What if Al Perlman had run the Penn Central?

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Posted by narig01 on Tuesday, April 17, 2012 2:38 PM

So did Mr Blevins get to have any more dates with Ms Golden Shifter?  Or did he become an independent consultant?

Thx IGN

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Posted by JMH251 on Thursday, May 10, 2012 6:15 PM

Al Perlman like all executives at his level have a contract. He threatened leagal action if he was forced out.  page 110 in "The Men Who Loved Trains" by Rush Loving Jr. A must read for any rail aficionado or executive.

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Posted by ruderunner on Sunday, December 03, 2017 5:41 PM

Ok it's an old thread...

I think a better question is would the NYC have survived without the PRR?

In that case I'd have to agree with 466Lex, maybe.  Perlman was beginning to turn things around at the Central, forward thinking managers, plant rationalization, hump yards, CTC and more. Sure they were selling off non rail assets to pay for it but they weren't believing their own hype.

Yes, there were the government regulations, crew size laws etc but they weren't shackled with the impossible things the PC was.  And I think the government would have learned their lesson when...

The PRR went bankrupt!  The PRR had been playing financial games for years, basically it seems they had given up on the railroad itself and were just milking any profit while they could. Sure they expanded into real estate and all sorts of other fields but they really did let the cash cow starve.

Not just years of deferred maintenance but a serious lack of investment in the future.  Not much for new motive power, signaling, rationalization. It seems like they gave up hope on the railroad ever becoming really profitable again.  Though their exceptional dividend payment even if they didn't make a profit didn't help their cash flow. The shuffling of money between assets to present a Rosy picture probably bit them as only a few knew just how bad things were. Other managers used the published reports to base decisions on, but they were mislead.

The failure of the PRR would likely have had similar effects on northeastern railroading though less severe as the other roads could have dealt with NYC to help keep things moving. Conrail would likely have been created but on a smaller scale, Amtrak would still have happened as that was a national problem.  The formation of Conrail would have lead to the Staggers act as the government would have made the discovery that the private lines weren't lying about passenger losses and unprofitable rates and draconian taxes on r o w.

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Posted by Paul_D_North_Jr on Sunday, December 03, 2017 7:48 PM

Note that NYC - led by a civil engineer, Perlman - was focusing on operating efficiencies, but PRR - led by a lawyer, Saunders - was focusing on mergers and financial maneuvers.  

- PDN. 

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Posted by MidlandMike on Sunday, December 03, 2017 8:19 PM

Before PC there was a plan to merge NYC and C&O.  ICC was not in favor.  If they had allowed that, PRR and N&W probably would also have combined, as they were already financially entwined.  Pretty much what has happened with the Conrail split.  Maybe all this bankruptcy could have ben avoided.

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Posted by ruderunner on Monday, December 04, 2017 11:48 AM

It's ironic that the end result is more or less what was desired in the first place.

While I'm sure the ICC had some influence on the NYC/CO merger, I was under the impression that CO didn't really want the NYC.

 

PDN, I believe the PRR problems existed prior to Saunders arrival.  Symes had started searching for help in the late 50's.

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Posted by Overmod on Monday, December 04, 2017 12:13 PM

Whatever NYC might have done pre-'50s the Robert R. Young fiasco likely killed.  As the Time story correctly noted, NYC was colossally negatively leveraged in any economic downturn, and more than usually hobbled by the range of problems facing predominantly Northeastern railroads - it helped transiently that Nelson assumed some of the remaining commuter risk in '66, but you will observe how quickly things went financially south a year or two after.

It is attractive to consider a NYC unrelated to New Haven as a potential merger partner... but it would have had to be a Saul Steinberg Reliance type deal (with everything lossy subsequently spun out or sold off) largely concentrating on the Water Level Route ... perhaps we would have seen an expanded version of the UA high-speed operation tried there, but it would have been no more successful than any other Johnson high-speed project going into the Nixon years, and even with the Perlman touch, there'd be too little too late in plant improvement; remember it was PRR that put so much capital into heavy second-generation power and Perlman who was looking at shorter, faster trains in a largely obligate-full-crew world.  We'd still have found the need for Staggers about the time we got it, just with multiple smaller bankruptcies compelling recognition instead of 'too big to fail' disaster.

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Posted by aegrotatio on Monday, December 04, 2017 10:48 PM

How does the Erie and Lackawanna, and the Erie-Lackawanna fit into this narrative?  Like the NYC, the E-L was courted for a merger with a southern railroad but the merger was aborted because labor did not like the deal. Without that deal the railroad might still have survived, but a couple of hurricanes made The Death of an American Railroad happen (see the book The Death of an American Railroad).

Railroads in the 1960s through the 1980s looked like four disaster movies back-to-back.

 

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Posted by CSSHEGEWISCH on Tuesday, December 05, 2017 7:05 AM

Erie Lackawanna was already part of the N&W camp by way of Dereco, which was a way of keeping EL and D&H at arm's length because of their marginal financial condition.

Much of EL and Reading would have gone to Chessie System in the original plan for Conrail.  The deal never went through in part because of an inability to come to an agreement with organized labor. 

Most of the former Erie main line west of Meadville PA would have been abandoned at any rate.

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Posted by David1005 on Wednesday, December 06, 2017 4:25 AM

Not wanting to hijack this interesting thread on Mr. Pearlman and the PC, but the rivet issue is also interesting. The rivets would have been wrought iron, not iron.  Wrought iron has a yield strength of 31,000 psi and steel rivets yield at 36,000 psi. The steel rivets would have been about 15% stronger. This could have easily been compensated for by slightly increasing the rivet/hole diameter. Small changes in the diameter make big changes in the crosssection.

