The Milwaukee Road

[greyhounds]

What's BN got to do with it?

If a shipper wanted the service route between the Pacific Northwest and Chicago they used the Union Pacific. I worked for a forwarder (ltl/lcl and intermodal) in Chicago. Our "North Coast" freight went CNW-UP. Back then, the UP was fast and reliable.

The MILW was caught between the UP and the BN. No wonder they died.

[Anonymous]

QUOTE: Originally posted by CSSHEGEWISCH

Point to remember (again): The former GN main line has trains operating over it, the Pacific Coast Extension is little more than a glorified bike trail.

Point to clarify: Not all the former GN line is intact. The segment from Spokane to Sandpoint has been either branchlined or abandoned. Not all the PCE is a "glorified bike trail". BNSF still uses the Miles City east segment, and some parts in Idaho are still operated as a shortline. The Washington state segment of the PCE was strategic enough that BN bought portions with the thought of using it as a replacement for the NP line over the Cascades, and as a shortcut between Ellensburg and Lind. I've also been told but cannot verify that UP was interested in the St Paul Pass segment between Silver Bow and Plummer.

The point to consider is this: If the Hill lines had been forced to include the Milwaukee in the BN merger (BMN?), anyone care to ponder which line(s) would have been used by BMN as the primary route between the Twin Cities and Seattle? Try the Milwaukee line from the Twin Cities to Lombard, the NP line from Lombard to Garrison, and the Milwaukee from Garrison to Seattle. This would have been the shortest routing, shorter than the current GN/NP/GN route used primarily today by BNSF by about 25 miles, assuming no major line relocations ensued. It is likely the Milwaukee/NP/Milwaukee routing would have been the primary route for intermodal and fast freights, while the current GN/NP/SP&S route via the Columbia Gorge would have been more suited for the long slow heavy trains BN likes to run on that route. Furthermore, if such had happened it is likely much of the NP line would have been abandoned, perhaps from Laurel to Bozeman, certainly the Ravalli line, and most certainly the Stampede Pass line. I also wonder if BMN would have kept a dual main between St. Regis and Garrison, or would have favored abandoning the original NP line between those two points? Perhaps even GN's Stevens Pass line would have bit the dust as there would have been no need to retain that line with the Milwaukee's Snoqualmie Pass line in place.

Here's another point to consider: The Milwaukee PCE was kept pretty much intact from it's construction to eventual abandonment, while the GN had several major line relocations in the intervening years from it's completion - the Haskill Pass bypass (late 1890's?), the Kootenai River realignment east of Bonner's Ferry Id (1900's?), the new Cascade Tunnel (1920's), the Chumstick Cutoff (1920's), and (after the BN merger) the new Latah Creek Bridge, the new Sandpoint cutoff, and the Flathead Tunnel reroute. I do not know if Milwaukee officials over the years had planned or hoped for any realignments of their original route (assuming they had ever had the ca***o do so), perhaps MIchael Sol might know if such was contemplated. Since the Milwaukee did simply electrify their mountain routes rather than building new realignments, from this perspective it does provide positive testimony of the suitability of the original alignment of the PCE.

[MichaelSol]

QUOTE: Originally posted by greyhounds

What's BN got to do with it?

If a shipper wanted the service route between the Pacific Northwest and Chicago they used the Union Pacific. I worked for a forwarder (ltl/lcl and intermodal) in Chicago. Our "North Coast" freight went CNW-UP. Back then, the UP was fast and reliable.

The MILW was caught between the UP and the BN. No wonder they died.

This is a good example of ignoring facts. By that, I mean documented financial data. How does someone look at a $176 million [2005 dollars] net positive cash flow and make this conclusion?

UP was good to Portland. But, in Milwaukee's back yard, Seattle, UP had 8-9% of the Port Traffic, Milwaukee had 76%. This is from Bill Brodsky, at that time asst VP -- Planning. C. K. Dunning, Milwaukee Road's Intermodal Import/Export manager, will specifically tell you that his data shows that Milwaukee had more intermodal traffic from and to Seattle and Tacoma than BN and UP combined and he will tell you that this lasted right up until the end.

