Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 9, 1992 TAG: 9202080092
SECTION: BUSINESS PAGE: C-1 EDITION: METRO
SOURCE: DANIEL HOWES BUSINESS WRITER
DATELINE: BLUE RIDGE LENGTH: Long
LIFE AFTER BUYOUT
Big bucks don't come along often for workers who see their jobs downsized out of existence. Whatever the payoff, though, the future holds fears for family finances, second careers and deteriorating lifestyles.
Patrick Graybill never considered himself a gambler - until now.
For several years the father of four had seen buyout offers come and go from Norfolk Southern Corp., but each time the offer ended up in the trash. Then, thanks to a settlement after the nationwide rail strike last year, came the big one: $110,000 to pack it in.
If he took it: No more calls in the middle of the night dragging him out to a 14-hour shift on the rails; no more school nights and weekends away from the kids, leaving his wife, Jill, to run the household; no more worries about contracts and unions and company bigwigs seemingly disinterested in the struggles of working men.
But he'd also find himself truly jobless for the first time in nearly 16 years - no more health insurance, sick pay, vacation days or retirement benefits. "I lost a lot of sleep during that time," he said last week in an interview at his five-bedroom home next to the Blue Ridge Parkway. "My mind was continually thinking."
There were 624 more like Graybill scattered across Norfolk Southern's 20-state system last December. Each worker had his own circumstances for taking a buyout he might never see again. And each of those decisions can have profound impacts on local economies, affecting retail purchases, sales of new homes and cars and adding to the ranks of folks looking for work.
It's not just the railroad industry that's scrambling to trim its work force and boost productivity. Banks and retailers, real estate firms and builders - all are trying to do more with fewer people. The unlucky workers get a day's notice and two-weeks pay, not hefty severance packages.
Graybill's eventual departure from the railroad and changes in his family's spending habits likely won't be felt in the regional economy. But the wrenching decisions that led him to take "the best deal I could get," highlight the quandaries faced by workers whose jobs suddenly cease to exist.
For Graybill, 37, the first step came the day before Thanksgiving. He chose to join the brakeman's "reserve board," created by the railroad for brakemen who, rather than accept a job buyout, want the security of drawing 75 percent pay and benefits until a vacancy opens up.
Norfolk Southern and other major railroads had long been bound by labor agreements forcing them to retain workers they insisted they didn't need. When the chance came last year for the company to rid its trains of brakeman, it offered buyouts - or the reserve board - to all of them.
It was the holiday season, and Graybill figured he'd take some time to think about his situation. He had until Dec. 31 to take the buyout - $50,000 for his job and $60,000 for selling his "productivity fund" to the company. The fund amounts to a bonus plan for some rail workers, who receive annual payments according to the work they did the previous year.
So Graybill - then drawing about $29,000 of his former $40,000 salary - set out looking for another job. "I want to tell you something: As soon as they find out you still have an affiliation with a company like Norfolk Southern, it's, `See ya, goodbye.' "
No one seemed to want to take a chance on hiring a railroad veteran who might jump at the first chance to get back his old job - and generous benefits package. He said many openly conceded they could not compete with Norfolk Southern's compensation.
Something else nagged at him: "It's hard for me to imagine a corporation paying a man $29,000 a year to stay at home. I just wasn't raised like that. My father always told me [that] you don't get something for nothing." He thought, "You're just appeasing me; sometime the ax is going to fall."
Graybill also had trouble believing the reserve board would always be there. He'd heard stories of one down in Georgia that had been abruptly discontinued a few years after it was established - rumors that senior company officials flatly say are untrue.
He felt stuck. So, on Dec. 18, Graybill took the buyout.
"If I would have had that iron-clad guarantee that the reserve board would have stayed there, I wouldn't have made this move," he said. "I just felt like the money they put on the table gave me an opportunity to make a fresh start."
