Malaysians form lines to vote in fiercely contested election

Voting is underway Wednesday in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been battered by corruption allegations and an unpopular goods and services tax.

A Malaysian prepares to casts her vote in Pekan, Pahang state, Malaysia on Wednesday, May 9, 2018. Malaysia's general elections slated for May 9, will determine if scandal-plagued Prime Minister Najib Razak's coalition can extend nearly 61 years of unbroken rule against an unprecedented challenge led by the former strongman Mahathir Mohamad. (AP Photo/Aaron Favila)

Polling booths opened at 8 a.m. and long queues had already formed at some voting locations in Kuala Lumpur and other cities. Watched by election officials, voters at a polling station set up at a school in central Kuala Lumpur dipped a finger in purple ink before casting their votes.

A Malaysian citizen casts his ballot during the voting day of general elections in Kuala Lumpur, Malaysia, Wednesday, May 9, 2018. Voting has begun in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been sullied by corruption allegations and an unpopular goods and services tax. (AP Photo/Sadiq Asyraf)

Analysts say the ruling National Front, in power since independence from Britain in 1957, might lose the popular vote for a second consecutive election. But it could still win a majority of seats in parliament due to an electoral system that gives more power to rural Malays, its traditional supporters. Voting closes at 5 p.m. and results are expected in the late evening.

A Malaysian citizen casts her ballot during the voting day of general elections in Kuala Lumpur, Malaysia, Wednesday, May 9, 2018. Voting has begun in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been sullied by corruption allegations and an unpopular goods and services tax. (AP Photo/Sadiq Asyraf)

Najib, in an election eve appeal to voters, promised income tax exemptions for young people and public holidays if his coalition wins. Mahathir, who was Malaysia's authoritarian leader for 22 years until 2003, repeated the themes of a campaign that asserted a vote for the opposition would save Malaysia from a corrupt elite.

A man folds his marked ballot paper at a voting center during the general elections in Alor Setar, state capital of Kedah, northern Malaysia, Wednesday, May 9, 2018. Voting is underway Wednesday in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been battered by corruption allegations and an unpopular goods and services tax.(AP Photo/Andy Wong)

The 92-year-old Mahathir emerged from political retirement and joined the opposition in attempt to oust Najib, his former protege, after a multibillion-dollar corruption scandal at a state investment fund set up by Najib.

A Malaysian citizen casts his ballot during the voting day of general elections in Kuala Lumpur, Malaysia, Wednesday, May 9, 2018. The scandal-plagued Prime Minister Najib is seeking a third term in office during the May 9 general election, but faces an unprecedented challenge from a rejuvenated opposition led by his former mentor and strongman Mahathir Mohamad. (AP Photo/Sadiq Asyraf)

The U.S. Justice Department says $4.5 billion was looted from 1MBD by associates of Najib between 2009 and 2014, including $700 million that landed in Najib's bank account. He denies any wrongdoing. An unpopular goods and services tax, introduced by Najib in 2015 to boost government revenue as Malaysia's oil wealth dwindles, has also dented support for the ruling coalition. It hit poor rural Malays particularly hard.

Election volunteers peep through a window glasses as Malaysian cast their votes for the general elections in Alor Setar, state capital of Kedah, northern Malaysia, Wednesday, May 9, 2018. Voting is underway Wednesday in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been battered by corruption allegations and an unpopular goods and services tax.(AP Photo/Andy Wong)

"Enough is enough. We want a clean and just government We want a party for all races," Agnes Yap, a bank employee, told The Associated Press after she voted in a Kuala Lumpur suburb.

Malaysian wait to cast their votes outside the voting center during the general elections in Alor Setar, state capital of Kedah, northern Malaysia, Wednesday, May 9, 2018. Voting is underway Wednesday in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been battered by corruption allegations and an unpopular goods and services tax. (AP Photo/Andy Wong)

Reflecting Malaysia's racial divides, Yap said the Chinese party in the ruling coalition had been subservient to Najib's Malay party and failed to defend the rights of the country's ethnic Chinese minority.