Best regards, Michael Sol

[MichaelSol]

From Bob McQuigg: "I would strongly agree about the Port of Seattle's support of The Milwaukee Road. My career in international trade with The Milwaukee Road started when I was transferred January 1970 from Los Angeles to New York City for the job of District Manager Foreign Freight Sales in New York with responsibility from New England to Florida. In 1973 I was transferred to Chicago as Director of International Trade, Market Development and Pricing. Our biggest customer, when it came to import/export traffic was, of course the Port of Seattle and with the help of Hank Levenger, Director of Marketing with the Port, every possible bit of traffic we could handle, we got, much to the dismay of the UP and BN. The Milwaukee in turn worked very closely with the Port of Seattle on rates and services to handle their business. In Chicago, I was the railroad's representative on the Trans-Continental Freight Bureau for Import/Export rates prior to the deregulation of rail rates, so there was a very close relationship between the railroad and the ports in the Pacific Northwest. "

Best regards, Michael Sol

[MichaelSol]

QUOTE: I do not know if Milwaukee officials over the years had planned or hoped for any realignments of their original route.

The Snoqualmie Tunnel is a line re-alignment from the original Laconia route.

There were a number. Like most of the railroads, there were ongoing projects, grade lowering in Central Montana in 1956, work here and there.

The biggest wish list project was a tunnel between Bryson and Adair, replacing Tunnel #19, St. Paul Tunnel (#20), Tunnels #21, #22, #23, #24, #25 #26, #27, #28, #29, #30, #31, #32, #33, and #34, four high steel bridges, about 1,000 degrees of curvature, ten miles of line, and lowering the grade to about .6% at 3500 feet. It would have been an extremely useful and productive improvement.

Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds

...I worked for a forwarder (ltl/lcl and intermodal) in Chicago. Our "North Coast" freight went CNW-UP. Back then, the UP was fast and reliable...

This is a good example of ignoring facts....

The customer is always right, even if you think he is wrong. We can spin all the theories we care to but greyhounds laid out the cash and the MILW did not get that cash.

[CSSHEGEWISCH]

The fact that the original PCE mainline was mostly intact can mean either of two things: the original alignment was already that good or MILW never had enough money or will to invest in line relocations to improve it.

Much of the UP main line between Omaha and Ogden has been relocated, more than once in a few places.

[daveklepper]

I wi***o thank all who contributed to my vastly increased knowledge about the last years of the Pacific Extension and of waisted opportunities. Thanks.

[MichaelSol]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds

...I worked for a forwarder (ltl/lcl and intermodal) in Chicago. Our "North Coast" freight went CNW-UP. Back then, the UP was fast and reliable...

This is a good example of ignoring facts....

The customer is always right, even if you think he is wrong. We can spin all the theories we care to but greyhounds laid out the cash and the MILW did not get that cash.

Uhhh, the OR documented free cash flow was better than any Class I today. The cash came from customers. Is there a comprehension problem here or is this that unclear?

That was the interesting part of the whole affair, of course. Customers would not leave the Milwaukee. The Trustee "intentionally discouraged traffic" according to the ICC, on Lines West in 1978, and the PCE still generated an enormous positive cash flow. Some of the big customers nearly doubled their tonnage that year over 1977.

The Consulting Firm, Booz-- Allen-- Hamilton, went out and actually talked to those customers, did a huge traffic study. It was the "secret" part of the final report to the Trustee, since it contained "proprietary" information about current and future traffic and customer needs. BAH not only surveyed for current usage and projected needs, but "attitudes" towards the various railroads that served the shipping community. Recall that Paul Cruikshank was attempting to explain to the ICC that the Milwaukee wasn't in receivership because of lack of business. The exact opposite.

"Demand has far exceeded the Milwaukee's ability to provide an adequate freight car supply." Cruikshank, Paul F., "Verified Statement," August 30, 1979 Docket No. AB-7 (Sub-No. 86F), Exhibit 5, ICC hearings, 1979.

This was a company that was in receivership because it had too much business. The ICC was naturally interested in that state of affairs. Customers were using the Milwaukee Road at unprecedented levels. The BAH study discovered that, despite derailments and service delays on the PCE, shippers continued to rank MIlwaukee Road the highest of all railroads in terms of customer service.

