Annual management meeting focuses
on revenue growth opportunities

Business and revenue growth opportunities were the focus of the 2003 General Management Meeting. More than 300 managers gathered to learn more about and discuss ways to help Norfolk Southern grow its business and its revenues.

David Goode, chairman, president and chief executive officer, gave the group a clear mandate.

"We have no choice," he said. "We have to grow."

Just how will NS grow its revenues? Those answers came from David Lawson, president MODALGISTICS®; Jim Newton, president Triple Crown Services and Thoroughbred Direct Intermodal Services; and Richard Kiley, director automotive, in a panel presentation. All cited improvements such as the Thoroughbred Operating Plan, new transportation products and technologies as springboards for revenue growth.

Newton said opportunity exists in markets currently served by truck. "We're working to be more trucklike to penetrate those markets with low rail share," he said. "Service improvements under TOP, new intermodal products, superior service and network coverage and capacity will help us accomplish our goal of taking trucks off the highway and putting that freight on rail."

Superior supply chain management is a key component to moving freight from highway to rail, Lawson said.

"We formed MODALGISTICS two years ago to offer our customers a broader array of rail-based supply chain solutions," he said. "We offer consulting, technology and operations services to provide shippers with lower cost solutions."

Lawson said close alignment of MODALGISTICS with various business groups has increased revenues for NS. He anticipates even more opportunities for growth.

Kiley said innovative solutions to customer needs have paid off for NS and will continue to do so.

"Some examples of how we've responded to changing customer needs are our 75-car grain shuttles, nine new intermodal core products and the coal business group's Powhatan Shuttle," he said.

He said NS will step up its efforts to grow its auto parts business using intermodal products, logistics services, new boxcar technology, expanded partnerships with key entities and an expanded JIT-Rail program.

Even with these successes, more work must be done, said Debbie Butler, vice president customer service.

"For us to move from good customer service to great customer service, we have to do more. There are four essential elements. We must produce a product with a market value, support that product with technology, build strong customer relationships and improve and innovate," Butler said. "Everyone has a role in making this happen."

Goode closed the meeting with a challenge.

"We have everything in place to grow our revenues and our business," he said. "Our job now is to make it happen."

Breakout sessions detail
revenue growth opportunities

Managers heard more details about Norfolk Southern's revenue growth opportunities in breakout sessions at the annual General Management Meeting.

Rob Robinson, director MODALGISTICS®, said innovative supply chain management is a key to revenue growth. Supply chain management involves logistical management from the acquisition of raw materials to the delivery of finished products.

MODALGISTICS was created two years ago as a rail-centered supply chain management offering. Services are divided into consulting, technology and operations.

"We look for opportunities to provide multimodal logistics solutions that result in a superior supply chain network delivering competitive advantage for our customers," Robinson said.

The group has been successful in taking freight off the highway and putting it on rail.

"We know we can provide more efficient,economical and environmentally friendly logistical solutions using rail where appropriate," he said.

Another breakout session offered information on how NS is using technology to improve decision-making, asset utilization, customer service and ease of doing business.

"We use technology in innovative ways to support our transportation and logistics products," said Cindy Earhart. "One example is Rail Traffic Controller, a dispatching and scheduling software system that analyzes the effects of planned capital projects, sets realistic schedules for maintenance-of-way projects and studies the effects of adding and deleting trains. Another is accessNS, a suite of Web-based e-commerce applications that make it easier for customers to do business with NS. Yet another is a locomotive system that lubricates the rail to reduce friction."

Additional breakout sessions detailed how the Thoroughbred Operating Plan have improved customer service. TOP has reduced operating costs and asset requirements, said Tim Heilig, assistant vice president transportation network.

"The improvements we've seen with TOP I are substantial," he said. "In 2003, TOP II will concentrate on more opportunities to size yard assets, further improve train performance, increase visibility of customers' traffic and enhance connection performance."

Conrail operating system
being replaced

The system used by Conrail's operations and customer service in the Shared Assets Areas (SAA) of North and South New Jersey and Detroit is being replaced. The former system, called TRIMS, will be converted to the Norfolk Southern Thoroughbred Yard Enterprise System(TYES) system or the CSX Transportation operating system.

"TRIMS has become too difficult to support because of its age," said Karol Weigand, director NS 21. "We found we can not only reduce costs by replacing it, but we also can significantly improve information and processing for Conrail, NS and CSX."

Weigand said SAA South Jersey and Detroit field operations and the support center will use NS' TYES. North Jersey SAA operations will use CSXT's operating system.

"The only thing that is changing in Shared Assets is the computer systems. Conrail employees who currently use TRIMS will have all the same information and functionality available to them as before," Weigand said. "The good news is they'll have more modern systems to support their work."

"Our ability to compete for business is enhanced through these changes," said Don Seale, senior vice president merchandise marketing. "Using newer operations and customer service systems helps us remain competitive and grow our business in these areas."

The conversions are starting with Detroit in April and are expected to be complete by the end of May.

Dispatchers, NS reach agreement

Norfolk Southern and its Train Dispatchers represented by the American Train Dispatchers Department of the Brotherhood of Locomotive Engineers have successfully negotiated a new 10-year agreement. The contract contains traditional general wage increases through 2004. Beginning in 2005, the dispatchers will participate in the NS bonus program just as NS management employees and BLE represented engineers do now.

ATDD General Chairman Alvin Hunnicutt said, "Our members are significantly involved in the day-to-day operations of the railroad. With this contract, we recognize a chance to benefit from our daily contribution to the railroad's financial goals."

