SUMMARY
Estimated
Reduction Savings
Study in Forces from Merger
Salaries, Wages and Fees
G General. This includes the Executive,
Law and accounting Departments, as
well as several smaller departments 241 $1,305,350
T Traffic. This study estimated savings
from the consolidation of the traffic
departments, including forces handling
rates and divisions, sales and service,
and outside agencies . . . . . . . . . . . . 187 1,146,516
S Superintendence Operations. The savings
from consolidation of supervisory forces
engaged in operating,.and maintaining the
railroads down to, and including, the
divisional level, are estimated at . . . . . 144 954,252
Total 572 $3,406,118
Payroll Taxes, Health and Welfare
Allowances
G General $ 104,428
T Traffic 91,721
S Superintence: Operations 76,340
Total $ 272,489
Total Salaries, Wages, Fees, Payroll Taxes
and Health and Welfare Allowance, etc. $3,678,607
Office and Traveling Expenses
G General $ 350,763
T Traffic 414,068
S Superintendence: Operations 179,436
Total $944,267
Total Estimated Savings
G General $1,760,541
T Traffic 1,652,305
S Superintendence: Operations 1,210,028
Total 4,622,874
Saving in rental - 140 Cedar Street, New York $90,459
Increased rental - Midland Building, Cleveland 5,000 85,459
Total - Study XIV $4,708,333
Each of the companies included in the merger study, of course, has its own executive and supervisory organization, its own operating department, its own traffic forces for the setting of rates and solicitation of business, its own set of records to maintain, and its own separate reports to make to the various regulatory authorities. The purpose of Study XIV was to analyze the existing functions of these various departments and the present cost of operation, and to set up a proposed organization which it is believed would be able to handle these functions after merger. The difference between the two would represent the estimated savings from merger. In order to facilitate the analysis, the study was divided into three major sections. Traffic and operations were studied-separately as indicated in the summary on the preceding page, and the executive, law and accounting departments, together with certain smaller departments, were included in the "General" section.
In order to estimate the organizational economies which would result from the proposed merger, it was necessary to decide upon a plan of organization for the proposed merged company. We believe the divisional plan as outlined in this study is a practicable and workable one, will provide an efficient administration responsive to local conditions and needs, and will produce the savings estimated herein. However, it is not intended by this proposal to imply that a departmental plan might not also be practicable, and we believe that either plan would produce the savings estimated herein.
System headquarters are now maintained by the Erie in Cleveland, and by the Lackawanna in New York City. We have been advised that headquarters for the merged company will be the present Erie offices in Cleveland and our studies have been made on that basis. This will permit giving up the Lackawanna space at 140 Cedar Street with an annual saving of $90,459 in rental. It has been estimated that additional space needed in the Midland Building in Cleveland can be rented for $5,000 annually. We have further been advised that the Accounting Department will be divided with the Auditor of Disbursements located at Scranton and the Auditor of Revenues at Cleveland, and that both of these decisions have been made in the interest of reducing capital expenditure.
In almost every department analyzed, it was discovered that practices on the two railroads varied as to organization and the functions handled by the department. In making these studies the first step was to determine what functions are presently handled in each department by the existing organizations. Existing employees handling like functions, regardless of present departmental assignments, were then brought together for analysis. The proposed forces which it was estimated would be required to handle these functions for the merged company were then set up, grouped in what we feel to be an efficient organization, and savings in forces and salaries were determined by a comparison of present and proposed forces. The "Present Forces" shown in this study therefore represent the forces analyzed with respect to functions, after transfers to and from the department were made to put the operations of both roads on a comparable basis. In setting up the proposed forces, meetings were held with all interested Department Heads, and it is believed the estimates meet with the general approval of all concerned. A proposed Organization Chart of the merged company accompanies this report, identified as Map No. XIV-A.
