Could have the SP survived without UP

Trains Magazine General Discussion
1

Right now there is an excellent forum discussion concerning the current state of UP and some of the problems it is facing: “Union Pacific.” From what I know of UP’s situation, SP is very related to their problems.

In the “Milwaukee Road” thread, we discussed if the Milwaukee Road could have made it if . . .

I think it would be interesting and instructive to kind of do the opposite by discussing whether the SP could have survived if not . . . (namely if UP, or someone else hadn’t absorbed it). My understanding is that it was really on the ropes when UP bought it and I don’t think it can be argued that its physical plant was in bad shape.

I have recently read a very interesting article on the SP and its fall from grace, and I am not sure the answer to this question is yes or no. But, I think addressing it will be interesting.

Gabe

2

Short answer: NO

Rio Grande and Anschutz could not turn it around, what makes one think it could survive on it’s own…

SP’s awful corporate culture and arrogance are as much to blame as one or two people at the top. Glad that Shouldn’t Paint So Fast (SPSF) did not happen. Krebs got to see what pride and hustle got you after he escaped SP.

3

I think as a class 2 regional it could have done fine.
Randy

4

Not in its last form…it would have been chopped up into regionals and short lines, then bought piecemeal by the other class 1s…

And yes, thank the powers that be the SP SF merger went on the rocks…
I have yet to meet a former Santa Fe employee who didnt love working there.

Ed

5

One must also ask the question about what would the UP be without the SP. In spite of teething problems of great magnitude the SP added a great revenue stream in the chemical corridor to UP - not to mention the now valuable sunset route.

dd

6

SP/D&RGW did have a few strong assets, such as the chemical corridor mentioned above and mineral traffic from Colorado, but the auto and lumber traffic were both in a serious decline. It could be argued that the SPSF merger turndown saved Santa Fe, since I don’t think that Krebs could have done to SP what he did to BN after the BNSF merger.

7

[#ditto] SP was doing just fine till UP [:(!][V] stuck their grubby hands in the situation. Look at what has been happening in Texas,especially in the Gulf Coast area,and the chemical companies that are there.

8

Marough?

9

With better management SP could have survived.The way it was managed towards the end it wouldn’t have lasted much longer.Unfortunately, I agree with edblysard. SP would have been broken up and bought piecemeal like Rock Island was[:(].

10

I have no doubt that the above is true, that SP was in dire straights near the end, but where did they come up with enough capital to purchase the new motive power that they did (SD70s, AC44, C44-9W) near the end. I would reason that they made the most of their motive power for as long as they could, but wouldn’t they have to be able to utilize the new units handily to stay solvent especially if they were on the brink?

Dave

11

I agree with espeefoamer completely, but with a slight change in terms. It’s not a matter of better management, it’s a matter of management that didn’t want to have the road survive. I firmly believe that Southern Pacific’s management was TRYING to kill it. Remember that there was a lot more to the S.P. than trains. Upper management wanted out of the transportation business so they could concentrate their efforts on more profitable ventures, like real estate. As to the new motive power purchased just before the end, I’ve always believed that a deal had already been made with the U.P. and that the new power was simply a part of it. It was a deal sweetener. So the question remains: Could the S.P. have survived without the U.P.? Sure, if it had wanted to. Would it have? No. Not without management comitted to saving it. --JD Nomad

12

To securities analysts it appeared to be a conscious neglect and destruction by the “management.” at the time.

True, with the above comment about never having met an ATSF employee or former one who didn’t love that road.

13

I never lived anywhere near the SP, never invested in it, and never really had much interest in it, so my opinion will be of an outsider.

That being said, one of the most influential weeks of my young railfan life was during the summer of 1972 when I was at Arkansas State University for a basketball camp. From my dorm room I could see both the Frisco and Cotton Belt mainlines. I went from seeing 2 trains a day on the Mattoon - Evansville branch to many trains. So, I develope an interest in both lines.