Scott Weaver, NS director labor relations said, "Dispatchers play a key role in providing our customers the high level of service they demand. This agreement gives them the opportunity to benefit financially from providing that high level of service."

ATDD General Chairman Frank Garritano added, "My members recognize that the BLE participation in the bonus program has been very beneficial for them. I feel this contract is very advantageous for my members in moving to the next level and becoming a part of Norfolk Southern's success."

"This is an important agreement for our members," said ATDD General Chairman Mike Greenwell. "It recognizes and rewards NS train dispatchers for their significant contribution to Norfolk Southern's success in the future. More importantly, it leads to continued cooperation between Norfolk Southern and its train dispatchers as we work together on other issues of mutual concern,"

Safety awards recognize
outstanding performance

It was a time to celebrate and reflect on outstanding safety performance in 2002 at Norfolk Southern's annual safety awards meeting in March. At the event, 46 groups of NS employees, 29 of whom were injury-free for the year, were honored.

More than 500 NS employees attended the meeting. Also attending were rail labor leaders; Allan Rutter, Federal Railroad Administration administrator, and others from the FRA; and representatives from the National Transportation Safety Board and Operation Lifesaver.

David Goode, chairman, president and chief executive officer, praised NS employees' leadership in safety. "You are the benchmark. Everyone looks up to you for your dedication and your concentration on safety, and I salute you for that," he said.

Goode talked of changing the E.H. Harriman Gold Medal Award requirements.

"I think it is time we take another look at the Harriman Award, and as the winner of that award, we are the best ones to say that," he said. "I encourage the Harriman committee to re-examine and determine if we need to change focus, but if we are to make changes, let's don't do it simply for the sake of change, but because it really does help us focus."

Steve Tobias, vice chairman and chief operating officer, cited teamwork.

"We learn from each other," he said. "That draws us together. We need the joint experience of the entire Norfolk Southern family to be successful. When one falls, we must all help lift him or her up. This is what makes us different from other companies as we continue our quest for zero injuries and zero incidents - the attitude and desire for safety among all employees."

Ed Hamberger, president and chief executive officer of the Association of American Railroads, was the keynote speaker.

"Good two-way communications is at the heart of safety," he said. "And no detail is too small when it comes to safety. From top to bottom, NS has developed a strong safety culture that reflects both of those points. Your proof is reflected in your incredible string of 13 consecutive Harriman Awards. The whole railroad industry has developed just such a culture, with NS setting a pace for others to match."

Dave Cheviron, lead electrician, Fort Wayne, Ind., was introduced as NS' Harold F. Hammond Award nominee. Cheviron, a safety committee member at work and volunteer reserve police officer in his community, was cited for his dedication to safety on and off the job.

"We are immensely proud of the job all NS employees do to make this company the leader in our industry when it comes to safety," said Chuck Wehrmeister, vice president safety and environmental. "This is a team effort that works well, and I thank all of you for your dedication and commitment to making NS a safer place to work every day."

NS certifies first Six Sigma Blackbelts

Norfolk Southern certified 15 Six Sigma Blackbelts in March. This is the first group of Blackbelts certified in the company. Six candidates are pending certification upon completion of their projects.

Each Blackbelt participated in a rigorous, extensive training program. Certification requirements include demonstrating knowledge, understanding, and application of the Six Sigma tools, passing of tests and successfully completing two projects. It can take nine months to a year for certification.

Henry Light, senior vice president law (l), listens to Sean Woody describe his Six Sigma projects.

Blackbelts take responsibility for quality process management in their departments devoting 100 percent of their time to process improvement and project work, and managing other projects to insure alignment with key corporate goals.

"We're extremely proud of all of you," said John M. Samuels, senior vice president operations planning and budget, at the recent Blackbelt Certification and Awards Banquet. "You are leaders in helping Norfolk Southern achieve continual quality improvement."

The group displayed their certification projects in a "Blackbelt Fair" in Norfolk. Among the projects displayed were process improvements in billing data input, asset utilization, equipment repair and grade crossing safety.

"The breadth of these projects shows how many positive things we can do using Six Sigma tools," said Jeff Yates, assistant vice president quality management. "These projects represent approximately $31 million in savings across the company. They also represent our commitment to continual quality improvement at NS as part of our ISO 9001:2000 registration. As we move forward, we will see more streamlining of processes and cost savings."

NS forms subsidiary to market
transportation services in Mexico

Norfolk Southern has formed a Mexican subsidiary, NorfolkSouthernMexicana, S. de R.L. de C.V., to market the railroad's transportation and logistics services in Mexico.

"We believe the time is right to raise our marketing profile in the Mexican market," said Ike Prillaman, NS vice chairman and chief marketing officer. "With the continued strengthening of NAFTA, and given our extensive service territory in the East, we have had six consecutive years of growth in our Mexican traffic, both in volume and revenue."

NS' Mexican market expert, Tony LaRosa, director Mexico, will continue in that role, providing direction for NorfolkSouthernMexicana and working closely with National Account Manager Patty Martin in Mexico City and Account Manager Jorge Morton in Monterrey.

"With the formation of NorfolkSouthernMexicana, we will serve both U.S. and Mexican customers involved in the NAFTA trades and also further strengthen our partnerships with western rail carriers," LaRosa said. "NorfolkSouthernMexicana will support our many efforts, including identifying new carload business, converting long-haul truck traffic to the rails, and providing additional support to recent NS intermodal initiatives linking the two countries."