CSX apparently booted out their chief operating officer, and NS ex-pat David Brown. Anybody have a clue why?
Anybody going to miss him? What of his replacement(s)?
It would be interesting to see what, if anything, transpired to have them kick him out. [*-)]
I’m hoping the CSX rumor mill was up to normal RR standards! [:)]
Article here http://www.foxbusiness.com/news/2012/01/24/csx-ceo-says-management-change-aimed-at-boosting-service-levels/ may provide some insight. According to the article, service metrics were off earlier in 2011. Ward states that metrics improved in the 4th Q, but earnings per share came in below street estimates and share prices took a fairly modest hit.
I would suggest a combination of factors. First Brown may have been in trouble for not meeting service metric goals. His replacement, Munoz was CSX’s Chief Financial Officer and his career seems to have always have been in that field. In spite of that, Ward must believe that he has the skills to manage CSX Operations and meet service goals. Also keep in mind that Wall Stree may appreciate a finance type being in charge. As with anything, time will tell.
Good hints. Thanks.
My understanding is that the Operating Ratio went up in 2011 - Not down.
Well, I don’t like to see anybody get let go, but…
If Brown did let go for failing to meet service metrics it’s a change for the better from the railroad operating culture I knew at the ICG.
At the ICG the operating honchos just flat our didn’t give a rip about service. And they got real upset with anyone who pushed them on the subject. Heck, if they needed locomotives at Markham they’d terminate a northbound TOFC train there and grab the power. Then the loads would sit until a transfer job brought them to the intermodal terminal and screw the customers.
This may be a good sign that CSX is taking service standards very seriously. I hope so.
Ah, yes. Those were the good old days! In my time at the IC for the 5 years before you were there the eight division superintendents ran their part as if it was their own railroad. The best way to reduce costs for running trains? Don’t run the trains.
As I understand it, Brown’s predecessor, Tony Ingram came from Norfolk Southern and brought Brown along as his Number 2. The story was that Ward wanted the level of discipline in Operations that prevails on the NS, and apparently, Ingram was up to the job. I’d guess that Brown’s heart was in the right place, but maybe he just wasn’t up to the task. Equally possible, he actually did the right things to get the job done, but conditions really beyond his control, for example weather, were the major factor in the decline of the service metrics. In that case he might just have been the victim of “Hey, we’ve got to show Wall Street we’re doing something about the problem.”
Any way, who knows for sure. I wasn’t there.
Ah, yes indeed. I used to refer to it as the “Non-Operating Department” because their apparent goal was not to operate trains.
I’ll tell one more story then I’ll put it all back in my Vault of Demons Past.
We scheduled three short intermodal trains a day each way between Chicago and St. Louis. UPS used our noon Chicago departure, train #49, to move loads to St. Louis that had arrived in Chicago that morning via eastern connections. UPS would cross town the loads to us and we’d take 'em to St. Louis.
One fine day the Non-Operating Department decided they no longer desired to run #49 and didn’t run it. They didn’t actually tell anybody they weren’t going to run it. It was their little secret.
I took the first phone call from a genuine fire breathing UPS dragon. The dragon wanted to know why we hadn’t told them we were going to discontinue #49. If they would have known they would have just hooked a tractor to the trailer and sent it on down I-55. Instead, UPS loads were sitting instead of moving and the dragon was breathing fire about that.
All I could say was the truth. The non-operation was as much of a surprise to me as it was to UPS. The non-operating department had made me into an ignoramous. There was no reason for UPS to ever believe another word we (me) told them.
They PO’d a major customer and didn’t give a rat’s behind about doing that.
The following UPS phone call went to the
This may be another case of the “Dinosaur’s Alarm Clock”*.
I took a look at the metrics in CSX’s releases and sure enough, they were indeed worse earlier in the year, but seem to have recovered since then. So a guy stumbles, recovers and gets things straightened out - then 6 months later gets the axe ! Most notably, for the very important Safety metric, the lost time injury ratio was 0.91 per 200,000 employee-hours; if memory serves, CSX and NS were within a whisker of each other last year (2010) at 1.02 or so. Unless NS had a similar stellar year, CSX may well take away the Harriman Gold Medal this year - and for all that they fire the guy ?!?
And who is he replaced with ? Not a well-respected operating person, but a finance guy (“bean-counter” in some quarters). What does he know about train, crew, and track scheduling, motive power assignments, blocking patterns, etc., other than “Cut, cut, cut the costs ?” Hardly reassuring. In fact, that may be why the stock price declined - “Unproven person placed in charge of operations of a major business”, not the revelation that the Q4 wasn’t quite as good as the Wall Street vultures had speculated. Unless there’s a big improvement in the metrics quickly - “What’s sauce for the goose is sauce for the gander !”, right ? - so by the end of the next quarter, Mr. Munoz should be able to make the trains run on time, earn huge proofits, drop the operaing ratio 5 points, cure cancer, and reverse any global warming that may be caused by coal (). It might well be time to consider unloading my CSX shares, because they’ve got the tail on the wrong end of the dog. We’ve seen this pattern many times before over the last 60 years - that of replacing operating people with financial people - and it often comes to grief. I’ll readily acknowledge that the operating people need to be cognizant of and a
If Munoz is any good he’ll be congnizant of his own weaknesses and have immediate subordinats who have direct, first hand knowledge of rail operations. And he’ll listen to them.
If he’s not any good the guy who put him in this position has just fired himself.
I don’t view Wall Street types as “Vultures”. They’re responsible for other people’s money. With some few criminal exceptions, they do take that responsibility seriously. They’re not looking at next quarter. They’'re looking at trends that indicate a company’s direction.
With respect, that’s the “party line” mantra, but nevertheless a naive view. My direct personal bitter experience - fortunately only once - and many years of observations are that the majority are not “responsible”, and do not take that responsibility “seriously”, except as it reflects their own greed and benefits their bank accounts (see recurring crashes and criminal prosecutions). Even the “next quarter” is too long term for them - “48 hours is a long-term investment” - the only trend that matters is the next sale, deal, [edit to add:] trade, swap, [end edit] commission, fee, leak, or insider information, and preferably today. Wait until you get into a dispute with them or question what they did, and see what the excuses, defenses, and legal filings and court rulings are. A great example from the ‘dot-com’ boom era circa 2000 was a ruling by U.S. District Court Judge Jed Rakoff a few years later essentially that investors “assume many risks”, including deliberately fraudulent behavior by Jack Grubman and his colleagues at Salomon Smith Barney in touting, hyping, and recommending those stocks, even though they knew clearly contrary facts.
But back to the topic at hand: What in Munoz’s training, experience, work history, or other background objectively qualifies him with any expertise or ability to manage company-wide Operations ?
And with regard to Mr. Brown: I’ll speculate that his downfall may well have resulted from and been justified by the 2 recent CSX rear-end collisions, which glaringly demonstrate that operating rules and discipline are not being taken seriously enough, and/ or crew managem
Well…I may not be the sharpest pencil in the drawer but I do know that considering the way some of the ‘bean counters’…or financial types have been acting I can see why Paul is saying what he is saying. But, having said that I do think the majority of those who are in that field are well cogniscent of their lack of expertise in other fields. Nor are all looking for that huge bonus at the end of the quarter.