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FOR IMMEDIATE RELEASE

SPI TESTIFIES ON RAIL CONSOLIDATION ISSUES

WASHINGTON (March 9, 2000) – – The Society of the Plastics Industry, Inc. (SPI) Wednesday testified before the Surface Transportation Board (STB), providing its view of the impact of major rail consolidations on the plastics industry.

Representing SPI was Phil Rine, director of corporate logistics for Aristech Chemical Corporation, a resin-production company based in Pittsburgh, and an SPI member.

In his comments, Rine referenced what he called the "most powerful message that can be sent to the Board on behalf of the plastics industry – the tremendous disruption caused by the recent mergers upon the processor community."

That disruption, added to the implications of the pending Burlington Northern Santa Fe/Canadian National-Illinois Central railroad merger, he said, makes it appropriate for the STB to step back and examine "the critical issues" surrounding major rail consolidations.

The plastics industry is the largest rail-dependent industry in the country, Rine told the Board. "With the customer base for raw material producers located more than 1,000 miles from the point of production, the railroads are the lifeline for the plastics industry, connecting the producers to their customer base."

Rine characterized the plastics industry as "a universe of thousands of small businesses," 90 percent of which have fewer than 100 employees, the vast majority having fewer than 50. "These are companies operating on a very narrow profit margin," he said, "and depending upon 'just-in-time' delivery."

"Few can afford the luxury of keeping large inventories on site, due to capacity constraints and the very nature of the industry," he explained.

"Therefore, when rail service is disrupted and becomes unreliable and unpredictable, it does not simply present just a terrible inconvenience to operations," Rine added. "It shuts down entire facilities, meaning product is no longer made, customer demands are no longer met and the corporate bottom [line] is adversely impacted. The economic reverberations to the community, the industry and the customer base – nationwide – are very powerful."

One example of disrupted and unreliable rail service related to the Conrail acquisition by CSX and Norfolk Southern involved stranding and non-movement of loaded railcars, he related. To prevent customer plant shutdowns, Aristech Chemical was forced to intercept loaded railcars en route and transload product into bulk trucks.

Rine told the Board that "it is imperative that any future mergers be considered under an extremely speculative light. Recent mergers have caused severe production disruptions to companies that cannot afford large variances on rendering products to its customer base."

Therefore, Rine said: "The plastics industry strongly urges the Board to carefully scrutinize the service problems of recent mergers, that is, questioning if the affected shippers have actualized the benefits promised. Second, the Board should look to protect, if not foster, competition in any matter affecting the precious few railroads left in this country today. Finally, there has to be strict accountability. Specifically, the Board must require the merging railroads to perform, and in turn, report metrics that are meaningful to the affected parties, that is, the shippers.

"If these elements are not incorporated into future rail merger policy requirements, there will be a feeling of hopelessness in the shipper community, which now is perhaps endemic to only the captive shippers, but will surely become pandemic to the overall U.S. shipper community," Rine predicted

"If these elements are not incorporated, the shipper community, which is still suffering, will not be able to fix its current problems, losses will continue to mount, current service problems will only be exacerbated and frustration among the shipper community will promote the sentiment that only through legislative remedial action will shippers have access to competitive conditions," he concluded. "And all these scenarios will likely doom the fragile efforts currently in place to construct a better working relationship between the carriers and their customers."

Founded in 1937, The Society of the Plastics Industry, Inc., (SPI) is the trade association representing the fourth-largest manufacturing industry in the United States. SPI's 2,000 members represent the entire plastics industry supply chain, including processors, machinery and equipment manufacturers and raw material suppliers. The U.S. plastics industry employs 1.3 million workers and provides $274 billion in annual shipments.

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