The future he saw promised only more buyout offers and other attempts to cut the railroad's work force. "I was thinking, `four or five years from now I'm going to be down here with 20 years seniority and no job.' " And he worried that his chances of landing a new job and starting a second career would diminish sharply once he turned 40.
His wife, a part-time dance instructor, backed the move. "She said, `There's not a lot of companies out there that would dump $110,000 in your lap and say we don't want you.' "
After talking to an accountant friend, Graybill used about $64,000 to pay off the mortgage on his 12-year-old home and the second mortgage he used for a new truck and some remodeling. There is no credit card debt now, either.
Gone is the railroad health insurance, so now he foots the bill for all his family's coverage. Graybill figures $1,000 a month will sustain the family's standard of living for the next year, and hopes his wife will be able to teach more classes to increase her $10,000 a year income.
"The key to this gamble for me is to find something and get back into a job," he said. "I'm an optimist. I can't believe I won't be able to find a job in the next year. I'm not looking for a job that makes $40,000 a year. I'm willing to start on ground level and work up."
Folks like Graybill are part of the vicious circle that continues to dog the nascent economic recovery: Consumers account for two-thirds of the country's gross domestic product and consumers, experts say, will lead the recovery. But those who lose jobs and others who fear they could be next are hestitant to lead the charge.
"In the very short-run, he is not going to contribute to the economy," Glenn Bowman, chief economist for Dominion Bankshares Corp., said about Graybill and others like him. But "to be able to pay off the obligations removes a lot of pressure from you in the job market."
Still, Graybill is jobless, determined to keep a tight rein on spending. Said Bowman: "I think there's no question that one of the problems of the recovery is the unemployment rate has continued to go up and that's a drag on consumer spending."
Indeed, unemployment in the Roanoke Valley crept upward during the October-through-December quarter, going from 4.5 percent to 5 percent. Worse, the number of people employed dropped, a double-whammy for governments which depend on tax revenue from workers and which must help support workers who suddenly have no jobs.
Despite the Roanoke Valley's employment erosion in 1991's fourth quarter, some bright spots emerged:
New car sales, battered for months, began to turn upward. Figures show 502 new cars were registered in the fourth quarter, 20 percent ahead of the 418 recorded during the same quarter in 1990. In recent weeks, dealers have seen increases in customer traffic.
Home sales during the fourth quarter slipped only 1.6 percent from the same period in 1990, dropping to 184 from 187. But in January, sales skyrocketed 109 percent over the same month last year. "It's better in the last month, and right now, than it's been in the last three months," said R. Lee Mastin, a principal in Mastin Kirkland Bolling Inc., a valley real estate firm.
Although retail sales figures for the fourth quarter are not yet available, retailers such as S.H. Hieronimus Co. Inc. are reporting a better Christmas season than anticipated.
"We had a good December," said Richard Lynn, president of the Roanoke department store chain. "I was surprised. For December, most of it came very, very late," an indication that post-holiday sales attracted buyers.
"I would think things may have turned," he said, cautioning that it will take a few more months before the direction of the economy comes clear. A hint: January sales were up 16 percent over last January.
Others major sectors of the Roanoke Valley economy didn't show as much improvement. J.M. Turner & Co. Inc., a Salem-based contractor, is "holding our own," said chairman Jay Turner. Dominion Bankshares, plagued by bad real estate loans and structural changes in the banking industry, announced last month that it was cutting its work force by another 10 percent, or some 500 jobs.
And Norfolk Southern, like Patrick Graybill, felt the impact of its job buyouts last quarter. The company took a $450 million charge against earnings to offset the expenses. At the same time, revenues from hauling coal, automotive- and steel-related products remained sluggish.
But the Norfolk-based railroad is predicting an upswing this year. "We don't expect any further charges to our income, though we will be making further buyout [offers] from time to time," said John Turbybill, the company's chief financial officer.
And that means there are likely to be more Patrick Graybills trying to decide on the best next step. "It could be worse: I could be sitting right here in this house without a dime in my pocket."