A couple places I’ve read about railroads switching from steam to diesels made me wonder about something. Illinois Central and Norfolk & Western were two of the last Class 1’s to dieselize. The reasons given, are that they were both big coal haulers, so it made financail and political sense to do it that way.
By delaying the inevitable switch, did they unkowingly give themselves a financial boost, compared to other Class 1’s at the time?
Other railroads were scrapping steam locomotives that were not at the end of their economic lifespans. Some were reletively new by comparison. That cost would have been a financial write-off.
Because there was a such a rush to buy diesels after WW II, it appears that some railroads purchased whatever they could, from whomever they could. That would have led to higher maintenance costs, moreso later, when some builders disappeared.
Because IC and N&W started late, they were able to choose from later model locomotives whose bugs had been worked out, and were able to purchase fleets of locomotives from a single source, streamlining maintenance issues and cost. I think both railroads jumped right in with GP7’s and the like. Compare that to PR and NYC, each of which must have had at least one make and model from every builder out there.
Did late dieselization give IC and N&W a leg up on the competition? Did it have any lasting effect on their financials?
Those that dieselized first needed the economies that the diesel provided. Those that dieselized last had enough financial support that they could afford the extra cost of maintaining steam. Since those that used steam last, were in better financial status to start with…they would be in better financial status after the switch.
Interesting thesis there, Murphy. Without a lot of deep thought or research, I’d be inclined to agree, for the reasons that you set forth.
Further, John Kneiling liked to point out that it was an outfit with no money - the New York, Ontario and Western - which was the first significant railroad to dieselize. And one of EMD’s founders - either Dick Dilworth or ‘Boss’ Kettering, I can’t remember which - used to say, when asked about how powerful their diesels were, that “I reckon they were powerful enough to pull several railroads out of bankruptcy !”. And remember Henry Ford’s aphorism that “Pioneering don’t pay”.
There were well over 100 Class I carriers at the time each with different traffic, financial, and steam fleet characteristics. You are correct about many of the early adopters being in such a rush that they bought anything diesel. PRR stands out in this regard and they got some real lemons. The thing is no one knew when the early purchases were made what manufacturers, engines, control systems, and traction motors were the best or the worst. Some experimentation was necessary. While the pioneers bore those costs, they also got the benefits first, even if the benefits were diluted by having a diverse fleet.
Then there are others, Michael Sol comes to mind, who argue that dieselization had a negative financial impact. This line of thought is based on the fact that the carriers incurred substantial new debt to acquire diesels. My personal opinion is that while the debt was a fact, the steam locomotive required a huge amount of labor to keep operational. Think roundhouses and huge shops for openers. Then think about the hidden infrastructure costs of fuel and water facilities and all the labor required to man and maintain them. Most railroads had a “water service” department just to build and maintain the water supply.
The diesels certainly reduced the head count in many areas of the railroad. I do not believe any carrier would have survived the post WW II inflation of labor costs had they not been able to reduce the head count through dieselization. That N&W was able to stay steam as long as they did is a tribute to the fact that they had a very simple fleet, three main line classes, they managed and maintained the fleet very well, and litterally sat on mountains of the best steam coal in the country, if not the world.
Thought: N&W and IC were both dieselized at about the same time, but I suspect the reasoning was different. I think IC would have dieselized sooner if it could have afforded to. It wasn’t one of those making-money-hand-over-fist lines like N&W was, and it was buying diesels for passenger and yard service very early on. IC’s freight service was dieselized with GP7s and GP9s; N&W used GP9s and RS11s.
Another thought–it didn’t take much to dieselize N&W–keep in mind that it was much, much smaller than IC at the time (or at least more compact).
C&O and B&O were two very different railroads that seemed to dieselize at about the same time. They made that final sprint to total dieselization in about the same way–lots of GP9s. But C&O had started a little later.
The Southern Railway System dieselized early–maybe that was one of the railroads that got pulled out of bankruptcy. Hard to believe, but MP was a chain of bankrupt railroads well into the 1950s, and its dieselization looked more like ICs than like N&W.
And close to home there is the C&NW. Not in good financial condition until Heineman and then rapid completion of dieselization and a move toward profitability.
Well, don’t give old Ben too much credit. It was a definite train ride while he was on board, but a few numbers put his first 13 years in perspective:
Operating Ratio, Freight, Average 1950-1956: 72.9
1956, Ben Heineman becomes President of the Chicago & North Western.
Operating Ratio, Freight, Average 1957-1970: 79.5
For the record, as far as operating ratios go, 79.5 is a considerable deterioration from 72.9.
This roughly coincides with the period of dieselization and the period after dieselization as well, but its hard to tell what that means in the case of the North Western.
There has seemingly always been a debate if the industry (or an individual company) dieselized “too fast”. There are so many variables, though, that I don’t know if we can ever find the answer or, if we do, they anyone could really fault the people responsible at the time. Among others to consider:
Investment cost: New diesels meant new financing and new facilities; steam shops were already “bought and paid for” but that didn’t mean that new generation steam locomotives could be serviced entirely in old facilities.
New diesels had to be bought, not built - fewer employees and shops needed to do that but more financing costs. Steam could often be built in house - it saved on financing costs but meant retaining the large shops and forces.Maintenance: New locomotives (steam or diesels) are going to need less maintenance. When they do, though, how soon and what would it cost?Fuel cost/supply: Oil was cheap and getting cheaper. Coal was getting more subject to labor costs & disruptions.