As for the PC, the PRR was so far behind times at the time of the merger it seems like there was no hope. I think a better plan would have been to let the PRR go into bankruptcy and use that opportunity to slice away loosing parts and renegotiate labor agreements. At the time of the merger the NYC had reduced its four track mainline to two track CTC while PRR still was using manually operated towers and every control point.  

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Posted by ruderunner on Wednesday, December 06, 2017 4:55 AM

Agreed.  Lots will say that both were extremely overbuilt and the maintenance costs of keeping the excess track functional was dragging them down.

I feel that perlman was using the overbuilt status to an advantage. By downgrading the main line from 4 to 2 track he was saving future maintenance costs and don't think for a minute that the track and ties that were pulled up just went to scrap.  

As noted the PRR d didn't try that.

The EL merger was a harbinger of what would happen to PC. They weren't able to realize the gain from eliminating duplicate track and service.  Neither had excess capacity of their own like the Central did, in fact both were historically short of power.

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Posted by narig01 on Wednesday, December 06, 2017 11:26 PM

ruderunner

Agreed.  Lots will say that both were extremely overbuilt and the maintenance costs of keeping the excess track functional was dragging them down.

I feel that perlman was using the overbuilt status to an advantage. By downgrading the main line from 4 to 2 track he was saving future maintenance costs and don't think for a minute that the track and ties that were pulled up just went to scrap. 

 

From what I read in Rush Loving's book, the track that was salvaged from the NYC mainline went into Selkirk yard.

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Posted by ruderunner on Thursday, December 07, 2017 4:41 AM

Right, the good track and ties were reused.

Question for my benefit, someone mentioned Dereco earlier and implied that Dereco was a going concern prior to the PC merger. I was under the impression that Dereco was a condition of the merger. Which is correct?

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Posted by CSSHEGEWISCH on Thursday, December 07, 2017 7:02 AM

EL, D&H and B&M were considered to be the next logical merger targets for an expanded N&W.  All of them were in marginal financial shape at best and Dereco was formed as a subsidiary of N&W to keep these roads at arm's length from N&W when they were acquired.

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Posted by ruderunner on Thursday, December 07, 2017 9:03 AM

So dereco began when?

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Posted by rrnut282 on Thursday, December 07, 2017 1:15 PM

According to info at the ELHS, Dereco was incorporated March 1, 1968.  At the same time the Lakawanna and Erie merged.  

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Posted by ruderunner on Thursday, December 07, 2017 5:27 PM

So post PC.

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Posted by Miningman on Thursday, December 07, 2017 5:58 PM

The Erie merged with the DL&W, the Lackawanna in mid Oct. 1960, way way way before PennCentral.

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Posted by ruderunner on Friday, December 08, 2017 4:34 AM

So to be clear, the EL was created in 1960 well before PC. This in knew.

Dereco was created March 1968, just after PC.

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Posted by CatFoodFlambe on Saturday, December 09, 2017 7:03 PM

Perlman could have delayed the rapid crash of PC, but there was no way that PC + NH never had  chance of generating the capital needed to make the railroad operationally sound.    In someways, perhaps it was best that PC crashed in such a spectacular fashion - it certainly got everyone's attention and led to the resolution of the entire industy's restrictions.    Had PC limped along for decades, the rest of industry might have suffered the same fate, such as did Southern Pacific.

 

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Posted by samuelpc on Saturday, December 09, 2017 10:45 PM

I believe E-L  was a condition of the N&W-Nickle Plate-Wabash merger  and Derco was used to shield N&W from EL's finances

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Posted by PennsyBoomer on Sunday, December 10, 2017 1:03 AM

Whats ifs are great exercises in conjecture. What if Hurricane Agnes had never happened?

PC was already indelibly on the road to oblivion but this was still an era of railroads "crying wolf" although it was becoming increasignly difficult to dispute the regulatory shackles. I wonder that if the storm-created financial catastrophy to not only PC but neighboring roads that fell into Conrail had not occurred to such a uniform extent, whether the situation might have lingered for much longer.

I do not believe Perlman could have done much better with the regulatory structure then in place, only forestalled the inevitable. All too often it takes a big crash of one sort or another to get any attention, as you say.

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Posted by Gramp on Sunday, December 10, 2017 8:22 AM

I wonder what today's railroads would look like if the knee-jerk reaction of the 60's had been to not merge, but have the focus on better organizaction of the firms' resources, and developing and serving customers to the hilt. 

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Posted by BaltACD on Sunday, December 10, 2017 9:45 AM

Gramp
I wonder what today's railroads would look like if the knee-jerk reaction of the 60's had been to not merge, but have the focus on better organizaction of the firms' resources, and developing and serving customers to the hilt. 

I suspect, had there been no 'merger mania', there would have been very little railroad mileage still in existance today.  The mergers that happened were mostly done to stave off bankruptcy by one or more of the partners.  What made PC so bad was that you had two partners that were already on the express lane to bankruptcy trying to save themselves, each featuring they could pick their partner clean - thus the red-green wars within the merged company.

The successful mergers were where one of the partners had the financial ability to overcome the weak sisters financial needs as well as implement organizational changes, technological changes and route rationalizations to keep the new organization operating in the black at the bottom line.  Without the mergers, many of the weak sisters would have just disappeared - like the Rock Island and the Milwaukee Road.  Those companies without financial resources could not have focused on better organization and/or serving customers better - their full focus was on trying to have the finances to exist the next day, let alone next month or next year.

         

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