Summary of Estimated Annual Savings in Force and Other Expenses
P R E S E N T P R O P O S E D
Force Annual
Erie -DL&W Total Salaries Force Salaries
Forces and Salaries
Executive Office, Pass
Bureau 12 7 19 $ 425,919 12 $ 347,352
Public Relations and
Advertising 7 5 12 93,891 10 76,466
Secretary & Treasurer 24 16 40 281,052 35 242,735
Law Department 17 18 35 535,815 29 445,883
General Claims 30.5 18 48.5 311,884 40.5 268,036
Land & Tax Department 34 14 48 287,969 38 227,760
Labor Relations and
Personnel 18 7 25 179,232 20 151,644
------------------------------------------------------
142.5 85 227.5 $2,115,762 184.5 $1,759,876
Accounting Department
Vice Pres.-Comptroller 15 13 28 $ 252,123 20 182,726
Statistics 9 7.5 16.5 105,537 13.2 85,514
Auditor of Revenues 371.5 175.3 546.8 2,671,490 461.5 2,264,748
Freight Claim Agent 68.5 24 92.5 529,903 79 464,612
Auditor of Disbursements 153.5 69 222.5 1,156,579 187.6 963,254
Car Accountant 34 28 62 286,300 50 230,268
Machine Accounting and
Reproduction 206.5 91.2 297.7 1,348,135 270.7 1,228,641
Valuation Department 30 9 39 245,832 35 216,672
------------------------------------------------------
888 417 1,305 $6,595,899 1,117 $5,636,435
Total Force 1,030.5 502 1,532.5 $8,711,661 1,301.5 $7,396,311
Savings 231 $1,315,350
P R E S E N T PROPOSED
Erie DL&W Total
Other Expenses
Rental IBM
Machines $ 298,683 $169,076 467,759 $ 442,072
Other Rentals 271,736 53,550 325,286 252,874
Stationery and
Printing 212,503 90,363 302,866 212,503
Expense Accts. 147,646 49,055 196,701 159,484
Contributions 100,000 21,090 121,090 100,000
Other 260,249 103,994 364,243 260,249
Total Other
Expenses $1,290,817 $487,l28 $l,777,945 $1,427,182
Savings $ 350,763
Total Estimated Annual Savings $1,666,113
Executive Offices, including Pass Bureau
Proposed Savings
Present Forces Forces Estimated Annual
Salaries
Erie DL&W Total Total Forces and Wages
Supervisory 4 2 6 4 2 $51,608
Non-Supervisory 8 5 13 8 5 26,959
----- ----- ----- ----- ----- ---------
Total 12 7 19 12 7 $78,567
The new executive department would be headed by a Chairman of the Board, but the active operation of the new company would be in the hands of a President, who would be assisted by an Executive Vice President and an Assistant to the President. The Pass Bureau would be included in this office, and appropriate secretaries and other clerical personnel are provided.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries,
Wages and
Erie DL&W Total Total Forces Fees
Supervisory 3 3 6 5 1 $13,230
Non-Supervisory 4 2 6 5 1 4,195
Consultants - - - - - 8,537
Total 7 5 12 10 2 $25,962
Both Erie and Lackawanna maintain departments which handle not only public relations, but also press relations, employees magazines, photography, and other related work. An Assistant to the President of the merged company to handle public relations is proposed, and he is provided with a staff of nine assistants and clerks. This department would also supervise the advertising undertaken by the new company.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries,
Wages and
Erie DL&W Total Total Forces Fees
Secretary 7 - 7 8
Treasurer 7 - 7 8
Secretary and
Treasurer - 5 5 -
----- ----- ------ ----- ---- ----------
Total 14 5 19 16 3 $14,749
Transfer Office 2 5 7 7
N.Y. Corporate
Transfer Office Yes No - No - 12,000
Cashier's office 8 6 14 12 2 11,568
----- ----- ---- ----- ---- ---------
Total 24 16 40 35 5 $38,317
The functions of the secretary and the treasurer are combined in one office on the Lackawanna, whereas the Erie divides the work between a secretary and a treasurer. It is believed that the requirements of the merged company would justify separate offices. A total of 19 officers and employees are now assigned to this work by the two companies separately, as compared with a proposed force of eight for the new secretary and eight for the treasurer, or a total of 16. Much of the work performed in these offices is corporate work or is otherwise related to system operations ' and it is assumed that the elimination of one of the corporate entities in the merger would result in a nearly pro rata reduction in work of this character.
The Erie employs two New York corporate transfer agents and also has two men in their Cleveland office assigned to payment of dividends, whereas the Lackawanna handles this work with its own forces. A transfer office is proposed for the merged company and it is believed that the seven men now assigned to this work could take care of the merged company. The only saving would be in the fees paid its corporate transfer agents by the Erie.
Both companies maintain cashiers' offices with a total of 14 supervisors and employees. Merger would result in very slight savings in this work and a reduction of only two men is proposed.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries,
Wages and
Erie DL&W Total Total Forces Fees
Supervisory 9 9 18 16 2 $48,740
Non-Supervisory 8 9 17 13 4 17,591
------ ------ ------ ------ ------- ---------
Total 17 18 35 29 6 $66,331
Outside Counsel 23,600
Total $89,931
The Law Department of the Erie is located in Cleveland, with one General Attorney in New York, whereas all of the Lackawanna's legal forces are located in New York.
A Vice President and General Counsel is proposed for the new company, together with two General Solicitors. It is believed that four Commerce Attorneys would continue to be needed as would the five General Attorneys. Two attorneys now handle real estate and taxes, and it is anticipated that no reduction could be made in this force. One man would continue to be required for labor and marine matters. A single managing clerk, however, would replace the two managing clerks which are now employed, and the number of non-supervisory employees could be reduced from 17 to 13, making a total reduction of six men in the department.
