NS MAKES ADJUSTMENTS TO KEEP NOR TH AMERICAN PERILS BEFALL TRUCK-RAIL LINK

NS MAKES ADJUSTMENTS TO KEEP NOR TH AMERICAN PERILS BEFALL TRUCK-RAIL LINK

Norfolk Southern Corp. considered selling its North American Van Lines division but chose instead to restructure the company to try to make it more competitive, the railroad's chairman said.

"We went through a real soul-searching on whether we should sell North American in the last year," Arnold McKinnon, Norfolk Southern's chairman said Friday.The Richmond, Va.-based transportation company was one of the first railroads to buy a major trucking company when it acquired North American in 1985.

Norfolk Southern expected North American to complement its rail operations but soon learned there were fewer benefits than anticipated.

"We talked a lot about synergies when we acquired North American," Mr. McKinnon said. "We spent a lot of time looking for synergies . . . but found that a lot of them were not there. There are a lot of differences" between the trucking and railroad industries.

Faced with a depressed trucking industry in 1989 and a potentially difficult time selling the company, Norfolk Southern stepped up its program for converting North American from owner-operator drivers to company drivers.

"We have instituted programs . . . to streamline and convert the operation from largely an old pre-deregulation era owner-operator truck line to the kind of lines like J.B. Hunt (Transport Services Inc.) and Schneider (National Inc.)," Mr. McKinnon said. "We're in North American for the long pull."

J.B. Hunt of Lowell, Ark. and Schneider National of Green Way, Wisc., have emerged since the trucking industry was deregulated in 1980 as the nation's premier full truckload motor carriers.

North American is best known as a household goods carrier, but the company also has divisions that transport a wide range of manufactured products, including high- value electronic components.

Mr. McKinnon, in a speech to the Transportation Table, a forum sponsored by The Journal of Commerce, said North American has reached the "break-even" point after a period of financial losses.

Norfolk Southern increased the truck line's capital budget for new trucks and trailers from $46.7 million in 1989 to $84.2 million this year. In May, the corporation added another $22.4 million for additional equipment purchases.

Even so, the railroad executive said North American still faces some hurdles.

"Cost control efforts have worked," he said. "Unfortunately, we're in a period right now where overall truckload business, as well as rail merchandise business, is off. We figured this was a two- to three-year turnaround opera- tion."

Mr. McKinnon said North American has helped the company improve its Triple Crown service, which uses truck trailers specially outfitted with steel wheels to run on railroad tracks.

"North American is providing 175 of the drayage operators that are serving Triple Crown's hubs, where they take trailers from the rails to the highways," he said.

On other issues, Mr. McKinnon said the railroad industry's top policy goal is keep Congress from approving use of longer and heav- ier trucks on the nation's high- ways.

Congress will consider that issue next year as part of a new highway funding bill.