It seems to me that 34 years after the collapse of the Penn Central Railroad, along with the Lehigh Valley, today’s top railroad executives still don’t get the lessons still to be learned from the collapse of Penn Central. Just look at the service meltdowns that Union Pacific is once again beginning to experience. That railroad’s top brass does not seem to have learned the lesson from what happened when they digested Southern Pacific, a largely single track railroad into the Union Pacific. Result was a service meltdown that made those suffered by Penn Central during its first year of operation, seem minor by comparison. Well, UP wasn’t losing entire trains or individual carloads of freight throughout its system, but shippers were plenty mad and some still are. UP, as well as the other railroads have cut staffing so much that they have more trains to run than they have crews for… It seems to me that railroading is a profession for railroaders who KNOW THE BUSINESS, not some Wall STreet types or fresh MBAs who think they know it all. It is still possible that hijinks with the books are still going on at at least some railroads and they have not yet got caught like Penn Central was. It is time for the railroads to be put back in the hands of professional railroaders who know both the operational as well as the business aspects of the profession, something today’s railroad executives seem to be missing, with a few exceptions. The Bottom Line should not be the only thing that matters, the safety and reliability of the service, the well being of the crews, proper maintenance all should be part of the equation. Too much corner cutting as now seems to be done has a way of coming up and biting you on your you know what, usually in the form of a catastrophic accident. Railroad employees can best empower themselves by buying enough stock in their companies and giving the Wall sTreeters now in charge the boot and replace them with professional railroaders who know the business. Then and only then can the meltdowns at Unio
Not sure that you are offering sound investing advice here. It was not service reductions that brought down Enron, it was illegal bookkeeping practices that covered up the looting of the company by company execs. You’re title implies you have information concerning criminal action by executives in some railroad companies similar to that which brought down Enron. You might recall, Enron employees were also encouraged to purchase their stock, and as a result many lost their jobs, savings and retirement as a result.
I’d be interested in seeing some of the evidence of the illegal activities.
Wayne
Some railroad reading is in order. Pay particular attention to the Goulds, Fisks, and Vanderbilts.
Financial hijinks are hardly new to the railroad industry. Fortunes have been won and lost. Many a “little guy” lost a bunch of money in the early days because he invested in the growth industry of the day - railroads. Everyone wanted to build one, which ended up precipitating the huge amount of excess plant that actually did exist at one time.
Financial considerations (“Wall Street”) have always driven the railroads. Blame today’s “right now” culture for the instant ROI mindset.
As for “employee owned,” I think we’ve discussed before who “owns” the railroads - you might be surprised to discover that a significant number of the stockholders aren’t even US residents… I don’t think the employees have enough money to buy those folks out. And they are in in for the money. If they RR starts hemhoraging money, they’ll bail…
So much to discuss here, I’ll throw out some insights derived from my experience in managemant and marketing at Uncle Pete. The things that go on inside would amaze you, I’ll just throw out a few tidbits.
I somewhat have a hard time buying the BS that the railroads are revenue inadequate. I understand the profit margins they make on traffic and believe me, the margin on mediocre intermodal traffic, exceeds product lines we consider high profit in competitive industry. The railroads cry poor mouth, then a month later publi***hat they made record revenues and profits, it’s enough to make one laugh…or drink.
One of the problems in the railroad industry is that it is mature and has somewhat limited growth potential. Some new bulk markets open up as others fade away and intermodal…the low profit margin buisness line is and will be in a great growth stage, but overall the railroad can’ show growth rates that are attractive to wall street investment vs other hotter industries.
The railroads are more and more signaling each other price wise with increased use of public pricing and an unwilingness to transload or bid aggressively on traffic the competitor has. The realize that in many lanes, they have just one competitor and are tired of gaining 5% volume one year, then loosing 5% the next…just shifting traffic back and forth and constantly diminishing thier contribution. In my companies markets, we have “healthy competiton” where a number of competing products and competing producers are hungry, the customer gets the best value/service for the best price.
Tge railroads are still in the mindset that cost cutting is the saving grace. They realize there is limited opportunity for growth through mergers any longer and are not willing to aggresively grow business by getting it from a competitor, thus the cut cost beyonfd reason in many cases and either jack rates up as high as they can where they can, or they nickel and dime you with fees and charges.
I really do enjoy this Forum! One reason is the delicious irony so often evident. For example, this thread asserts that what the industry really needs in leadership are “railroaders who KNOW THE BUSINESS.” Yet the most consistently vilified leader on this Forum seems, IMHO, to be a quintessential “railroader.” His official biographical material from his railroad’s web site follows. (I couldn’t readily find the biography of a certain “railroader” who runs a system based in Omaha, but if my memory serves me, he came up through the ranks too.) I’m scratching my head, trying to think of the Class I CEO’s who are “Wall sTreeters now in charge.”
E. Hunter Harrison
President and Chief Executive Officer
E. Hunter Harrison became President and Chief Executive Officer of the Canadian National Railway Company on January 1, 2003. Before assuming that position, he had served as CN’s Executive Vice-President and Chief Operating Officer during the previous five years. He was appointed to the Company’s Board of Directors on December 6, 1999.
Prior to joining CN, Mr. Harrison had been President and Chief Executive Officer of the Illinois Central Corporation (IC) and the Illinois Central Railroad Company (ICRR), as well as a director of both IC and ICRR, from 1993 to 1998.