The two companies maintain outside counsel on a retainer fee basis in Washington, D. C., and at sixteen other points. At seven of these points it is believed that no saving could be realized as a result of merger, but at Washington we estimate the annual cost could be reduced from $11,100 to $7,500, or a saving of $3,600, and at nine of the points where outside counsel are retained, it is estimated that the total cost could be reduced from $105,000 annually to $85,000 annually, or a saving of $20,000. Total savings in fees for outside counsel are therefore estimated at $23,600 annually.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Headquarters:
Supervisory 3.5 2 5.5 3.5 2 $14,641
Non-Supervisory 5 1 6 5 1 4,359
----------------------------------------------------------
Total 8.5 3 11.5 8.5 3 $19,000
Districts:
Jersey City 8 - 8 > 11 4
Hoboken - 7 7 >
Binghamton 1 1 2 > 5 -
Scranton - 3 3 >
Buffalo 1 3 4 3 1
Hornell 3 - 3 3 -
Others (6) 9 1 10 10
-----------------------------------------------------------
Total 22 15 37 32 5 $24,848
Total Claims 30.5 18 48.5 40.5 8 $43,848
At present, General Claims for Erie are under the supervision of the Chief Surgeon, and the same arrangement has been continued. No attempt has been made to study the forces in the Medical Department which on the Erie, in addition to the Chief Surgeon, number 10 persons and on the Lackawanna consist of the Chief Medical Officer and his secretary.
District claim agents are now maintained at the several points shown in the table above, and the proposed reduced forces are also indicated, It is believed that under merger the work can be handled more efficiently at a smaller number of points, and it is estimated that a reduction of five men can be made in the field. This saving, coupled with a reduction of three at headquarters, produces a total estimated saving for the claim division of eight men.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Supervisory 4 4 8 4 4 $29,026
Non-Supervisory 30 10 40 34 6 31,183
Total 34 14 48 38 10 $60,209
The General Land and Tax Agent of the new company would be charged with the maintenance of all basic land records, and would furnish information as required to the valuation and other departments of the railroad. He would also be responsible for property tax returns. All other tax returns would be the responsibility of the Comptroller.
There would be some reduction in the volume of work with respect to taxes following consolidation, but the detailed accounting for land would not be substantially affected. A total of 48 men now handle this work, and it is proposed to set up an organization of 38. Supervisory officers are reduced from eight to four, a reduction of four, whereas clerical forces are reduced from 40 to only 34, or a reduction of six.
The General Land and Tax Agent would be assisted by one officer in charge of real estate, and another officer in charge of taxes, with one chief clerk. The other 34 employees would be assigned to tax work, preparation of documents, valuation work, drafting of maps, and other clerical duties. In view of the local nature of much of the land work, field men would be assigned to district offices located in New York, Cleveland and Elmira.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Supervisors 9 3 12 10 2 $13,848
Non-Supervisors 9 4 13 10 3 13,740
----------------------------------------------------------
Total 18 7 25 20 5 $27,588
It is proposed that a Director of Labor Relations, Personnel and Training be appointed who would report direct to the President* and have, complete charge of all wage matters, schedules, negotiations, employment, personnel records, and employee training programs. He would be provided with an Assistant Director.
A Supervisor of Labor Agreements would be in charge of wage schedules and negotiations, and his department would include four Examiners and a Chief Clerk. A Superintends of Employment, assisted by a Chief Clerk, would handle employment problems.
Total supervisory forces provided for the merged company would include the ten supervisory officers listed above as compared with 12 at present, or a saving of two. The volume of work with respect to employment and related records would be only moderately reduced as a result of merger, and it is estimated that total non-supervisory forces of 13 at present could be reduced to ten, or a saving of three, making a total saving for the department of five.
** It may be desirable to separate this department between Labor Relations on the one hand, and Personnel and Training on the other, the former department to report to the Vice President Operations, and the latter to the President. This would in our opinion result in some loss in efficiency (and increase in expense) through separation of the two departments in exchange for increased efficiency through more direct handling of the more important labor problems with the principal departments involved. There is precedent for both types of organization.
Vice President - Comptroller
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Supervisory 5 4 9 7 2 $41,125
Non-Supervisory 10 9 19 13 6 28,272
-----------------------------------------------------------
Total 15 13 28 20 8 $69,397
The Comptrollers of the two companies are now located in Cleveland and New York, with total forces of 28 officers and employees. At this level of supervision the separate forces are largely engaged in work which is the same for both companies, such as developing accounting policies, maintaining general books, preparing system statistics and reports, etc. It is proposed to assign 20 officers and employees to this work for the new company.
The new organization would be headed by a Vice President and Comptroller, and it is proposed to assign to him three assistants. The first assistant would serve as the executive officer and office manager as well as handle the general accounts. The second would be responsible for tax work, and the third would be in charge of statistics. The auditors of the various bureaus would report directly to the Comptroller, with secondary lines of responsibility to the Assistant Comptrollers in their respective fields. Three additional supervisory officers are also provided, together with 13 accountants, bookkeepers, secretaries and clerks.