A policeman stands watch as Malaysian line up to cast their votes outside the voting center during the general elections in Alor Setar, state capital of Kedah, northern Malaysia, Wednesday, May 9, 2018. Voting is underway Wednesday in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been battered by corruption allegations and an unpopular goods and services tax.(AP Photo/Andy Wong)

The National Front lost its two thirds majority in parliament in 2008 polls and lost the popular vote in 2013. However that year it still won 60 percent of seats in parliament. Tindak, a group advocating for a fairer electoral system, says one third of voters decide half of seats.

About 15 million Malaysians are eligible to vote and the Election Commission has predicted a turnout of 85 percent.

A man gets his finger marked with ink before casting his ballot at a voting center during the general elections in Alor Setar, state capital of Kedah, northern Malaysia, Wednesday, May 9, 2018. Voting is underway Wednesday in a fiercely contested Malaysian election that pits an opposition led by former authoritarian leader Mahathir Mohamad against the ruling coalition of Prime Minister Najib Razak, whose image has been battered by corruption allegations and an unpopular goods and services tax. (AP Photo/Andy Wong)

But the opposition and election monitoring groups said the commission's decision to hold the vote midweek was likely to lower turnout and favor the ruling party.

Najib, the son of Malaysia's second prime minister, cast his vote in the coastal city of Pekan.

A Malaysian voter dips his finger on ink as early voting starts in Pekan, Pahang state, Malaysia on Wednesday, May 9, 2018. Malaysia's general elections will determine if scandal-plagued Prime Minister Najib Razak's coalition can extend nearly 61 years of unbroken rule against an unprecedented challenge led by the former strongman Mahathir Mohamad. (AP Photo/Aaron Favila)

The election campaign had been "quite vicious in the content of the personal attacks which doesn't reflect a mature democracy," he said after voting.

"But the most important thing is for the people to decide on the destiny of this nation and it must be based on facts, it must be based on policy," he said.

Malaysian Prime Minister Najib Razak votes at his hometown in Pekan, Pahang state, Malaysia on Wednesday, May 9, 2018. Malaysia's general elections will determine if scandal-plagued Prime Minister Najib Razak's coalition can extend nearly 61 years of unbroken rule against an unprecedented challenge led by the former strongman Mahathir Mohamad. (AP Photo/Aaron Favila)

Malaysian Prime Minister Najib Razak looks at his finger marked with ink as he votes at his hometown in Pekan, Pahang state, Malaysia on Wednesday, May 9, 2018. Malaysia's general elections will determine if scandal-plagued Prime Minister Najib Razak's coalition can extend nearly 61 years of unbroken rule against an unprecedented challenge led by the former strongman Mahathir Mohamad. (AP Photo/Aaron Favila)

Norfolk Southern’s first-quarter earnings report Wednesday gave the railroad the opportunity to publicly defend CEO Alan Shaw’s strategy again before investors decide on May 9 whether to back him. Since the railroad already preannounced its disappointing results earlier this month when it disclosed a $600 million settlement over the disastrous February 2023 Ohio derailment there were few surprises in Wednesday’s numbers.

Norfolk Southern confirmed the $53 million, or 23 cents per share, that it earned in the first quarter. Without the settlement and some other one-time costs, the railroad said it would have made $2.39 per share while Wall Street was predicting earnings of $2.60 per share. The Atlanta-based railroad’s profit dropped from $466 million, or $2.04 per share, a year ago even though the railroad delivered 4% more shipments during the quarter.

“Our strategy is about balancing service, productivity and growth with safety at its core,” Shaw said, and he promised to close the profit margin gap with other major railroads over the next couple of years though several analysts have expressed doubts about whether Norfolk Southern will be able to do that as all the other railroads keep improving.

The railroad and Ancora Holdings disagree over whether Shaw ’s strategy of keeping more workers on hand during a downturn to be ready to handle the eventual rebound is the best way to run Norfolk Southern and whether he is the best man to lead the railroad.

Ancora's CEO candidate, Jim Barber, was formerly UPS’ chief operating officer and said keeping more workers on hand during slower times is wasteful.

“This concept of Precision Scheduled Railroading is the exact same way that UPS has run its network for 60 or 70 years, which is you run it very efficiently, very effectively, and very balanced with as few assets as you can and leverage the efficiency of your employee base and the assets,” Barber said in an interview with The Associated Press.

All the railroad unions, which have been complaining about the deep job cuts since PSR became the industry’s standard operating model, came out in support of Shaw even though Norfolk Southern has also cut workers. And key regulators at the Surface Transportation Board and Federal Railroad Administration warned that Ancora’s strategy could jeopardize the advancements in safety and service Norfolk Southern has made since the East Palestine derailment.