I think BAH was much surprised by what it was finding in this traffic study. They would walk in the door, and a shipper would sit there and offer to contractually commit to ship an additional 600, 1000, 500, 2500 carloads per year, if the Milwaukee would just stay in the Pacific Northwest. The customers were not just staying with Milwaukee, they were stepping up to the plate and willing to re-route traditional traffic from other carriers to Milwaukee. Port of Seattle and Port of Tacoma were giving Milwaukee everything they had. Port of Portland had become a key profit center for the Milwaukee. BAH saw these enormous positive cash flows that the PCE had been generating, and were continuing to generate even as the Company as a whole was foundering.

The traffic study was page after page of customer use and customer support for the Milwaukee Road and the PCE. BAH ran the numbers every way that they could, and could not find a midwestern configuration of the Company that would ever be likely to generate a profit. Yet, every set of numbers showed the transcontinental operation as profitable.

The customer is always right, sure, that's a comfortable maxim. The problem I have with Greyhounds remarks is that the substantial postive free cash flow generated by Lines West was generated by customers. The "customer is always right," is OK, the problem is usually when business or analysts ignore what the customer is saying. That appears to be what happened when the PCE was ordered closed.

The customer may be right, but a Federal Judge was actually calling the shots, the customers didn't have anything to do with it, and he decided otherwise.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds

...I worked for a forwarder (ltl/lcl and intermodal) in Chicago. Our "North Coast" freight went CNW-UP. Back then, the UP was fast and reliable...

This is a good example of ignoring facts....

The customer is always right, even if you think he is wrong. We can spin all the theories we care to but greyhounds laid out the cash and the MILW did not get that cash.

In Washington State, Milwaukee Road had a larger share of the total state rail traffic market than the Union Pacific: 21.5% compared to 15.8%. Interstate Commerce Commission, Draft Environmental Impact Statement (Wash., D.C., U.S. Government Printing Office, 1979). p. 2-22.

Milwaukee Road captured nearly 50% of all container traffic out of Seattle prior to 1978, leaving the UP with 36% and the BN with only 16%. Overall, the Milwaukee had a near monopoly of more than 76% of Port of Seattle business, which was booming. Bruce Ramsey, "Loss of Railroad, 'May Hurt Port'", Seattle Post-Intelligencer, November 12, 1979, p.C12.

The Port of Tacoma argued that the Milwaukee's services were more important to the country as a whole than Chrysler Corporation's, and asked, if the government could advance a billion dollars to Chrysler, why it could not make similar commitments to the Milwaukee. Bruce Johnson, "Milwaukee Needed, say Port People," The News Tribune (Tacoma, Wash.), November 25, 1979, p. 10.

Best regards, Michael Sol

[bobwilcox]

Concerning the Booz, Allen, Hamilton survey
about customer attitudes. Did the customers know who had hired BAH?

[Anonymous]

Here's a question regarding the Milwaukee's electric operation. Did Milwaukee's management ever consider upgrading the electric operations in the 1950's or even in the 1960's with more powerful electric locomotives (maybe a DC powered version of the E44 if that could be done) and a more efficient power distribution system? Say switching from direct current to alternating current? The later probably isn't feasible owing to cost of conversion versus using the exsisting infrastructure, but I had to ask!

With the Milwaukee's purchase of the Little Joe electrics sort of breathing new life into the aging electrification in the 1950's, did the management figure that purchasing a dozen new electric locomotives was "good enough" for the operation since they also had to find money to dieselize?

[MichaelSol]

MILW had originally been offered the entire run of 20, but had delayed until the sale of 8 of them to other purchasers. After the modifications to the 12 purchased Joes made them "a superb locomotive" for mountain operations, the Company scrambled to purchase the rest of the production run, but couldn't pry them loose from the other purchasers.

Between 1969 and 1973, several studies were conducted attempting to achieve renovation and extension of the existing system. One involved extensive government funding and had been approved by the funding agency, the FRA. Chairman Quinn failed to submit the proposal to the Board for approval.

The ultimate decision to terminate came despite internal and external studies which favored retention. I was a principal author of one of those studies, the one that is generally cited in publications. Unfortunately, the analyst conducting the internal company study failed to realize that the power contracts were essentially subsidy contracts. I made the same error despite the fact that the President of the Power Company had told me he felt they were "subsidizing" the Milwaukee.

