Norfolk Southern Derailment and Low-Road Capitalism

LewisBraham

Since Norfolk Southern's derailment on February 3rd in East Palestine, Ohio, the stock has fallen about 6.5% while Union Pacific has dropped 4.8% and CSX 3%. The poisoning of an entire community with PVC and other carcinogens seems to be worth about 2% to 3% of the company's value relative to its peers.

https://npr.org/2023/02/16/1157333630/east-palestine-ohio-train-derailment

Several cars were carrying vinyl chloride, a cancer-causing substance. Other cars held other hazardous substances

Five of the derailed cars were carrying vinyl chloride, a manmade substance that is a key ingredient in PVC, the hard plastic resin used widely in construction and health care.

At room temperature, vinyl chloride is a sweet-smelling colorless gas. It is typically transported in the form of a compressed liquid.

Inhalation of vinyl chloride can cause respiratory symptoms like shortness of breath, along with neurological symptoms like headaches and dizziness. Chronic exposure to high levels of vinyl chloride has been associated with liver damage and cancer, according to the CDC.

This week, the EPA released a partial Norfolk Southern manifest that detailed other hazardous chemicals on the train, which included ethylene glycol monobutyl ether, ethylhexyl acrylate and isobutylene. All can cause irritation or neurological symptoms like dizziness and headaches.

https://thenation.com/article/economy/rail-workers-say-industry-courts-derailments-in-quest-for-profits/

Rail workers have insisted for years that the staffing cuts that rail carriers have pursued to pad their bottom line would create a safety crisis in the industry. “Through PSR [Precision Scheduled Railroading], they’ve cut staffing levels, not just for the operating side, but for maintenance…and basically all crafts across the line,” Doering said. These acute staff shortages also mean that freight lines are subject to incomplete or infrequent inspections, compounding the risks of environmental disaster.

https://nytimes.com/article/ohio-train-derailment.html

Gov. Josh Shapiro of Pennsylvania, a Democrat, weighed in on Tuesday, criticizing Norfolk Southern in a public letter for “inaccurate information and conflicting modeling” of the impact of the derailment.

Residents of East Palestine are losing trust in state officials and in Norfolk Southern, saying that no one has clearly communicated the scale of the disaster and the public health threats it could pose months or years later.

On Wednesday evening, hundreds of East Palestine residents crowded a school gym for an informational meeting about the derailment. They peppered local and state officials with questions about how such a disaster could be avoided and whether their water was truly safe to drink. Representatives from Norfolk Southern declined to attend.
Residents were evacuated and face uncertainty.
Just after the derailment, 1,500 to 2,000 residents of East Palestine were told to evacuate. Schools were closed for the week, along with some roads.

https://nytimes.com/2023/02/15/us/ohio-train-derailment-anxiety.html

“I just don’t want to be diagnosed with cancer or something 10, 15 years down the line because of their mistake,” said Therese Vigliotti, 47, who was outdoors the night that the chemicals were burned and said that her tongue still feels scalded and that she had seen blood in her stool for two days.

Most of the anger so far has been directed at Norfolk Southern, with elected officials publicly taking the rail company to task. Gov. Mike DeWine of Ohio, a Republican, called it “absurd” that Norfolk Southern had not been required to notify local officials about the train’s contents before it came through because of its classification, calling for congressional action and dangling the threat of legal action should the company fail to pay for the cleanup.

In a public letter, Gov. Josh Shapiro of Pennsylvania, a Democrat, denounced Norfolk Southern for its “poor handling” of the derailment, charging that “prioritizing an accelerated and arbitrary timeline to reopen the rail line injected unnecessary risk and created confusion in the process.”

davidrmoran

commie

LewisBraham

I don't know whether to laugh or cry. Sometimes I can't even tell the difference anymore.

larryB

If we want to talk about “ Low Road Capitalism “ we can discuss the private equity firms buying up Emergency Room practices, Pet Hospitals and Hospice services and reducing staffing to increase the bottom line. So when the state of California pension fund invests in the black hole of private equity they are putting lots of folks, their pets and the elderly in a worse position they they might have otherwise been. Perhaps the 20 year old me who railed against the evils of capitalism a half a century ago wasn’t completely off base.