But control of the railroad will ultimately be decided by investors — not the unions or regulators — who will vote on Ancora’s seven board nominees, and investors have reason to be disappointed in Norfolk Southern’s results given that the railroad’s profit margins have lagged behind peers. Several big investors, including EdgePoint Investment Group that ranks in the top 10 of the railroad’s shareholders, have said they will back Ancora’s slate, and a Deutsche Bank analyst said in a research note that the activists seem to have strong support among institutional investors.

Barber and Ancora’s pick to be chief operating officer argue that Norfolk Southern needs to aggressively implement the lean Precision Scheduled Railroading model to make the best use of its locomotives and crews and bring its profits in line with the other major freight railroads. That model calls for running fewer, longer trains on a tighter schedule and switching cars less often, so the railroad won’t need as many workers, locomotives and railcars.

If keeping more workers on hand was really the answer, Barber and the man Ancora wants to be Norfolk Southern’s Chief Operations Officer, Jamie Boychuk, questioned why Norfolk Southern can’t deliver more shipments on time now while business remains slower. The railroad said Wednesday that during the first quarter, it delivered 86% of the shipping containers it handled and about 76% of all the other goods on time. Norfolk Southern predicted that would improve in the second quarter, but its nearest competitor in the East, CSX railroad, was already significantly better.

Ancora wants to shrink Norfolk Southern’s workforce by about 1,500 jobs through attrition over the next three years while working to cut more than $800 million in expenses in the first year, and another $275 million by the end of three years.

Norfolk Southern says there’s no way to save that much in a year without laying off about 2,900 workers. The railroad said it believes the steps Ancora has outlined would only save about $400 million in the first year. Norfolk Southern has predicted that its own plan will generate that much cost savings within two years.

In one example of the dueling letters and presentations to investors, Ancora replied to that criticism and said most of its initial $800 million in projected savings come from things like parking hundreds of unneeded locomotives and thousands of railcars and improving fuel efficiency — not from layoffs.

Boychuk has experience helping CSX implement Precision Scheduled Railroading after a different investor group pressured that railroad to hire industry legend Hunter Harrison in 2017. That led to all kinds of service problems that year when CSX overhauled its operations quickly in the last few months of Harrison’s life, but since those initial problems CSX has come to be regarded as the industry leader in most respects and routinely outperforms Norfolk Southern in the eastern U.S.

Boychuk and Barber have promised to implement the model more gradually at Norfolk Southern, but they say major changes are needed — not the incremental adjustments the railroad is making under new Chief Operating Officer John Orr that it paid CPKC railroad $25 million to get the right to hire this spring.

Orr touted his background at other railroads and the efforts he has made in the first month on the job to streamline the way Norfolk Southern's railyards are working.

But Boychuk said improving the way individual railyards operate without reworking the entire network will just push the problems out somewhere else along the railroad.

“It’s not about a point here, a point there. Or because I massaged a yard,” Boychuk said.

Norfolk Southern shares fell more than 3.5% Wednesday to trade around $236 after the report. Ancora predicts shares will reach between $420 and $525 over the next three years if it implements its plan.

Regardless of how the vote ends up, the fight over Norfolk Southern has already put all rail CEOs on notice, and the industry already had a history of investors forcing changes. Just last year, Union Pacific hired a new CEO in response to pressure from a hedge fund, but the most famous examples were when CSX and previously Canadian Pacific both hired Harrison to implement Precision Scheduled Railroading.

Current CSX CEO Joe Hinrichs knows he has to keep costs in line while also trying to improve customer service and grow the railroad.

“I think the way to bring those two together is to continue to deliver efficiency while demonstrating the ability to serve customers. And that’s the balance we’re trying to achieve and what we’re focused on,” Hinirchs said. “I think when you can’t achieve that, like we’ve seen, people are going to push for improved cost performance, to improve margins. And so we talk very openly and actively with our team about that.”

FILE - A Norfolk Southern freight train runs through a crossing on Sept. 14, 2022, in Homestead, Pa. Norfolk Southern reports earnings on Wednesday, April 24, 2024. (AP Photo/Gene J. Puskar, File)