Unfortunately, I took the comment as hyperbole. What he meant was that the contract price was so cheap that, after the electric operations were ended, Milwaukee's power costs for routine operation increased from when the electrics were running. The MILW's entire Rocky Mountain Division had operated under the power contracts, not just rail electrification. The Power Company was able to terminate the contracts if electrification was not the primary purpose. They were converted to a standard industrial rate.

Plus MILW then incurred all new levels of diesel fuel costs.

It was a very expensive mistake in terms of dramatically increased costs of operation.

Best regards, Michael Sol

[greyhounds]

QUOTE:
Demand has far exceeded the Milwaukee's ability to provide an adequate freight car supply." Cruikshank, Paul F., "Verified Statement," August 30, 1979 Docket No. AB-7 (Sub-No. 86F), Exhibit 5, ICC hearings, 1979.

This was a company that was in receivership because it had too much business.

You know, I think Sol actually believes this. The poor man. But it's got SOME truth in it.

Way back then, there was Federal ecnomic rate regulation. Now if by Federal Law you keep the rates low enough, shippers will, in fact, flock to your service. Of course, since the rates are artificially low, you loose your shirts providing the service That's what was going on with the Milwaukee and the ICG and the Rock Island and some others.

The Milwaukee couldn't provide equipment for the same reason the ICG couldn't provide equipment. It wouldn't pay for itself. We had "Oodles" of bad order equipment sitting around. And we had shippers that wanted to use that equipment at the artificially low charges. But we couldn't afford to fix it because we'd never get our money back.

Sol makes a big deal of the "Free Cash Flow" generated by the Milwaukee's Pacific Coast Extension. Well, "Free Cash Flow" don't mean squit. This requires a basic understanding of accounting standards - but for simplicity, let's just say that if I decide my business has no future I'm not going to paint the building or buy a new truck. I'm going to not invest in the future (because I see no future for the business) and I'm going to take the cash out of the business. That's what the MILW managers did. They saw the UP service route on their southern flank, the forming BN on their norhern flak, I-94, and they called a retreat.

When you're liquidating a business, you generate cash. That's your goal. Get the cash out. Sol seems to think that this was some kind of "proof" that the PCE was long term viable. As I said, "the poor man".

Sol has misrepresented what I say. I pointed out that the service route between Chicago and the Pacific Northwest was CNW-UP. He then accused me of ignoring the "Free Cash Flow". I never mentioned "Cash Flow" until this post. Short term, cash flow is critical. Long term, it is not. You gotta' make a profit. The Milwaukee couldn't do that. They are gone.

I think Sol has an unhealthy obsession. She's gone dude, move on.

[Anonymous]

QUOTE: Originally posted by MichaelSol

QUOTE: I do not know if Milwaukee officials over the years had planned or hoped for any realignments of their original route.

The Snoqualmie Tunnel is a line re-alignment from the original Laconia route.

There were a number. Like most of the railroads, there were ongoing projects, grade lowering in Central Montana in 1956, work here and there.

The biggest wish list project was a tunnel between Bryson and Adair, replacing Tunnel #19, St. Paul Tunnel (#20), Tunnels #21, #22, #23, #24, #25 #26, #27, #28, #29, #30, #31, #32, #33, and #34, four high steel bridges, about 1,000 degrees of curvature, ten miles of line, and lowering the grade to about .6% at 3500 feet. It would have been an extremely useful and productive improvement.

Best regards, Michael Sol

I'm glad I have a copy of Stanley W. Johnson's The Milwaukee Road In Idaho, otherwise I would have had no idea where Adair was. I take it then that Bryson lies on the southernmost apex of the big curve between Saltese and Taft. Given your description, the new grade (west to east) would have started at Stetson following the lower valley of the North Fork of the St Joe River and the Loop Creek Valley (down in the flats of these valleys) to just below Adair, then tunnel roughly 4 1/2 miles to below(?) Bryson, then along the flats of the St Regis River parallel to the NP Wallace line (and below the original grade) to Haugen(?), or just to Drexel (which I have not been able to locate on my atlas, but I understand that's where the westbound grade shifted from 0.8% to the 1.7%). However, didn't the 1.7% eastbound start at Avery proper, and if not, what was the grade from Avery to Stetson?

