why did the UP make it when so many others failed?

[Anonymous]

i was sitting here wondering why the Union Pacific has lasted so long when so many other railroads didnt make it. the UP was just another bridge line when it started, with not very many industries. basically all they had was grain and bridge traffic from chicago to the west coast. how did they make it? the C&NW had basically the same setup, but they ended up getting bought. the SP was the other end of the UP leg, and they had tons of on line industries in CA and TX and other places. and they didnt make it either.

was it the discovery of coal in Wyoming that saved the UP? was it better management? how did they not only survuve, but thrive when other bridge lines went bankrupt or were bought out?

[ericsp]

SP was the biggest and most profitable railroad in 1969(?). Obviously bad management must have played a roll. Many people was point to reduced logging in Oregon and California and higher than average operating expenses.

Could another reason be that UP bought early and bought often?

[Randy Stahl]

U.P. still owns vast amounts of real estate with mineral rights dating to the building of the RR. Lots of borrowing power.
Randy

[jeaton]

Actually, the simplicity of the pre MoPac UP may have helped put it in a position to have the clout and resources to acquire the MOP and the others. If you look at rail maps of the 1970's and earlier, you would see that the Santa Fe was the geographic powerhouse. It was the only carrier that had California, the Texas Gulf Coast and Chicago. The other western carriers generally would try to avoid giving up traffic to the Santa Fe for delivery. Of course other routing options were available, but the UP had gotten into a position to be a great bridge carrier. Without a spider web of low density branch lines to support, they could afford to keep the Omaha to Salt Lake main line in top shape and buy and keep a top of the line locomotive fleet. They also had at least 5 carriers competing to get freight off the UP at Council Bluffs for Chicago and for that reason could keep the division of revenue going to those carriers on the low side.

Consequently, they carried a lot of traffic and made a good buck at it. Even the SP had to look to the UP for hot freight out of central Calfornia. Also, the UP had lines to LA and the Pacific Northwest that probably had a godd share of the traffic to and from those areas.

The Burlington was there first, but getting into the Powder River Basin also had to produce a lot of profitable revenue.

[Anonymous]

I think another reason it lasted so long is the fact that the UP name is famous, the UP has changed holding companys a few tmes (most resently in 1996) but is still called UP.

[jeaton]

Mark,

I posted my remarks without the resources to refresh a fading memory and then went to bed without going back to the thread. So I didn't read your post until this morning. I stand corrected on the UP branch line situation. I did remember that the Santa Fe was all over the place west of Kansas City, and I am sure these began to be a drag on their bottom line at least by the 60's.

Anyway, I appreciate your summary of the story.

Jay

[daveklepper]

UP's excellent position did not stop the WP-DR&G- CB&Q & MP from trying to compete, and they did get some traffic.

[Anonymous]

Mark, thanks for the excellent info. i will definately have to track down those books.

[Anonymous]

It sure wasn't because of the managers they have now!!!

[Anonymous]

QUOTE: Originally posted by pltbrnch

It sure wasn't because of the managers they have now!!!

[#ditto]

[Anonymous]

Some of the philosophy of a Harriman or two might have helped out a bit. Repair and rebuild to high standards, keep it well financed, pay the bills, have a open account with the Equitable Ins Co. a steady sourse of European Capital not tied to the Rothchilds, and run it well.

[garr]

If memory serves me right, didn't a "little" disturbance during the 19th century have a lot to do with the routing of the transcontinental railroad? A big debate raged about a more southerly route verses the ultimate decision which is now UP. The Civil War broke out which sealed the deal for the more centerally located route. If the more southerly route had been chosen would UP be what it is today?

[cstaats]

Mark we need a special thread just dedicated to questions for you. I always enjoy reading your articles and your postings are just as good.

[PNWRMNM]

Another part of the answer was that when UP went bakrupt in the late 1890's it was reorganized under the same name. More important to the economics was that it was taken over by E. H. Harriman who invested massive amounts of money in new cars, new power, and line relocations all of which drove operating costs down. The central location with service to all important Pacific Coast ports helped. Their branch line network in Washington and Oregon was not very strong. Would be interesting to see traffic split for GN, NP, MILW and UP East-West at Washington-Oregon border.

In later years the answer is that because it had the financial strength it was the buyer in all later mergers and kept the UP name.

