(3 of 3)
Santa Fe and Southern Pacific see their union as the best way to compete with two other big Western railroads that were built up through mergers: Burlington Northern and Union Pacific. Says Southern Pacific Chairman Benjamin Biaggini: "It looks as if there isn't going to be a place in the West for smaller systems that don't go everywhere and do everything." Santa Fe and Southern Pacific intend to become more efficient by abandoning duplicate routes and pooling equipment. The combined 57,000-member work force of the two railroads will shrink, but probably through attrition rather than layoffs.
Santa Fe tried to take over Southern Pacific in 1980, but doubts about getting Government approval and disputes over who would run the company caused the deal to collapse. New talks began a few months ago between Biaggini and Santa Fe Chairman John Schmidt, who says that "negotiations suddenly got hot last Friday, and we worked it out over the weekend." Biaggini, 67, conceding that "it's time now for me to go," intends to retire, and Schmidt will run the new corporation from Chicago. An ambitious executive who grew up in a blighted Chicago neighborhood and once sold peanuts, baby pictures and encyclopedias, Schmidt is considering an effort to buy Conrail, the big Government-owned Eastern system, and link it to the Southern Pacific and the Santa Fe. That grand plan would put Schmidt in charge of the largest U.S. railroad and the first transcontinental line owned by a single company. —By Charles P. Alexander. Reported by Lee Griggs/Chicago and Russell Leavitt/Los Angeles