The destructive train derailment in East Palestine, Ohio, has hit the railroad’s bottom line—and sent the CEO and the leadership team into a scramble to regain the public’s trust.
- On February 3, a Norfolk Southern freight train carrying dangerous toxins derailed in the town of East Palestine, Ohio, resulting in the small town being exposed to five cars of vinyl chloride particulates that have allegedly poisoned local water sources.
- Norfolk Southern faced heavy scrutiny from bipartisan U.S. politicians, labor unions, and local citizens, angered by mismanagement of railroad safety, hasty dangerous materials disbursement, and fears that the town had been effectively poisoned.
- The railroad released its quarterly earnings report on Wednesday, noting that the damage, cleanup efforts, and settlements had cost $387 million. It reported $3.13 billion in quarterly revenue, but stocks have declined 19% year-to-date.
Why It’s News
Norfolk Southern has a great deal to answer for—both in its poor safety record and in the costly damage that poor maintenance and policies have had on the town of East Palestine. Fox News notes that numerous residents, three months later, have yet to return to their homes safely and that local property values and businesses have been negatively impacted by the accident, with many local residents fearing that their homes and lives have been irrevocably destroyed.
In an interview with Trains Magazine, Norfolk Southern CEO Alan Shaw addressed many of the core allegations and conspiracy theories leveled against the railroad and repeatedly affirmed that it is taking steps to address the needs of the people of East Palestine.
“We take safety very seriously. Me and all my colleagues at the CEO level are always looking to improve. You’ve seen improvements in our safety performance and the industry’s safety performance over time. What I will tell you is that our response to East Palestine has reconfirmed my conviction in the strategic plan we outlined last year,” says Shaw. “If you go into East Palestine—and I’m there a lot—you see these yard signs popping up. They say, ‘East Palestine, America’s greatest comeback story.’ That’s what I want. It really is.”
In a recent op-ed for The Tennessean, retired Tractor Supply Company CEO Joe Scarlett argued that the derailment and cleanup efforts reflect a failure in leadership wider than Norfolk Southern’s executives. He argues that Transportation Secretary Pete Buttigieg and the railroad acted too slowly to respond to the crisis, with Shaw and Buttigieg only visiting the town weeks after the disaster. This poor decision has shaken confidence in the government and corporations’ ability to respond to crises.
“How leaders respond to a crisis is oftentimes more telling than the crisis that occurred in the first place. Trying to “run out the clock” in hopes that public outrage will wane is rarely an effective strategy. When our leaders, whether in government or business, fail to respond in a timely manner, citizens rightfully feel they are not working for us,” says Scarlett. “This is easily defined as a crisis—an environmental crisis, a safety crisis, and now, a crisis of leadership.”