LewisBraham

To me the stock's muted reaction to this devastating environmental news indicates that Wall Street thinks our regulations and regulators have no teeth. If, say, we had a more "high-road" capitalism approach in which all stakeholders mattered--people, planet, consumers, workers and investors--the stock would be down significantly more as regulators would step in and do their job, i.e., regulate companies that go astray. They would punish such behavior severely, and the stock price would reflect that. But Wall Street is telegraphing that it's largely OK with Norfolk's behavior, as is the government of Ohio.

davidrmoran

Oh, in a profit world, all powers-that-be are okay with almost all bad behaviors.

Over time and in the larger picture, shiny cancerous buckeye creeks and farmland will recede, same as images of the torn-apart bodies of bloodsoaked second-graders and elderly black shoppers, same as footage of rabid crazies with Confederate flags bear-spraying police officers outside the Capitol.

Did anyone notice that Erin Brockovich, bless her, was interviewed about East Palestine? So cool. And gosh, there's a movie about her, and this issue. A different time.

howaya

Meanwhile. JNJ and MMM have both experienced larger corrections due to potential legal liabilities. Perhaps Norfolk Southern's stock will correct more as time passes by.

davidrmoran

z

Mark

One link re: Erin Brockovich

Erin Brockovich talks about East Palestine train derailment

LewisBraham

Since railroads are one of the older American industries and have been subject to corporate abuses in the past, it is interesting to reflect on what regulation of that industry with actual teeth looked like in previous eras. A fascinating State of the Union speech by Teddy Roosevelt, who was bad on a number of things, but good on trust busting:
https://politico.com/story/2018/12/03/this-day-in-politics-december-3-1027800

https://let.rug.nl/usa/presidents/theodore-roosevelt/state-of-the-union-1902.php

WhollyTerriers

Ah, the old days. When disaster became legend.
As, the Mussel Slough Tragedy inspired The Octopus.
“When the legend becomes fact, print the legend.”
Now, that sounds more like politics.

larryB

@ WT. great Frank Norris reference.

sma3

Looks like the train crew should have had plenty of warning derailment was coming. One axle was on fire for 20 miles, visible on track side cameras. There were probably so few crew on the train no one noticed. The heat sensing alarm didn't function either. ( This was on the track every 10 to 20 miles, not on the cars). Hard to believe that even though my car will tell me if a tire pressure is a tiny bit low, similar warnings are not functional for railroad cars, especially ones with hazardous material.

https://www.post-gazette.com/news/transportation/2023/02/10/east-palestine-train-derailment-video-fire-axle-alert/stories/202302100070

It does not appear that Norfolk Southern is following the "Tylenol" playbook for a disaster. No one from the company attended the town meeting as they said their employees were afraid for their personal safety. Evacuations are apparently only a mile out even though mayor said if tanker exploded shrapnel could be thrown a mile away.

I think 3M has far more exposure with PFAS than JnJ has with talcum powder. Probably why 3M is down 30% in a year, Jnj down only 4%

Crash

In 2023, nothing like this should ever happen. Period. Not enough spent on infrastructure, on safety, on everything connected to running an operation like this. Inexcusable, unconscionable. Not enough crew on board, spread too thin, worked too hard, expected to cover too much. But it's all about the Benjamins, isn't it????? Feces. I'm just utterly disgusted.

And I just remembered THIS disaster from several years back, too:
https://en.wikipedia.org/wiki/Lac-Mégantic_rail_disaster

Old_Joe

We all "profit" from the current "anything goes" operations because the profits of all of the various companies involved (from beginning to end on these materials) eventually trickle their way into the general economy and thus to the stock market and our investment profits.

If either the government regulators or the railroads actually cared there would be specific regulations for shipments of incendiary, explosive or toxic materials. For starters-
• limits to train length
• requirement for heat sensors on the wheel bearings of these tanker cars with alarms direct to the train crew.

This will happen right after gun regulation is taken care of.

larryB

@Old_Joe. + 1. All three of your points are right on. Particularly the last. They don’t even bother with “ thoughts and prayers “ anymore cause they realize how hollow that sounds.

Crash

+1. @Old_Joe and @larryB.