Remember the good old days when all the trains were actually driven by human beings. Well, those days are back, after the alarming discovery of cracks in 163 major components of the East Rail trains by yesterday. Michael Tien, chairman of the Kowloon-Canton Railway Corporation (KCRC), announced on January 14 the East Rail trains will be switched over to manual operation starting the next day. The trains these days are moving slower, and the emergency system has been alerted.

This was subsequent to the disclosure that KCRC failed to report to the Transport Department for nearly three weeks that there were cracks in the welding connecting some of its trains' bulky metal compressors that are commonly used in the braking system.

Readers might have been aware that accidents and equipment and reporting failures have been taking place with much higher frequency not only in KCRC, but strangely enough, also in MTR systems in recent years. If you look deeper beyond the symptoms, there must be some serious common problems in these two railway companies. One common denominator is for the past two years, they have both been facing a pending merger.

In February 2004, the Executive Council, led by the then Chief Executive Tung Chee-hwa, decided to invite the Mass Transit Railway Corporation Limited (MTRC) and KCRC to commence negotiation on a possible merger, to be concluded by August 31, 2004. In March 2004, the government officially encouraged the two organizations to merge.

The August 2004 deadline has since passed, but no concrete results have been reached. The major obstacle was government fears that stockholders of MTRC might object the valuation of KCRC. After the Link REIT fiasco, if the valuation was too low, MTRC stockholders might be pleased, but the government would be charged for selling public assets on the cheap to a listed company.

The merger was then apparently put on hold, but ever since Donald Tsang took over as chief executive, the issue was put on a fast track again. Instead of a traditional merger and acquisition deal, there was a new proposal for MTRC to lease assets from KCRC and to operate its existing transportation businesses. Many pundits had since speculated that the deal could be struck before the end of last year. Again, despite all the news in the wind, there was no solid progress. Like in the last proposal, if the lease price is too high, the stockholders of MTRC would object; but if it is too low, KCRC cannot even pay interest to the lending banks, and the government will have to subsidize it against public outcry.

All the time when we debate the pros and cons of the merger in public, and set various target deadlines for the deals, all we care about seem to be the figures, and the balance between the interest of MTRC shareholders against that of the public. But if you put yourselves in the shoes of the employees of these two railway companies and the long suspense of their future, you will well understand that with each news announcement and with each deadline, their anxiety goes one level higher. It is their jobs that are on the firing line, and they have been left hanging for two long, long years by now.

Unfortunately, both the government and the media seem to mind only about the figures and the big "public interest". Few actually care to pay any attention to the welfare and concern of the thousands of employees of the two companies. Gradual downsizing has already been going on for months, and with it, personnel morale is being sapped every day. If we wonder why there have been so many accidents and mishaps in the past two years in the two railway systems, low morale is probably the most important common reason. We have been procrastinating for much too long, and the problem is now bouncing back on us.

We can blame the two railway companies, and we can even hold a few top officials accountable and fire them, but if we do not address the underlying human factor of the problems, they just will not go away. The merger issue has been dragged on far too long. If we cannot quickly finalize the merger deal, it is up to the government to call it quits and promise not to bring it up in the foreseeable future to let both companies lick their respective wounds, and take long-term steps to do whatever necessary to improve their service to the public. Failing to do that, I can well foresee a deterioration of the situation. Touch wood, so far we do not have any serious incidents with a high number of deaths and injuries or prolonged stoppage, but we should not count too much on luck.

(HK Edition 01/19/2006 page2)