The Gandy Dancers' Line

Among U.S. railroads, the Chicago & North Western has an unusual characteristic: its commuter trains run on time. Last week it gained an even more remarkable distinction. Ben Heineman's Northwest Industries Inc., the conglomerate that owns the road, agreed to sell out to a new company composed entirely of the line's employees.

If the Interstate Commerce Commission approves the deal, as expected, the North Western Employees Transportation Co. will acquire the line by taking over $401 million of its debt and paying $19 million over 20 years. All of the line's 14,000 employees, from president to gandy dancers, will be invited to buy shares in the new company in amounts ranging from $500 to $100,000, depending on salary. The North Western line's president, Larry S. Provo, 43, a longtime Heineman associate, has also become president of the employee company. Provo has great expectations for a jump in productivity when employees become stockholders. "There are a helluva lot of people working unsupervised on our 11,500 miles of track," he says. "If they feel the railroad is not just an impersonal operation, we can get some real motivation."

On the basis of projections of increases in volume and productivity, officers of the employees' company predicted earnings of $81.9 million over the next five years. The line, which is expected to make a small profit this year, has been in the red for the past two years. That was one reason why Northwest Industries' Heineman wanted to sell.

He derides the idea that he dumped the line on the employees when he could not find another buyer. "The employees have been pressing to buy," he says. There is one undeniable benefit for Northwest Industries. Because the line will be sold for less than the book value of its assets, Northwest will get a tax credit estimated as high as $225 million. That should help Heineman's conglomerate speed up its switch into faster-moving areas of business.

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