As I understand it, when deregulation hit, SP really got hammered. The solid trains of lumber out of the northwest had to be pulled all the way to SoCal and then all the way to East St. Louis for interchange with eastern carriers. Other carriers were much more competitive both with service and cost.

Imagine having to go nearly 1000 miles south before heading east!

I would suggest to you a great book on the SP/Cotton Belt, written by Fred Frailey. It is Blue Streak Merchandise. The book covers the history of the BSM and the hoops the SP jumped thru to get the train across the rails.

In my aspects, the story of the BSM is very similar to the story written today by Fred Frailey about the UP and the UPS “bullet train.”

Anyway you look at it, the SP was behind the 8ball. To compete against the UP’s Central Corridor meant handing freight off to DRGW and then again at Denver to either the ROCK or to BN.

When UP purchased the WP, the handwriting was on the wall. Plus the UP’s purchase of MP gave it a reach to both Chicago and Texas.

I guess SP finally got to Chicago sometime in the 80’s, but it was by trackage rights, or via the old Gulf Mobile and Ohio. Neither routing would have been good.

I read in the UP article that they are running up to 75 trains from on the Arkansas lines. Can that be possible? That is a lot of freight. Where does it all go?

ed

PS…Gabe wh

14

Sounds like the consensus to this point is NO !

15

Did SP retain the real estate business after the SPSF? I know they lost the pipeline business to Santa Fe Pacific. When did Sprint split off?

16

An interesting sidenote on SP management, I do know that a former SP manager was one of the forward-thinking (or needlessly risk taking, depending on your point of view) types in the early 1990’s who was a proponent of experimenting with the open access concept for SP. Of course, he didn’t last too long after making his pitch. The unaswerable question then is this: Was SP management wise and judicious in getting rid of this guy, or was there firing of him an omen of their derelict management philosophy?

17

So it could have been the demise of Santa Fe, but why was the merger between SP blocked but the one with Burlington Northern was allowed. Different political climates?

18

Let’s go back to the beginning here. A lot of good points have been made here, and a lot of good questions asked. I don’t pretend to be the world’s greatest expert on this, but I’ll tell you where my information comes from. Back in the 1970’s my father belonged to a rather famous fly fishing club. I won’t mention the name of it because it’s still in existence today, and besides, it doesn’t matter anyway. I was invited to be a guest of my father’s many times at this club, and because of that, I got to know many of the members. One of those members was Ben Biaggini, the president of the Southern Pacific at that time. As a Southern Pacific employee I had some things in common with him, on top of the fact that he and my father had become friends over the years because of both business relationships and their common interest in fishing. ( To explain: my father had been one of the S.P.'s lawyers for a time.) Obviously, as a relatively young engineer, I was somewhat in awe of Mr. Biaggini, so tended to keep my distance from him. I suppose I was afraid of irritating him somehow, and thus screwing up my future. Anyway, to make a long story short, one day it happened that he and I came in off the river a bit ahead of everyone else, and a conversation ensued between the two of us. After general pleasantries, Mr. Biaggini got down to business. He asked me a number of questions about how I liked my job, how I liked my supervisors, what I thought about the railroad generally, and so forth. I’m afraid I wasn’t much of a conversationalist, but he seemed to understand that he was putting me on the spot. After a few minutes of his questions and my one word answers, he offered me some advice. This isn’t an exact quote, but it’s pretty close. He said to me, “You seem like a pretty good kid, so I’m going to tell you something. Go find yourself something else to do. This railroad isn’t going to be around in a few more years, and you’d be better off to get out now and find another career.” At this point I probably said something reall

19

theNomad,

That was an interesting story. I enjoy reading posts from the many people here who are/were “on the inside.” Could you do one thing to make it easier to read, though? Seperate your paragraphs (press enter twice) so there’s not a screenful of text. Thanks.

20

Mr. Nomad:

Thank you very much for that story.

That must have been one interesting conversation. I applaud Mr. Biaggini for being forthright with you on the matter.

Interesting how you stuck with your decision and it turned out ok. We all face critical times in our lives when we must make such decisions.

What would you fly fish for? Trout?

ed