insult to this wound, the unions insist that four (and in some cases five) men ride the train on each shift.
Such work rules were taken for granted at the FEC when Thornton arrived there as chief operating officer in 1960. As a former trainmaster and track supervisor for the Southern Railway, Thornton had seen them encumber a railroad renowned for good management and sound finances. The Florida East Coast at the time was renowned for neither. It had been in bankruptcy for decades, its labor-management relations were sour, and the track was deteriorated.
When a Federal mediating board decreed that railroad union employees should receive a 10 cent an hour wage increase in 1962, Thornton and Ball decided that their hapless railroad could not afford to go along. Alone among the major railways, they refused to grant a raise.
The union reaction was predictable: to call a strike. Although the union leaders did not know it then, they had made an enormous mistake. The strike would last in one form or another for 13 years, and lead the FEC to discover that it could do more business with about one-third of the workforce it employed previously.
"In 1960 a freight train operating from Jacksonville to Miami on the FEC required three five-man crews, or a total of 15 men," Thornton says. "Today that train is operated the entire distance with two men." Where once every train had a caboose with two men, the railroad now runs trains with no cabooses, flagmen, firemen, or brakemen. And safety has improved—not only do the labor savings go into improved track maintenance, but electronic sensors by the roadbed detect potential accidents before they happen.
The unions did not fail in their effort to curb the FEC for want of trying. Picket lines grew increasingly ugly during 1963 as union members saw the success with which the railroad operated with "skeleton" crews. As petty harassment and vandalism proved ineffectual, some strikers turned to other means.
At first, the sabotage posed more danger to property than to life. Jammed switches led to derailments in the train yards, and arson destroyed some railroad property. But then the focus shifted. Strikebreaking engineers came under rifle fire as they rode in trains; Molotov cocktails were thrown at their homes; and more than half a dozen dynamitings hurled trains off the track, once in a densely populated area.
Politicians friendly to the unions were doing their part too. The mayor of Miami, then a candidate for governor who was running a fiercely anti-FEC campaign, forced snail-like speed limits on trains passing through the city. In Washington, President Kennedy and the secretary of labor became increasingly shrill as the railroad's business returned to normal. Kennedy decided the strike constituted an "emergency," and appointed a special board to help end the strike at a time when FEC business was at about 90 percent of the pre-strike level. Thornton commented at the time: "The only 'emergency' is that the unions have lost the strike and want the government to pull their chestnuts out of the fire."
The railroad paid little heed to the board's recommendation that it rehire the strikers and pay them the disputed raise. And finally, circumstances began to shift in favor of Thornton and the FEC. First, the Supreme Court ruled that the railroad had the right to hire strikebreakers. Secondly, the saboteurs made a tactical blunder. Two trains were dynamited one day within 100 miles of the new president, Lyndon Johnson, who had come to Florida to make a speech. The enraged president soon had FBI agents crawling over the area, and arrests of union men were soon forthcoming.
Ever since, life has been looking up for the FEC. Thornton, for one, is attempting to press home the need for loosening the union grip on the industry. "In 1960 the Florida East Coast Railway was essentially in the same circumstances as the Penn Central before its collapse," he told Congress in 1975. "Today, without archaic work rules, the FEC is one of the most modern and efficient railroads in the United States." He notes that the Penn Central could have made a profit of $387 million—rather than a loss of about half a billion dollars—in the year of its collapse, had it enjoyed the work rules of the FEC.
To date, Congress has paid little heed to the achievement of Thornton's railroad. And Thornton worries that the unhealthy railroads will pull down the healthy ones, much as portrayed in Ayn Rand's Atlas Shrugged. "It is my belief that the railroad industry is headed for nationalization unless it can become more competitive and more efficient, and neither of these events will occur under work rules that exist nationwide with the exception of the FEC," he says. The portents for success are not encouraging in view of the political power of the unions. But as Thornton and his railroad have shown, long odds are not always insuperable.