Southern Pacific Switching Layout

[faraway]

...The other result was that the class one railroads divested themselves of local branch lines, which were then sold off to smaller operators if the traffic warranted. These smaller non-union operators and in some cases union operations just specialized in serving local industries and acted as feeders to the class one's.

I assume they have a much lower labor cost structure permitting labor intensive work. On the other hand I assume they are short on capital and reuse older equipment to prevent capital expenditures and high depreciations in their balance sheet.