I agree that would have been a very productive project (I had always assumed that any such wish list tunnel between the St Regis and St Joe watersheds would have run from Falcon to Taft, so at leat that assumption wasn't to far off the mark!), but wouldn't then the Milwaukee have suffered the same constraints as GN per the Cascade and Flathead tunnels' trains per day limitations?

The other point to ponder in this scenario takes into consideration the later revelations of the hotter intermodals being able to tackle 3% grades, aka BNSF's study of a Flathead Tunnel 3% flyby for the lighter faster trains. It would have been just as concievable to have a set of 3% fly-bys on both the Montana side and the Idaho side of the St Paul Pass tunnel, which would have also reduced the overall mileage by 10 or more miles, without the constraints and expense of the new longer tunnel. Given Milwaukee's superiority in hauling autos and containers, this idea would have been a much better fit for them than for the BN.

[MichaelSol]

Well, what Greyhounds actually said was this

QUOTE: If a shipper wanted the service route between the Pacific Northwest and Chicago they used the Union Pacific.

As the actual record shows, in those areas in the Pacific Northwest where the two companies had competed head to head for 70 years, "the customers" had preferred the Milwaukee Road -- it had the larger market share -- and as the accounting data clearly shows, the revenue earned was substantially in excess of the costs of producing that revenue. Realistically speaking, it was also the growth market for the future, that the Midwest was not.

And, there is the independent study, BAH, which showed that a Company which included that traffic would be profitable, whereas a company that did not, would not be.

Why you might see a need to personalize it, I do not know. But, it is the historical record, and that is why, unlike you, I am generally able to cite the specific references demonstrating the facts at the time, as I think it might be useful, if you are interested in the background.

Sorry that discussion of history is not your motive or your goal. Why are you on this thread at all? Just to waste everyone's time with useless observations? What do you think a "Milwaukee Road" thread might be talking about? Perhaps you should "move on" to a topic that interests you, then. Don't let the door hit you ...

I don't think it's odd that people might discuss railroad history. I think it's odd that someone takes the time on a clearly labeled thread about history to complain that the clearly labeled thread is actually talking about the history for which the thread is labeled. In terms of obsessions, that one shows that somebody needs a time out.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by futuremodal
but wouldn't then the Milwaukee have suffered the same constraints as GN per the Cascade and Flathead tunnels' trains per day limitations?

Milwaukee had electrics.

Best regards, Michael Sol

[arbfbe]

Futuremodal,

As is was explained to me by long term employees in the operating department, the east portal of the tunnel would be just out of the horseshoe curve at Bryson and the west portal would be between the tunnels at Adair. Supposedly it would be a gradeless tunnel but you would have to check elevations between the two points to confirm that. The length of the new tunnel was reputed to be equal to the total length for all the tunnels and bridges it would replace. Additionally, about 70% of all rotary trips had historically been on the line that would have been abandoned. As the story goes the tunnel had been an integral part of the original construction but no one had yet built a tunnel of that length and the MILW Board of Directors was hesitant to go into such a project only to find unstable soils and formations inside that would immensely increase the total cost of construction. The tunnel would have additionally eliminated helper service for most trains. Oh but for today's drilling technology and the ability to drill core samples for the entire length of the proposed tunnel.

The tunnel part of the story has been confirmed but some of the details I have mentioned may be part folklore handed down amongst employees over 60 or more years by the time I heard them. There must be surveys of the proposed bore that someone may access.

[Murphy Siding]

Greyhounds: I'm just curious, you mention *we* had oodles of bad order cars......
Did you work for the Milwaukee Road at one time?




p.s. I'm not sure if *everyone* realizes this, but the Milwaukee Road is gone now! *Some* think it's just hiding incognito-like Elvis![}:)]

[Anonymous]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by futuremodal
but wouldn't then the Milwaukee have suffered the same constraints as GN per the Cascade and Flathead tunnels' trains per day limitations?

Milwaukee had electrics.

Best regards, Michael Sol

"Had" being the operative word. I take it then this project was proposed pre-1970's before the wires came down. The question then is would the Milwaukee have been more disposed to keep electric operation with this tunnel, or would they still have gone all diesel (and then the subsequent operational constraints as experienced by GN/BN/BNSF)? Since they would have had 20 some years to observe the subsequent problems GN/BN had when they took down the wires in the 1950's, perhaps this new tunnel might have played a role in convincing Milwaukee officials to keep the wires juiced.