Proposed Estimated Annual
Present Forces, Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Supervisory 1.8 1 2.8 2 .8 $ 5,922
Non-Supervisory 7.2 6.5 13.7 11.2 2.5 14,101
-------------------------------------------------------
Total 9 7.5 16.5 13.2 3.3 $20,023
The Erie Railroad has a number Of officers and employees in the Accounting Department doing statistic, work, including an Assistant Comptroller who supervises the preparation of annual reports, operating statistics ,stand other similar statements.
The Lackawanna Railroad has a relatively small statistical bureau engaged in the same type of work.
The merged company should have an adequate organization handle this type of work, and since there is some duplication in the work performed it is believed that two officers would be able to handled the work which is now done by 2.8 supervisors, and that the non-supervistory employees can be reduced from a total of 16.5 to 13.2, making a total reduction of 3-3 officers and employees.
Proposed Estimated Annual
Present Forces Forces Saving
Salaries,
Erie DL&W Total Total Forces and Wages
Supervisory 22.5 16.4 38.9 28.0 10.9 $ 64,332
Non-Supervisory 349.0 158.9 507.9 433.5 74.4 342,410
---------------------------------------------------------
Total 371.5 175.3 546.8 461.5 85.3 $406,742
It is proposed to place revenue accounting under the supervision of an auditor of Revenues, who would be provided with two assistant auditors. The Auditor would have general supervision and supervision of personnel. One assistant would have supervision over local freight revenue, interline freight accounting, revision work and overcharge claims. The other assistant would handle station accounts, traveling auditors, passenger revenue and other miscellaneous revenues.
Revenue accounting, particularly interline accounting, would be reduced somewhat in volume by merger, and supervision can be consolidated, so that the total existing forces of 546.8 could be reduced to 461.5, or a saving of 85.3 officers and employees.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries,
Wages and
Headquarters Erie DL&W Total Total Forces Fees
Supervisory 4 3 7 5 2 $15,337
Non-Supervisory 52.5 20 72.5 61 11.5 49,954
----------------------------------------------------------
Total 56.5 23 79.5 66 13.5 $65,291
Districts:
Jersey City 7 - 7 8 1 I
Hoboken - 1 1 - 1
Cleveland 1 - 1 1 -
Chicago 4 - 4 4 -
----------------------------------------------------------
Total 12 1 13 13 -
----------------------------------------------------------
Grand Total 68.5 24 92-5 79 13.5 $65,0291
On the Erie the Freight Claim Department is under the jurisdiction of the Comptroller, whereas on the Lackawanna it is included in the Operating Department. it is proposed to place this work in the Accounting Department in the belief that it can there be more readily and effectively coordinated with an over-all mechanization program. Freight claim prevention would be handled in the office of the Superintendent of Transportation in the Operating Department.
The Freight Claim Department now located at Cleveland and Scranton, would be consolidated into one office under the jurisdiction of a Freight Claim Agent and two assistants. A chief clerk and an assistant chief clerk would complete the supervisory forces, and an additional 61 employees would be required to handle the work of the merged company at headquarters.
At present the Erie has three and the Lackawanna one district office. It is proposed to continue the district offices at Jersey City, Cleveland and Chicago, and discontinue the office at Hoboken.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
1. Supervision 7.6 4.5 12.1 9 3.1 $ 28,187
2. Payrolls 62.6 36 98.6 81 17.6 94,781
3. Material 36.6 9 45.6 45.6 - ---
4. Bills 12.5 4.5 17 14 3 16,674
5. Vouchers 10.7 7 17.7 13 4.7 24,806
6. AAR Billing 9.5 5 14.5 11 3.5 15,757
7. Dining Service .2 .5 .7 1 .3 I 1,584 I
8. Bookkeeping 6.3 1.5 7.8 7 .8 4,287
9. Treasury Work 2 - 2 1 1 4,896
10. Filing 2 - 2 2 - ---
11. Office Boys 3.5 1 4.5 3 1.5 5,521
----------------------------------------------------------
12. Total 153.5 69 222.5 187.6 34.9 $193,325
The basic functions of disbursement accounting will remain substantially the same after merger as before, and the various categories analyzed are listed in the table above. A total of 222.5 officers and employees are now required to handle this work, and it is estimated that under consolidation only 187.6 will be needed, a reduction of 34.9 or 16%.
Comments with respect to each of the 11 categories listed above are as follows:
Disbursement accounting is now handled by the Erie at Cleveland and Hornell, and by the Lackawanna at Scranton. It s proposed to handle all of this work at a central office at Scranton, with one supervisory force instead of three. The proposed supervisory force of nine includes an auditor of disbursements and his secretary, and three Assistant Auditors. One of the three assistants would have general supervision; the other two would be placed in charge of material and payroll accounting, respectively, and each would have a chief clerk. This group would also include an accountant whose primary unction would be the handling of pensions and related work.
