I know the obvious answer is that they have a long-term lease from BNSF, of course. Do they operate over Northern Pacific’s former trans-continental lines? And, what was the motivation for BN to lease the lines to MRL?
Murph:
I will paraphrase Lawrence H. Kaufman’s excellent book on the history of the BNSF entitled Leaders Count.
In the 1980’s BN was abandoning or selling off large chuncks of branch lines. Chairman Walter Drexel decided to not only eliminate branches, but also mainlines. He sold the former NP mainline from Laurel, Mt. to Sandpoint Id. to Dennis Washington who formed Montana Rail Link. The Stampede Pass line thru Washington state was sold to Washington Central.
With the sale to MRL came guarantees to turn over trains for MRL to haul across Montana for BN and then turn back to BN at Sandpoint.
Rob Krebs later in the 90’s wanted to purchase the MRL back, but Washington refused to sell it back. As you know, Stampede Pass line was repurchased and rebuilt.
I am sure others more geographically centered to these activities can provide a much more descriptive analysis.
ed
Not sale, 50 year lease.
Denny had Milwaukee Road veterans William Brodsky and Fred Simpson who told him, “we can make this work.” Bill was President, Fred, executive VP. Basically, co-presidents between old friends from Milwaukee Road days. Fred walked out at Milwaukee when he realized that Hillman’s “plan” was irrational, Bill fired a few months later when he was “seen” picking Fred up at O’Hare. MRL was the SORE/NewMil model, scaled down. Provide Service. Very profitable.
Just finished a consulting project with the largest shipper on the MRL. Transportation budget of $30 million annually. Used to go 50/50 Milwaukee/BN. It’s general manager told me: “We now ship 50/50 truck/rail. If we could get the trucks we would ship everything truck, but I will say this, Montana Rail Link works hard for us. If we had to work with BNSF, we’d buy our own trucks and ship everything by truck. Rail Link still keeps us shipping by rail. Very good to work with.”
If Montana Rail Link is such a great company to work with (and I am sure they are) why is the shipper so motivated to switch as much business to trucks as they can?
On those shipments where BNSF would have most of the haul.
MRL leases the mainline, but owns the branches.
Back in 1987 Trains said something about the mainline being leased because of NP bondholders.
Most railroad general mortgage bonds had a “Mainstem Covenant Clause”. Always a merger problem.
Thanks for the correction on the “lease” vs buy. The book indicated it was sold, but the more I think about it…that would not have been very feasible.
What is the level of traffic on this line?
Are most of the trains BNSF flow thru trains? I see they purchased new power for the helpers. Much coal?
Those NP bonds proved to be pretty pesky securities, as outlined by Kaufman.
Has anyone else read his book? At $15, it is a bargain.
ed
Trains said those bonds were issued back in the 1890s.
Reminds me of those “funny pieces of paper” that stalled UP’s takeover of the MKT for two years.
I wonder…
…If not for the WGI bankruptcy a few years ago, would Dennis Washington have had the necessary financial footing to seriously expand MRL beyond it’s BNSF contraints?
Larry Kaufman was an outstanding writer at Journal of Commerce during the Milwaukee reorganization days. A “must read” source. Always right on top of things, good writing style.
I’ve got the book, unfortunately it’s in the foot tall pile of “books to read over the summer.”
Glancing through it, I saw what journalists often do when they write books: they forget that there is a financial record available. They take every utterance of their subject as gospel. Well, then I flipped to the back and saw that he had been a public relations officer at BN after his Journal days. And unfortunately, that explained the approach to the book.
Of course, interviewing people to explain to the world why they and their colleagues were great leaders probably offers inevitable temptations to the subject being interviewed, and that appears to be the case in the couple of sections I glanced at.
The financial record, analyzed, provides a useful backdrop to claims of great leadership, since, ultimately that is what business leadership is supposed to be about. In at least one instance, the record is considerably different than the claims made in the book.
Railroad histories tend to operate at extremes: fawning adulation at one end or populist criticism at the other, a’la Hear that Lonesome Whistle Blow, Iron Wheels and Broken Men, or Bad Land: An American Romance.
Leaders Count too clearly falls into the adulation section, along with Overton’s Burlington Route. Then you look at the flap and see that the authors of both were PR guys for the railroads they write about and it’s a little clearer why.
the BNSF sent this book to all its employees for free, when I first got it I was shocked and suprised. Gotta eliminate that pesky conductur on the train run engineer only, but hey whats a book cost anyways. To read this book from a historical context, its poor, if one has read any other historical books on the former and present railroad, you would see that alas this is a book to promote the railroad managers as brilliant. I also couldnt help but see the lack of respect the book had for employees. As far as the bn santa fe merger, well hmmm that was so grand because Rob Krebs was brilliant and hes the only one who could pull it off, and hes a god like figure, let me stand in the corner and puke.
The merger of the BN and santa fe was due to two reasons BN had to have routes south, and Krebs could smell money. The santa fe was trashed after the SP SF attmept at a merger, the Santa Fe CEO and presidents and vp’s were cowboys, they still are.
Historically the book is laughable, its short sighted and lop-sided, from a management point of view, apperantly if your a CEO you are god and can do no wrong. The book I’m sorry to say is ok for a read but if one wants an accurate account one should find a book by a historian, not a fromer PR guy fro the railroad.
Kaufman’s always been a shill for the current Class I oligarchy. He’d be a perfect candidate for the Fraternal Order of the Ilks.[xx(] AKA, BNSF can do no wrong, it’s the rest of the transportation world that’s screwed up. “Puke” doesn’t begin to describe it.
What is becoming apparent with the whole Milwaukee vs BN vs MRL picture over the years is that BN was in a financial predicament eerily similar to Penn Central in some ways. BN needed Milwaukee and the PCE to be eliminated to keep the Hill Lines functional. And MRL needs to be kept captive to BNSF or all hell might break loose.
if Milwaukee and the PCE survives, perhaps BN doesn’t.[?]
The Pacific Coast Extension is dead and buried, so I quess we’ll never know.
Well, remember now, MRL is made up of ex-Milwaukee folks, people who knew the intrinsic value of the PCE. In some ways MRL is the substitute for the PCE, keeping it alive and relatively prosperous.
I t sounds to me, that BN(SF) has more-or less, subcontracted some of their business to another (lower cost?) railroad? Was Denny Washington a Milwaukee alumni also?
No, Dennie Washington came from elsewhere - he just knew how to hire good men.
The BN did believe that the MILW would have “done them in”. My opinion is that the BN would certainly have had trouble going forward against the MILW. They have had a hard time of it without the MILW and its PCE.
Rob Krebs came from the SP. He was one of those that stripped the SP of its land grant properties and shifted them to the ATSF. He is a good manager, and also has a very good nose for the bottom line.
My father was part of the Rocky Montain Division at the time BN decided to close the southern route. After the last Christmas part of the BN threw of its emplyees the talk on the flight back to Billings was that “we will close thins line” as a pretense with labor problems. I know it seems to be a situation of cutting ones nose off despite the face but did the BN get there way? yes they did by leasing to a man who hates labor organizations. Eeven though the rail link has unions they are much weaker now then if BN still had to operate the lines under the old union. I hope this helps.
While I found Leaders Count to be an “interesting” read its accuracy was sorely lacking.
There is a good story to be told, but “Leaders Count” was more on the order of a bunch of execs being able to offer a public relations account of their version of history, with no qualification, no critical eye, no historical accountability.