[Anonymous]

QUOTE: Originally posted by arbfbe

Futuremodal,

As is was explained to me by long term employees in the operating department, the east portal of the tunnel would be just out of the horseshoe curve at Bryson and the west portal would be between the tunnels at Adair. Supposedly it would be a gradeless tunnel but you would have to check elevations between the two points to confirm that. The length of the new tunnel was reputed to be equal to the total length for all the tunnels and bridges it would replace. Additionally, about 70% of all rotary trips had historically been on the line that would have been abandoned. As the story goes the tunnel had been an integral part of the original construction but no one had yet built a tunnel of that length and the MILW Board of Directors was hesitant to go into such a project only to find unstable soils and formations inside that would immensely increase the total cost of construction. The tunnel would have additionally eliminated helper service for most trains. Oh but for today's drilling technology and the ability to drill core samples for the entire length of the proposed tunnel.

The tunnel part of the story has been confirmed but some of the details I have mentioned may be part folklore handed down amongst employees over 60 or more years by the time I heard them. There must be surveys of the proposed bore that someone may access.

Michael Sol describes the elimination of Tunnel's 19-34 with this project, which clearly shows a substantial grade realignment as well as the new tunnel. It may be that this was a long term project borne of the original plans, and then the grade realignment was added to later plans.

[MichaelSol]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by arbfbe

Futuremodal,

As is was explained to me by long term employees in the operating department, the east portal of the tunnel would be just out of the horseshoe curve at Bryson and the west portal would be between the tunnels at Adair. Supposedly it would be a gradeless tunnel but you would have to check elevations between the two points to confirm that. The length of the new tunnel was reputed to be equal to the total length for all the tunnels and bridges it would replace. Additionally, about 70% of all rotary trips had historically been on the line that would have been abandoned. As the story goes the tunnel had been an integral part of the original construction but no one had yet built a tunnel of that length and the MILW Board of Directors was hesitant to go into such a project only to find unstable soils and formations inside that would immensely increase the total cost of construction. The tunnel would have additionally eliminated helper service for most trains. Oh but for today's drilling technology and the ability to drill core samples for the entire length of the proposed tunnel.

The tunnel part of the story has been confirmed but some of the details I have mentioned may be part folklore handed down amongst employees over 60 or more years by the time I heard them. There must be surveys of the proposed bore that someone may access.

Michael Sol describes the elimination of Tunnel's 19-34 with this project, which clearly shows a substantial grade realignment as well as the new tunnel. It may be that this was a long term project borne of the original plans, and then the grade realignment was added to later plans.

Alan correctly describes the original survey plan made in 1908. My grandfather was part of that survey.

If you are familiar with the territory, you will note that both Bryson and Adair are considerably above their surrounding elevations. A later proposal, which L.W. Wylie described to me, took advantage of the fact that a slightly longer tunnel could come out "under" Adair by about 300 feet. That is, directly on Loop Creek. In that event, the entire line into Avery would have been re-engineered to something resembling a water level grade along Loop Creek and the North Fork of the St. Joe. Similarly, on the Montana side, the grade from Haugan west would follow the St. Regis to Dominion Creek, a couple hundred feet below Bryson, then up Dominion Creek to the East Portal of the proposed tunnel.

Both in the days of steam and even with modern diesel-electrics, very long tunnels are a threat to both human and machine. Combustion engines still need oxygen, and the third engine and back doesn't get much in those very long tunnels, just toxic gas and heat. Efficiency collapses, machines fail, people suffer. Milwaukee had planned to electrify in 1908, and so that was never a concern since a tunnel is pretty much the same as anythng else for an electric locomotive.

In 1973, Milwaukee Road's tunnels were all so short that these just weren't viable concerns insofar as the electrification vs diesel were concerned. GN had thought they could get away with abandoning their electrics in their big bore in 1956, but the new diesel-electrics were neither as clean operating nor as robust as expected. Given that experience, Milwaukee would, I am sure, have considered more carefully its decision had it had a very long tunnel, in light of GN's history of negative experience with theirs. On the other hand, Milwaukee abandoned its electrics in spite of favorable outcomes in its favor in the studies, so who knows? It would have been an additional element in favor of retaining the electrification, and most decisions like this are balancing acts.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by greyhounds

Sol has misrepresented what I say. I pointed out that the service route between Chicago and the Pacific Northwest was CNW-UP. He then accused me of ignoring the "Free Cash Flow". I never mentioned "Cash Flow" until this post.