A total of 67 employees now handle timekeeping for the two companies, including 2.5 supervisors, 26 timekeepers for operating employees and 38.5 timekeepers for non-operating employees. The volume of work under merger will be reduced somewhat because of the reduction in total employees, and there will be certain advantages in consolidating the work in one place. Two supervisors are proposed for this work, together with 23 timekeepers for operating employees and 30 for non-operating employees, making a total of 55 for the entire bureau, or a reduction of 12'employees.
The payroll department will also handle all work in connection with deductions, bond purchases, detailed records with respect to group insurance, the distribution of payrolls, compensation reports, etc. One supervisor would be required for this work as compared with two at present, and the total number of employees handling these miscellaneous functions would be reduced from 31.6 to 26.
Erie accounting is by districts, while the Lackawanna maintains system figures only. The one exception to this is in connection with material used in repairs of diesel locomotives where both Erie and Lackawanna maintain records showing material applied to each individual unit.
Under the Lackawanna system, material is charged out on the basis of monthly inventories. This method does not permit budgetary control by operating division or mechanical repair point, although budgetary control can be maintained by classes of material for the entire system. In setting up the proposed forces required for material accounting it was assumed that the Erie system would be adopted. Records of material applied by diesel unit as practiced by the Lackawanna and Erie would also be continued.
The estimated force of 45.6 men for the merged company is the same as the existing total.
The preparation of bills against other companies requires 17 supervisors and employees at present, including several men who check joint facility bills. It is proposed that this be done by a force of one chief clerk, two Joint facility investigators, and 3.1 other employees, making a total of 14, or a reduction of three as compared with existing forces.
The preparation of vouchers in payment of bills received from other parties now requires 17.7 supervisors and employees, and it is proposed that this work be done with a total of 13, a reduction of 4.7 employees. This should be possible because of the consolidation of a substantial number of transactions.
Bills against other railroad companies for repairs to cars Delayed in accordance with rules of the Association of American Railroads require 14.5 employees now, and it is proposed to handle this with 11 men, a reduction of 3.5. This redaction is possible for two reasons. First, all billing between the Erie and Lackawanna would be eliminated; and second, it is assumed that mechanization of this work as now practiced by the Lackawanna would,be adopted by the merged company.
Less than one man is now required for handling accounts related to dining cars and other related services on the Erie and Lackawanna, and it is assumed that one man could handle it for the merged company.
After the basic detailed preparation of payrolls, material accounting, etc., has been completed, a certain amount of work is required in preparing journal entries and maintaining the general books of account. It is estimated that seven men would be needed as compared with 7.8 at present, a reduction of .8.
The Erie now has two men in New York on the payroll of the Comptroller one of whom would be eliminated as a result of merger. The work of this man would be absorbed by forces in the office of the Treasurer which are set up elsewhere. The second man keeps a duplicate set of general books in New York as required for the Erie because it is incorporated in New York State.
Although files now maintained in three different offices will be consolidated, it is felt that the two existing file clerks will continue to be needed.
A total of 4.5 office boys are now employed, a large part of whose time is required for messenger service. After the proposed consolidation of three offices into one it would be possible to reduce this force to three.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Supervisory 2 3 5 3 2 $11,208
Non-Supervisory 32 25 57 47 10 44,824
-----------------------------------------------------------
Total 34 28 62 50 12 $56,032
The methods used for car accounting by the Erie and Lackawanna vary markedly. The Western District of the Erie is equipped to put information for each car handled on cards in all of their principal interchange yard offices for transmittal by teletype direct to the machine bureau. There the information will be automatically punched on I.B.M. cards. However, the Erie will not start their program until the Eastern District yard offices are also equipped with the necessary machines. The Lackawanna has no corresponding program.
Passing reports are furnished by teletype to all main traffic offices by the Erie. The Lackawanna furnishes information for all cars handled through East Buffalo, but for all other cars the Lackawanna Traffic Department must call the Car Accountant or the Transportation Department, and the latter usually makes further inquiry of yard offices by telephone. The merged company would furnish passing reports similar to those prepared by the Erie.
Operating statistics (OS Reports) are in general compiled by the Erie and Lackawanna in the office of the Car Accountant, and it is assumed such reports would continue to be made in the office of the Car Accountant for the merged company.
It was assumed that with greater mechanization and concentration of work the merged company would achieve greater efficiency, and on this basis it was estimated that the total number of officers and employees required for this department could be reduced from 62 to 50, or 12 employees.
The supervisory force for the proposed new office would include a Car Accountant, one chief clerk in charge of per diem, demurrage and wheel reports, and a supervisor of statistics. The other 117 employees in the department would be engaged in handling per diem, demurrage, wheel and passing reports, tracing, home routes and short routes, statistics, and other related matters.
