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APPENDIX B

ERIE - LACKAWANNA MERGER STUDY

Normalized Maintenance

The purpose of this study was to develop maintenance costs for way, structures, diesel locomotives and passenger train cars which would be normal or average and not affected by economic factors of a given period, and thus appropriate to use in computing savings and costs of merger in the various studies affected by changes in volume of traffic, removals and additions of track and structures, and changes in use of locomotives and passenger train cars.

Normalized Maintenance of Way and Structures

The engineering departments of the two study roads estimated normal maintenance for all way and structures by primary accounts. The results were analyzed and correlated and average normal maintenance costs for all way and structures were developed.

All track districts which would be affected by merger were analyzed and classified according to character and density of traffic into three categories of new rail territory and six categories of relayer rail territory including three classes of yard trackage. A normalized cost of maintenance was then computed for each class taking into account rail, tie and ballast cycles.

The costs of maintenance of various types of structures and facilities were also developed according to major type and each major type was further classified according to size or capacity. For example, buildings were classified according to frame, masonry or metal construction and each of these divided into three sub-classifications according to size. Normal maintenance costs per cubic foot were developed for each sub-classification.

The normalized costs of maintenance of way thus determined were used to estimate the saving or increased expense which would result from abandonment of property, construction of additional facilities, and changes in the volume of traffic. The changes in normalized, maintenance for track as a result of increased or decreased volume of traffic were estimated by applying the Yager (AREA) formula for first and second main tracks. The estimated changes in normalized maintenance in light traffic lines and branch lines were based upon judgment.

Normalized Maintenance of Diesel Locomotives

Present average costs of repairs to diesel locomotives were developed and analyzed according to type of service, manufacturer and horsepower. From such information a normal maintenance cost for all classes of each of the following types of locomotives was determined and used in the studies:

Nomalized Maintenance of Passenger Train Cars

Normal passenger train car maintenance was considered in Study XII, Competitive Passenger Train Service.

Average repair costs for the two roads were developed and compared for the years 1951 to 1956, inclusive. After adjusting for cost. of repairs to motor equipment on Lackawanna MU cars, a normal maintenance cost was developed for each of the following types of passenger train cars:

Normal Maintenance of Freight, Train Cars

Normal repair costs for freight cars were not calculated as these costs are included in the per them rate or the mileage rate. In all studies where use of freight cars was increased or decreased the per them rate or the mileage rate was applied as an appropriate dollar measure of the change in use.

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