I am not a great fan of UP, but I would have kept name if I could. Very few companies can trace their name back to 1862.

Mac

[dehusman]

The comments about UP's current managers not being able to make it now is entirely incorrect in my opinion. Most of the class one's survived into the 1970's. Even some of the real anachronisms like the LNE made it into the 1960's.
The real trick was making it through the mixmaster of the 1970's, 1980's and 1990's when the railroads really started to congeal. It was those 25 or 30 years that changed the railroad landscape more than any other in recent history.
The major players in UP's current management were major players in structuring the UP to get to its current position, the biggest RR in the US. The management team today helped make sure the UP survived when dozens of other mighty class ones were absorbed and disappeared.

Dave H.

[PNWRMNM]

Mark,

I would fault current UP management for being too quick to rip out track and facilities.

They tore out too much of Eugene Yard. Taking half the departure yard, which they were using as arrival tracks, was a real bonehead move. Eugene has been a disaster ever since they did that, which was about the time the rebuilt Roseville opened.

Saw an ariticle on the web from a newspaper in Pocatello Idaho quoting a loco engineer to the effect they ripped up 35 miles of track there. Even allowing for exageration, it sounds like Eugene all over again.

UP's current managers did this to themselves, and worse to their customers. They do not deserve credit for trying to clean up the mess thay made.

You are right about Harriman doing what other progressive managers were doing in that era, but you have to give him credit for the scope and size of projects. Of course the original cheap construction gave him lots of things to fix.

Mac

[Anonymous]

That Pocatello ordeal was larger than that. It involved tearing up large infrastructure, closing down a very efficent car shop as well as a locomotive rebuild facility. Part of it was, I am told a political fallout between UP wanting land and certain advantages and the city turning them down. UP's reply..we'll make you a fuel stop..they did. They can be very ruthless in their management.

[Anonymous]

A fascinating thread of good questions and knowledgeable responses.

Railroads and baseball ... endless opportunities for "what-if's" and "if only's"!

"If only" the ICC hadn't taken twelve years mulling over UP-CRIP. Endless possibilites can be hypothesized about the railroad map had that merger been approved. I won't do that, but rather offer the comment that UP's acquisition of MP was central to UP's current strength. MP was the dominant "chemical coast" carrier in the '60's, '70's and '80's, complementing and enhancing UP's foundational soda ash franchise. Second, MP served many coal-burning power plants throughout its territory. This provided a natural market for Wyoming PRB coal that UP knew it would access through CNW's PRB access. UP-MP was a classically strategic franchise-enhancing merger.

(One wishes more record existed of the CEO/Chairman thinking about mergers. What was the thinking in the late 1970's at BN and MP, for example? BN-SLSF was in the works, but why not, rather, BN-MP? (Perhaps because it would have be MP-BN?) BN's franchise in the PRB would have been strenghthened and the MP's chemical business would have be an invaluable enhancement, for BN (and BNSF to this day) had a very weak chemical base.)

[Anonymous]

Mark: When proposed, the UP-CRIP merger looked attractive for it would have given UP excellent Chicago access; Mississippi River access at St. Louis and Memphis; the "spine line" from the Twin Cities to the Gulf; and a good grain franchise. However, UP's refusal to go ahead with the merger in 1975 must, in retrospect, be considered a brilliant decision. Much capital was conserved; CNW served adequately to get to Chicago, but much more importantly CNW provided entre to the PRB (in 1985); and the MP merger opportunity opened up (accomplished in 1982), a franchise vastly superior to CRIP.

Very interesting FRA documents you mention. I'm a little surprised at the ostensible financial rationale for the BN-SLSF merger. Frisco did alright, but really was a modest firm in both size and financial strength. And the Gillette-Orin line was completed in 1978, while the merger was complete late in 1980. I always viewed Frisco as a better fit with ATSF than BN. A standing (and somewhat bitter) joke in St. Paul was that BN bought Frisco for the management.

The FRA analyst's prescience on subsequent mergers is uncanny. Was a rationale given for the expected pattern?

Your focus on the C&EI's importance to MP, and ultimately to UP is interesting. It certainly got MP good Chicago access, and perhaps as importantly. gave MP a direct interchange with Conrail without the delay and expense of the St. Louis TRRA. However, strategically, MP (and SP) already had the key connections to all Eastern and Southern carriers at St. Louis, Memphis and New Orleans.