Auditor of Mechanized Accounts and Reproduction
Estimated Annual
Present Forces- Proposed Forces Savings
Salaries
Erie DL&W Total Cleve. Scranton Total Forces and Wages
General
Supervision
Supervisory - - - 2 1 3 3.0 I $ 23,424 I
Mechanized
Accounting
Supervisory 8.8 2.3 11.1 6 2 8 3.1 $ 22,883
Non-Supervisory 136.2 55.7 191.9 123.7 50 173.7 18.2 82,615
----------------------------------------------------------------------
Total 145.0 58.0 203.0 129.7 52 181.7 21.3 $105,498
Comptometer
Division
Supervisory 1.0 - 1.0 1 1 2 1.0 I $ 4,704 I
Non-Supervisory 19.0 11.0 30.0 20 6 26 4.0 16,922
----------------------------------------------------------------------
Total 20.0 11.0 31.0 21 7 28 3.0 $ 12,218
Stenographic
Bureau
Supervisory 1.0 1.0 2.0 1 1 2 - $ 912 I
Non-Supervisory 36.5 18.5 55.0 38 12 50 5.0 23,145
----------------------------------------------------------------------
Total 37.5 19.5 57.0 39 13 52 5.0 $ 22,233
Reproduction
Department
Supervisory - - - 1 - 1 1.0 I $ 4,740 I
Non-Supervisory 4.0 2.7 6.7 4 1 5 1.7 7,709
----------------------------------------------------------------------
Total 4.0 2.7 6.7 5 1 6 .7 $ 2,969
Total
Department
Supervisory 10.8 3.3 14.1 11 5 16 1.9 I $ 10,897 I
Non-Supervisory 195.7 87.9 283.6 185.7 69 254.7 28.9 130,391
----------------------------------------------------------------------
Total 206.5 91.2 297.7 196.7 74 270.7 27.0 $1l9,494
I - Increase
A new section of the Accounting Department is proposed for the merged company, to be under the general supervision of an Auditor of Mechanized Accounts and Reproduction and two assistants. This section would include Mechanized Accounting, the Comptometer Division, the Stenographic Bureau, and the Reproduction Department. These four bureaus are placed in one section because they do work for all other bureaus of the Accounting Department, or for other departments of the railroad, and much of their work is on machines which require various degrees of specialized skill. Since the disbursement accounting will be performed at Scranton, it will be necessary to have a branch of the section at that point.
The mechanization of railroad accounting is in a period of transition. accounting practices on both railroads are being modified as new machines become available and new applications are developed for older machines. The Lackawanna and the Erie each recently acquired an IBM Model 650 and both roads are planning increased mechanization.
For the purposes of this merger study the existing accounting forces of both railroads now assigned to work on IBM machines, were brought together in one summary statement, as shown in the table above. The estimated force required to handle the work for a merged company was then set up. Possible savings from further mechanization which could be secured apart from merger were excluded, and no provision was made for increased research and programming which might prove desirable in the future. In other words, the estimated savings shown in the table above reflect only the effect of merger upon present operation and existing forces as set up under present management policies.
The proposed machine bureau would be under the general supervision of a Manager, who would be assisted by other supervisors in direct charge of the various principal functions such as station accounting, .revenue accounting, car accounting and disbursements.
A total of nine men, one supervisory and eight non-supervisory, are assigned to research and programming at the present time, and it is believed that seven, one supervisory and six non-supervisory, could. handle the corresponding work for the merged company. This force represents the ultimate saving after the accounting procedures have been correlated and the departments merged in o one. During the transition period, however, a larger programming force would probably be required to effect the merger within a reasonably short period of time.
Both roads now use IBM machines, and 91.2 employees are required as key punch operators and verifiers, and 74.8 as machine operators, and 6.2 as miscellaneous clerks, a total of 172.2. It is estimated that the volume of work will be reduced about 10%, reflecting the use of local freight waybills for inter-company cars now handled in the interline accounts, the elimination of records for cars interchanged
Between the companies, some reduction through concentration of work, and other less important factors. As to the machine operators, here is another saving in that the preparatory time for wiring boards and setting up machines for operation is largely duplicated, and would be substantially reduced under merger. It is therefore proposed that the non-supervisory employees would be reduced to 82 key punch operators and verifiers, 69 machine operators and five miscellaneous clerks, a total of 156 and a reduction of 16.2.
A total of 215 IBM machines are now rented, including two model 650 magnetic drum data processing machines recently installed by the Lackawanna at Scranton and the Erie at Hornell, but excluding 604 to be released shortly by the Lackawanna.