Mr. Harrison’s railroad career began in 1964 when he joined the Frisco (St. Louis-San Francisco) Railroad as a carman-oiler in Memphis while still attending school. He advanced through positions of increasing responsibility in the operations function, first with the Frisco, then with Burlington Northern (BN) after BN acquired the Frisco in 1980. Before moving to IC and ICRR in 1989, he served as BN’s Vice-President – Transportation and Vice-President – Services Design.
With IC and ICRR, Mr. Harrison first held the position of Vice-President and Chief Operating Officer, becoming Senior Vice-President – Transportation in 1991, Senior Vice-President – Operations in 1992, and Presid
What bogles me is how Hunter Harrison being a former railroad worker that likely had to take crap from Frisco management, he now turns around and does it to other hard working employees under his watch. He couldn’t have liked it when others were mean to him so what makes it O.K that he can do it to others who don’t necessarily deserve it. I have little respect for those who don’t give a general respect for other human beings. You may think a person is a real moron but respect says you give the common courtasies to others because they are human beings. Hunter Harrison and others like him are the reason why the world has turned so cold and calculating.
I’ve often wondered if part of the UP’s problems aren’t precisely because *** Davidson is a “railroader” and not more business oriented. To me, it’s inexcusible that UP could miss forecasting their crew needs so badly.
Planning is a more technical and challenging task that “reacting”, but old-time railroaders seem to get a bigger kick out of reacting to problems as if it’s a measure of their toughness or manliness or their worth as a person. I remember early in my career that some guys would talk of going out wrecking on derailments with much glee, as if it were a Boy Scout camping trip…
The only thing the railroads have to fear is prosperity and increasing levels of business.
Mark & ***
Me too. We should add Mr. Davidson’s bio to that post and keep it handy every time some one says “real” railroaders would solve the xxxxxx mess.
Many of us members are quick to want to hang the CEO with every problem that ever comes up. Sure, the buck might stop there, but to say every mistake ever made must be attributable to the CEO is just nonsense. That would assume that every employee in the organazition is in a mental lock step with the boss. Even our military leaders don’t get that.
I have worked for many companies and have had bosses ranging from great to terrible. Even the best companies will have some that just can’t function in a manner that is 100% for the good of the company.
In fact I never encountered the perfect boss until I started my own “sole proprietership” business. Good thing, I have to hang with him 24/7.
Jay
They’re being run today the same way they have for 100 years; money money money. Only now they’ve manage to cut off all their excess (branch lines, section gangs, etc.) so when anything happens, (storm, etc.) the railroad shuts down. Who ever heard of passenger trains shutting down due to the “threat” of a bad storm?- it’s because they don’t have the people anymore to keep things going in bad times. They can’t summon an army to repair the road- because they don’t have the army anymore.
This all reminds me of the old deffered maitenence (pretty sure I spelled one or both of those words wrong, sorry.) program, where the track was run into the ground with minimal to none service, subsequentely abandoned because it would “cost to much” to restore back to good condition when it got so bad it wasn’t usable.
Somewhere (Trains?) it was also mentioned that there’s a greater threat of litigation these days, so RRs are a lot more cautious about running trains during and immediately after storms. RRs are not described as the “all weather mode” as much as they used to be.
Union Pacific IS an Enron!
Oh? In what way?
Wayne
Here is the page for UP executives’ profiles. Richard K. Davidson started out as a conductor/brakeman in 1960.
Just curious–has Hemphill worked for UP or any other railroad in the past? He sure seems to blatantly defend them all the time.
Have to agree with the SD70MAC guy–UP may be an Enron–they just havn’t been officially “caught” yet!! And you can’t spell stUPid without a UP!!!
Just curious – has pltbranch worked for UP or any other railroad in the past?
And just exactly what about UP makes them an “Enron”? Be specific. We’re waiting.
Yeah I have to agree with you on this. When I bad mouth CN, it is based on information that is true and than I form an opinion on it. Most of the critism of CN is has legal political overtones to it but I have never may any comments that could get me in court. If I say CN sucks or Hunter Harrison sucks, than that is an opinion but if I were to say that they were criminals and gave a type of crime they supposidly did with out proof, they would have justification to haul me into court for slander.
Pitbranch, careful you don’t get sued with what you say. If UP is doing something illegal forget talking about it here and talk to the F.B.I.
Andrew a.ka Junctionfan
Settle down, Mr. Hemphill–this question was by NO MEANS an attack on you–I just was simply curious if you had affiliation with a RR in the past–that’s it. No harm intended. Personally, I do have 16 years RR experience. Thanks.
But where’s the detail about UP and Enron?
Personally, I think it’s possible to equate UP with Enron in a very different respect from corporate fraud or massive sudden failure. Enron contributed to massive problems in utility provision and cost connected with deregulation, in the name of expedience and short-term profitability. I’d be interested in seeing discussions of how UP (and other modern railroad organizations) might be contributing in similar ways. There need be nothing actually or potentially libelous in those discussions.
JMHO but aren’t many of UP’s problems related to greatly increased traffic to and from the ‘NAFTA plants’ in Mexico combined with taking over a railroad that wasn’t in the best shape to handle it? I saw something on CNN about the trans-border truck traffic being all bottlenecked as well, even pre 9/11. Imports from China have also exploded. I wonder how many parts and sub-assemblies come from China, go to Mexico, and finally return as finished goods to the U.S.? Could the pre-merger S.P. done any better with all this traffic?
Enron created artificial demand by sham-trading, I don’t think that’s the case here. Besides how does U.P. profit from the bottlenecks?