Why did Burlington Northern and Santa Fe merge? Weren’t both doing just fine on their own?
(1) If BN didn’t get Santa Fe, UP was going to. ATSF was getting about all it could out of it’s plant and was busy fighting off the Wall Street Trash.
(2) Santa Fe was considerably more profitable and efficient than BN.
- The merged railroad should just have kept the Santa Fe name and image, the horrendous orange scheme is just as expensive to maintain as the red and silver warbonnet and the wedgie logo is just a copy of the Ryder truck and car rental company logo. They reportedly paid 43 million dollars for this logo. I can’t understand why they can’t seem to understand that their image is no good and doesn’t compare to UP’s. The big yellow road at least understands and respects history.
i guess i need to get in the logo business. if someone pays $43 mil for a logo…
hmmmm…
If my memory serves me right, wasn’t BN headhunting Krebs at the time too. The result being BN getting both Krebs and the Santa Fe.
Jay
If you look at the maps of BN and ATSF you will note their obvious strengths and weaknesses. The merger allowed BN to reach the Long Beach market, which turned out to be critical for growth. ATSF had very little coal traffic, which the BN did. BN also had a very strong franchise to the Pacific Northwest, something ATSF did not.
ATSF had the arrow straight and superior Chicago - Kansas City route and BN provided access to Memphis.
Looking at late 80’s figures, BN had about 2x revenue of ATSF…I will take a more detailed look later.
The earlier point of UP getting ATSF was very real. Remember that ATSF tried and failed to merge with Southern Pacific.
It has also been suggested that BN really wanted Rob Krebs to be CEO. The merger of BN and ATSF seems to have been one of the more successful ones in recent history, along with CN and IC. In both instances the smaller railroad delivered a strong executive which became CEO and took the merged company to a higher level.
ed
I have always believed that the BN bought the ATSF to get Rob Krebs. As part of the deal Grinstein was to move out of and Krebs into the CEO chair. Krebs was one of the greats
Mac
I’m not sure I see the advantages here. Did combining the two roads make any more money than the two would have separately? BN got into Long Beach, but ATSF was already there. Did it work better to have BNSF there, instead of just ATSF?
For certain industries and companies, size matters. The rail industry was rapidly moving towards consolidation during the 80’s and 90’s.
Take a look at the UP map in the mid 90’s. They went to Pacific Northwest, Bay Area, and LA basin (although not a great route) and they got to Chicago (via CNW…but still a very friendly connection, if not a cousin). They had a strong coal franchise. They had the Texas chemical traffic (MoPac and Katy). It was a formibable railroad. Had they gained ATSF, it would have been all over for BN to have any power in the west.
Sure, both BN and ATSF could have survived alone…for awhile, but a friendly merger filled in the map for both.
ed
First, welcome to the forum.
Where exactly was this $43 million cost for the BNSF logo reported?
That’s an awfully big number. NBC-TV paid only $6 million for its logo a few years ago, then had to alter it because was exactly the same as another company’s logo at the time and they were sued for infringement.
In February 1976, NBC was sued by the Nebraska ETV Network, Nebraska’s chain of PBS affiliates, for trademark infringement with its “Stylized N” logo, since the new NBC logo was virtually identical to the Nebraska ETV Network logo, except in the coloring. An out-of-court settlement was reached in which NBC gave Nebraska ETV Network new equipment and a mobile color unit, valued at over $800,000, in exchange for allowing NBC to retain their logo. In addition, NBC paid $55,000 to Nebraska ETV Network to cover the cost of designing and implementing a new logo.
It was kind of like double-dating. There were only 4 major railroads in the west at the time - in alphabetical order, BN, SF, SP, and UP. We’d found out that the SF-SP wasn’t going to be approved, for anti-competitive reasons - too many parallel reasons. SP was dying, so someone else was going to get / would have to take it - either BN or UP. And if you had been BN, which of those 2 would you want - SP or SF ?
BN couldn’t have merged with UP -again, too much parallelism. And, if UP went for SF first - actually, it might have, now that I think about it - wasn’t there a little bidding war between BN and UP for SF ? Well, then BN would be stuck with the left-over RR - again, kind of like double-dating, or being left standing when the music stops and all the chairs are taken. So, of the limited number of remaining possible merger partner combinations among those 4 railroads, for BN the only one that made sense was SF. And whichever 2 went first, it was pretty much inevitable that the remaining two would wind up together, for competitive reasons, strategic balance, economic strength, markets, etc.
- Paul North.
Paul:
That is a really good explanation as to why ATSF was more desireable than SP and how the West was Won.
ed
I wonder what a BNSP logo would have looked like.
Could it be any worse than the current BNSF logo?
Lets dont go there !
Does anybody remember the Kodachromes…End of story…
I don’t mind the black and orange and the current logo BUT I’d much rather have seen an actual name as opposed to a bunch of letters. It’s unoriginal. Even the PRR and NYC came up with a better name than PRRNYC.
I wish they would have used more of the BN green or GN Blue as opposed to the orange and black, however.
Probably close to the same, the only difference between BNSF and BNSP is the half circle-)- connecting the horizontal prongs of the F.
Jay
Only a total IDIOT would eliminate the red and silver “War Bonnet” paint scheme. It was an Icon. My 2 cents worth.
Dick
Texas Chief
Which brings me to a question that has nagged since the UP-SP merger: Why was not the UP asked to “unmerge” the D&RGW & WP as part of the deal? The SP/RG merger gave them both routes (UP/SP and RG/WP) between Denver & the Pacific coast. I could guess at some reasons-1) BNSF didn’t want it, 2) It was a non-competitive through route, 3) UP getting the central transcon routes to itself was sop to BNSF having all the northern transcon routes to itself since the MILW pulled out (after all, the real action turned out to be the southern transcon routes out of LA/Long Beach and that’s where the competition remained) and/or 4) Since BN was in Denver and SF in the San Francisco Bay area, t
I am not sure if I can answer this question, but perhaps can at least keep it moving along.
How much actual freight was moving into/out of the San Francisco Bay area by the 90’s? It doesnt seem as if there was very much.
The former SP route never seemed to have much traffic, if memory is correct, perhaps 10-15 trains daily. Wasnt the major container growth out of Long Beach and Seattle?
San Francisco kinda reminds me of Boston on the east coast…a financial center more than manufacturing. Plus Santa Fe had it’s route out of the area and thru the Valley, not exactly the best route geographically, but it must have beat going east thru Nevada.
It seems the Rio Grande route is mostly about coal and minerals these days. The manifest merchandise trains of the 60’s/70’s dried up.
Denver seems more important as a passing point for southbound coal than an east west route for BN. How much freight does BN run E/W on it’s line to Denver?
Just my 2 cents worth.
ed