The total base rental, including the 10% Federal tax, is $467,759, for first shift operation. It is estimated that the merged company would need about 90% of the basic machines now rented by the two companies separately, including key punch and verifying machines, collators, sorters, alphabetic and numeric accounting machines, reproducing punches, gang punches, and interpreters. The merged company would probably continue to use the three model 604ts and the two 650's now rented, but better utilization of the machines would probably be realized. On the basis outlined, the total number of machines would be reduced from 215 to 198, or about 8%, and annual rentals would be reduced from $467,759 to $442,072, or 9%. no change is estimated in the minor cost of rental for second shift operation. The saving in annual rentals is included in Traveling and Office Expenses appearing at the bottom of the Summary, Page 1.
The Erie is now using calculating machines for payroll and other disbursement work at Hornell. This work would eventually be placed on IBM machines by the merged company, but no saving has presently been taken.
Both companies are using Comptometers for revenue and disbursement accounting, and these forces would be merged into one in the new company and placed under the supervision of the Auditor of Mechanized Accounting and Reproduction. It is estimated that about 10% of the Comptometer work would be saved as a result of merger.
Under existing operations many of the bureaus of the accounting Departments have their own stenographic forces. It is proposed that a pooled force be set up for the merged company under the jurisdiction of the Auditor of Mechanized Accounts and reproduction, and the more efficient operation under merger would permit a saving of five employees, or about 9%. In addition to this pool, a secretary has been assigned to the Comptroller, the assistant Comptrollers, and the Auditors.
It is also proposed to place under the jurisdiction of the Auditor of Mechanized Accounts a small bureau set up for the mechanical reproduction of reports, statements, maps and other documents. Machines for this purpose are continually becoming more efficient and more expensive, and trained personnel are largely required for their operation, indicating the necessity of a pooled operation.
Proposed Estimated Annual
Present Forces Forces Savings
Salaries
Erie DL&W Total Total Forces and Wages
Supervisory:
Engineering 6 2 8 7 1 $12,000
Accounting 1 1 2 1 1 6,552
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Sub-Total 7 3 10 8 2 $18,552
Non-Supervisory:
Engineering 20 5 25 23 2 $10,608
Accounting 3 1 4 4 0 ------
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Sub-Total 23 6 29 27 2 $10,608
Grand Total 30 9 39 35 4 $29,160
The work of the Valuation Department combines engineering and accounting, as indicated in the table above, and its principal function is maintaining detailed records of property owned and the preparation of valuation reports as required by the Interstate Commerce Commission. There would be no great reduction in the work performed, and supervisory and non-supervisory forces have each been reduced by two.
The Valuation Department has been placed under the general supervision of the Comptroller because so much of the work done is directly related to accounting.
The purpose of Study XIV-T was to analyze the existing functions and present costs of operation of the Traffic Departments and to set up a proposed force which would be able to handle these functions under merger.
Data with respect to the organization, personnel and expenses of both roads were analyzed and a proposed force was set up after conferences with Traffic Department representatives, including one meeting with the Traffic vice presidents. With one exception, referred to later,, the Traffic Departments of both the Erie and the Lackawanna are organized and operated in a substantially similar manner so far as personnel and policy are concerned.
The Traffic Department headquarters would be located at Cleveland. The Rate and Divisions Department would also have offices at New York and Chicago. Supervision of on-line and off-line sales activities would be controlled from New York, Cleveland and Chicago.
As to off-line offices, the personnel of the railroad having the largest force at a particular agency was usually adopted as the proposed force for the merged company at that agency. In several cases, however, additions were made because not all of the calls being made by the two companies are duplicated and some increase in personnel seemed necessary to permit proper solicitation coverage.
In the proposed organization the Mail, Baggage and Express Department will come under the Traffic Department in line with present Erie practice.
Office and traveling expenses were estimated on the basis of existing costs adjusted to reflect the proposed Traffic Department organization after merger.
A recapitulation of present and proposed forces and expenses as well as the estimated annual savings is shown on Schedule A. The estimated annual saving is $1,560,584.
P R E S E N T P R O P O S E D
Total Amount Annual
Erie DL&W Total Salaries Force Salaries
Force and Salaries
Vice President - Staff 11 6 17 $ 175,284 12 $ 113,220
Industrial Development 9 4 13 100,824 12 94,608
Passenger Traffic Dept.
General Office 17 16 33 195,876 24 137,616
On-Line and Off-Line
Agencies 35 25 60 353,100 54 318,780
Mail, Baggage and Express 4 4 8 45,084 6 35,148
Coal Traffic Department 12 4 16 113,604 14 98,640
Freight Traffic Dept.-
Rates and Divisions 87 39 126 727,116 98 571,620
Sales and Service
General Office 53 42 95 628,848 60 411,012
On-Line and Off-Line
Agencies 257 119 376 2,285,280 277 1,697,856
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Total 259 744 744 4,625,016 557 $3,478,500
Savings 187 $1,146,516
P R E S E N T PROPOSED
Erie DL&W Total
Annual Expenses
Vice Pres - Staff $ 16,620 $ 31,068 (A) $ 47,688 $ 17,172
Industrial Development 32,088 5,040 37,128 34,992
Passenger Traffic Dept.