All these had costs. Now, as a railroad executive at the time, pick any year from 1946-1960, collect all the data you could a
You used operating freight ratio. However, the overall performance is best seen in operating ratio for the railroad. 1950-56 average = 86.4; 1957-1970 = 83.6. Only a slight improvement, but certainly not worse. The line also went from net losses to profitability for a while in the 1960’s. Given all the other factors (all rails declining share of the freight business), it is hard to see a real improvement through total dieselization, but how much worse it might have been if the C&NW had continued partially in steam, given that much of its steam roster was old and obsolete?
There was a reason I said freight ratio and specifically identified it as such. Most roads with long-distance passenger services made gains as the trains losing the most money were peeled off during the early and mid-1960s. Reduced loss was virtually automatic as those trains came off. Freight ratio, however, demonstrates what management was doing at managing its franchise: railroading. And that was getting worse at North Western, and sure, its easy to say that if hadn’t been for dieselization, things would have been worse, but that requires more than just a wave of the hand.
Ultimately, after dieselization, things did get worse. That’s not an argument that supports the premise. But, with Ben Heineman – management by ADHD – all sorts of things were going on and, in any case, it takes a lot of number crunching, not broad philosophical conclusions, to really find an answer.
It would be an interesting PhD thesis. It seems like somebody would have done one early on, and it may well be out there, unpublished, somewhere.
It is an interesting topic b/c Heineman was so controversial. Here is the academic study I found the O/R in, which looks a the management styles of the CNW and RI in the same period -Heinemen vs Langdon.
Illinois Central doesn’t really jump out at me here as one of “the last” to dieselize. It looks to be about in the middle of the pack, which is how I remember it. In many cases, we are talking about a few months difference. N&W isn’t really an outlier either. Is there a source for this or something I am missing here?
Not sure, but perhaps the variable on late dieselization would need to look at % steam operation year by year. If the N&W dieselized at the same time as the IC, but was almost 100% steam for freight one year earlier, while the IC was only 20%, that would show a truer picture.
While that certainly seems to make sense on the surface, I do wonder. Wouldn’t all the railroads have needed, or at least wanted, the eoconomies that the diesel provided? I can’t get a grasp on the idea that those that waited to save money on operations did so because they had the money to do so. (?)
What would be the correlation between using steam last, and being in better financial status to start with?
In a word- no. There is no source for this per se. Railroad books are chock full of broad generalities, retroactive conventional wisdom and old wive’s tales, etc… That’s what makes it so hard to sift through what is true and what is tuned to match someone’s idea of true. That’s why I ask questions. One book will lead one way, the next book leads another.
So, IC dieselized reletively late, at least late enough that most of their big diesel fleet was EMD Geeps and switchers. Did this reletively late dieseliaztion gain them anything in the way of financial gains or competitive advantage, based on having reletively more standardized, equipment, with reletively more bug already worked out? Same question about N&W.
I don’t know how late IC was “relative” to CN, CP, B&O, CB&Q, C&, GTW, Nickel Plate, NP or UP, since the IC dieselized earlier than all of those roads. The average of the roads listed was 1957; take the top 10 and they round to 1959: making IC just about average. Add 1 year, and its N&W. Between the “average” and the longest, we are talking about only 16 months or so. I doubt there were many revelations about EMD vs, say, Baldwin, in that short period of time. Maybe there was, but I don’t remember it. A case “could” be made about N&W; I’m just not sure where the case is made for IC. I certainly don’t remember anything in particular about it being a coal hauler that made it any more special than other midwest coal haulers.
The cited link is interesting in that regard. Rock Island was one of the earlier larger roads to fully dieselize – 1952 – and it was averaging a very healthy Operating Ratio of between 70-72 in those years that it completed dieselization. It began its long, fatal decline in 1954 after dieselization.
North Western, in that paper, steadily improved “according to the paper” and shows no particular relationship to dieselization, per se. The paper, comparing the management styles of the two railroads, does not mention that dieselization play any role in the relative performance of the two managements even though these two roads, statistically, represent a relatively large disparity in when they dieselized. IC
ICLand- I wonder if you’re getting too bogged down in the definition of “forest” to stop and ponder some of the “trees”?
Among other things, your chart shows last runs by steam. That doesn’t neccesarily compare when the the majority of the traffic was converted to diesel locomotives on any given road.
You mention CNW. Maybe that’s a good reference point to frame my question. From what I’ve read, IC and N&W switched the majority of their locomotive fleet over to diesel power relatively later than C&NW did. (This may or may not, in fact be the case). In later years, CNW shifted all their ALCO’s to Huron, S.D., and I think(?) Their Baldwins to the Upper Michigan area. They did this to simplify maintenance and parts inventories. IC and N&W on the other hand, appear to have started with well tested, and reliable EMD Geeps right out of the chute. This gave them an easier, and probably less expensive maintenance situation to deal with.
Did this give them any financial or competitive advantage?
In other several threads as in life in general, it is easy to fall into the errors of over-simplification. To use the average of last run of steam as a determining metric seems almost meaningless. As Murphy Siding and I have noted, the pace of dieselization may be more useful in determining the effect of dieselization on profitability. Even then, it ignores the overall economic climate and management competence, as the study I cited shows.