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ERIE - LACKAWANNA MERGER STUDY

Communication Facilities

Study XI

The purpose of this study was to determine what savings would be realized by merger of present communications forces and facilities and to determine the additional costs of providing efficient communication facilities for the merged company.

The first step was to organize the proposed merged railroad by operating divisions and set up dispatching offices including proper forces. This plan reflected the abandonments contemplated in Study II, Duplicate Lines, and the net saving in train dispatching labor are included in Study XXII, Train Dispatchers. The second step was to estimate the costs of rearranging the communication facilities so as to reflect the changes covered by Studies I, II, XIV, and XXII, and to bring the entire system up to the highest standards observed by either line today.

The total cost of new construction is estimated at $633,608 of which $366,709 is for system telephone and teletype circuits. No credit has been taken for train and yard service savings which will accrue to the merged company through the more extended use of radio communications. The increase in normal maintenance and depreciation is due to the increase in radio facilities and the substitution of company owned system telephone circuits for present rental circuits.

At the system level the Communications and Signal Departments would be combined and the savings are included in Study XIV-S. There might be a substantial savings by a further consolidation of these two departments, but as these savings could probably be made without merger they are not included here.

The estimated savings from this stady are $6,942 as outlined in the summary following:

                           SUMMARY



A. Net Cash Cost of Effecting Merger

  1. Salvage from Property Retired                           $    2,112 L
  2. Extraordinary Expenditures Saved Next Four Years             ---
  3. Cost of Property Acquired                                  633,608 L
  4. Cost of Property Relocated                                  14,183 L
  5. Non-Recuri-ing Income Tax Saving                            39,888 G
  6. Total Net Cash Cost                                       $610,015 L


B.  Expenses
    MW&S

  1. Cost of Nomalized Maintenance                          $    20,130
  2. Depreciation                                                11,632
  3. Total Maintenance of Way and Structures                $    31,762  L

    Other

  4. Savings in Forces                                        $  37,878  G
  5. Equipment and Circuit Rental                                27,175  G
  6. Total @enses                                             $  33,291  G

C. Payroll Taxes, Vacations, etc.                             $   4,152  G

D. Interest

   5% on Net Cash Cost                                          $ 30,501 L

E. Total

   Net Savings Realized From Merger                             $ 6,942 G

 G - Gain
 L - Loss