General Office 16,524 13,704 30,228 20,280
On-Line and Off-Line
Agencies 64,068 34,488 98,556 86,580
Mail, Baggage & Express --- 996 996 996
Coal Traffic Department 23,988 3,468 27,456 26,200
Freight Traffic Dept. 236,580 51,384 287,964 273,024
Rates and Divisions
Sales and Service
General Office 133,404 55,740 189,144 145,008
On-Line and Off-Line
Agencies 543,696 259,296 802,992 597,768
Miscellaneous 740,592 245,052 985,644 891,708
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Total $1,807,560 $700,236 $2,507,796 $2,093,728
Savings 414,068
Total Estimated Annual Savings in Traffic Department $1,560,584
(A) Includes rents for other departments. Rents have
been assigned to individual departments for the
proposed organization.
The Operating Department would be under the control of a Vice President located at Cleveland. Divisional organizations would report directly through Superintendents to General Managers in charge of the Eastern and Western Districts and only indirectly to the other system staff officers. Forces would be reduced about 20%, as shown in Schedule B, attached.
Under separate operation the companies to be merged are organized into operating districts and divisions as follows:
Lackawanna Miles Buffalo 213 Scranton 449 Morris and Essex 266 928 Erie Eastern District Buffalo-Rochester 252 Susquehanna-Delaware 453 New York 304 1,009 Total in Study Area 1,937 Western District Allegany-Meadville 449 Mahoning 280 Kent 204 Marion 265 1,198 Total 3,135
Several factors arising from merger permit a reduction in the number of operating divisions required for the new company. Terminal operations at the important common points would be consolidated (Study I, Common Points). It is anticipated that approximately 96 miles of road would be abandoned (Study II, Duplicate Lines). The operation of certain duplicate freight trains would be eliminated (Study III, Duplicate Freight Train Service). Finally, geographic concentration would be permitted to a greater extent than under separate operation because the lines of the Lackawanna and Erie are largely parallel between Jersey City and Buffalo.
Under merger, the proposed district limits would be the same as the present Erie districts, the six divisions in the study area could be reduced to three and the system total from ten to seven. The miles of road included in the divisions and districts, divided between main and branch, together, with miles of trackage rights would be as follows:
M i l e s o f R o a d
Owned Operating
Main Branch Total Rights Total
Eastern District
New Jersey 187 253 440 8 448
Middle 372 511 883 85 968
Buffalo 95 250 345 3 348
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Total 654 1,014 1,668 96 1,764
Western District
Allegany 183 215 398 51 449
Mahoning 88 188 276 3 279
Kent 119 85 204 - 204
Marion 245 - 245 20 265
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Total 635 488 1,123 74 1,197
Grand Total 1,289 1,502 2,791 170 2,961
The reduction in total m miles from 3,135 to 2,961 or 174 miles reflects the 55 miles of line retired in the Erie-Lackawanna coordination program as well as Study I and Study II abandonments, lines reclassified, and the elimination of trackage rights held by one system company over another.
The size of the staffs of the new divisions were based primarily on anticipated volume of traffic and the size of the proposed divisions, bearing in mind not only road miles and the relative number of main and branch miles, but also the geographical concentration of these miles.
A recapitulation of the present and proposed forces and estimated savings in the System and Divisional organizations follows in Schedule B. The annual saving is estimated at $1,133,688.
P R E S E N T P R O P O S E D
Annual Annual
Erie DL&W Total Salaries Force Salaries
A. Forces and Salaries
System Organization
Vice Pres. Operating 19 7 26 $ 261,312 20 $ 194,268
General Manager 20 7 27 207,732 16 134,844
Superintendent of
Transportation 29 19 48 292,716 34 219,000
Chief Engineer 109 27 136 995,580 112 804,888
Supt.-Sig. Comm. 14 8 22 178,248 20 159,804
Mechanical 91 39 130 852,156 101 654,252
Safety Department 1 3 4 31,356 5 36,180
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Total 283 110 393 $2,819,100 308 $2,203,236
Divisional Organizations
Superintendent 90 54 144 $ 929,820 118 $ 763,452
Div. Car Foreman 11 8 19 108,240 14 80,592
Master Mechanic 23 4 27 168,612 22 135,432
Division Engineer 70 35 105 688,884 89 577,692
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Total 194 101 295 $1,895,556 243 $1,557,168
Totals 477 211 688 $4,714,656 551 $3,760,404
Savings 137 $ 954,252
P R E S E N T PROPOSED
Erie DL&W Total
B. Expenses
System Organization $354,672 $144,312 $498,984 $346,092
Division Organi-
zations 120,252 52,560 172,812 146,268
---------------------------------------------------
Total $474,924 $196,872 $671,796 $492,360
Savings $ 179,436
C. Total Estimated Annual Savings $1,133,688