Intereresting. You say you never mentioned "Free Cash Flow" until this post, but that I accused you of ignoring it previously. Isn't "not mentioning it" kind of, sort of, exactly the same thing as "ignoring" it? So, if you didn't mention it, isn't that exactly what I said, you "ignored it?"

Good grief, what a hoot.

And of course statistics showing Milwaukee with greater market share obviously supports the idea that UP/CNW was "the" market route. But, don't customers create "market share"?

In Oregon, customers may have used UP, or BN, or SP. Don't know, since the correspondent provides no evidence of anything.

In Washington State, customers favored the Milwaukee over the UP/CNW and that was verified by an ICC traffic analysis. Big customers favored Milwaukee over everyone, and Milwaukee made very good money.

Hopefully making more sense than the correspondent, the "Free Cash Flow" was what paid for things. A 35% or more gross profit margin does not suggest break-even pricing; far from it, it shows Milwaukee's control of the premium traffic market. The corresponding corollary is that something, somewhere else, was sucking up "Free Cash Flow" since the Company as a whole was about $55 million in the hole in 1977.

Ya think?

Best regards, Michael Sol

• Reply

Of course it is gone. That is more painfully clear to some of us than others. As Michael points out it is not gone account the customers abandoned it. In a regulated market the rates between the carriers should be the same and shippers had the choices of the MILW, the UP, the NP and the GN yet they stayed with the MILW until the service had deteoriated beyond practible levels. Traffic studies by BAH showed the PCE was viable and far more profitable than the midwestern "core" yet MILW management elected to abandon the PCE to focus on the core which was basically a north south routing in an east west world. There was a chance to rebuild and extend the electrification yet the president of the MILW elects not to present the proposal to the board. The electrification was working, each Little Joe at 5500hp could likely short time three SD40-2 units at 3000 hp yet they were scrapped and the infrastructure dismantled to preclude the savings electrification offerred in the long run. Shippers on the other hand seemed to know the effects of the loss of the third transcontinental line in the Pacific Northwest. So why was it in the face of emperical data from the BAH analysis, steady shipper support and increasing traffic levels in the market as well as a dedicated group of employees did management seem so hellbent of driving the company into the dirt? MWH suggests the grades made the difference yet that assumes all other things are equal and having worked on both the MILW and the BN I can tell you all other things were not equal. The MILW family did make a difference and the shippers were aware of that. When the REAL reason for the demise is finally answered then we can let the carcass rest but until that is done some of us will keep poking a stick into it to see what kind of a stink comes out of it.

alan

[Murphy Siding]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by Murphy Siding

p.s. I'm not sure if *everyone* realizes this, but the Milwaukee Road is gone now! *Some* think it's just hiding incognito-like Elvis![}:)]

It's a "Milwaukee" thread, Murphy.

Hard to talk about the past without talking about the past.

Best regards, Michael Sol

Point well taken> My apologies.[:I]

Can someone sum up ,more or less. why The Milwaukee went under? I see lots of info about why it shouldn't have gone broke, but.......
Thanks[:)]

[MichaelSol]

QUOTE: Originally posted by greyhounds

QUOTE:
Demand has far exceeded the Milwaukee's ability to provide an adequate freight car supply." Cruikshank, Paul F., "Verified Statement," August 30, 1979 Docket No. AB-7 (Sub-No. 86F), Exhibit 5, ICC hearings, 1979.

This was a company that was in receivership because it had too much business.

You know, I think Sol actually believes this. The poor man.

The Milwaukee couldn't provide equipment for the same reason the ICG couldn't provide equipment. It wouldn't pay for itself. We had "Oodles" of bad order equipment sitting around. And we had shippers that wanted to use that equipment at the artificially low charges. But we couldn't afford to fix it because we'd never get our money back.

During the 1960s, Midwestern railroads in general began suffering significant carloading losses. In the early 1960s, MILW carred probably something like 1.8 million carloads. In the mid-1960s, MILW began losing nearly 150,000 carloads per year. No doubt this was in part due to larger capacity equipment, but also because of Interstate Highway work. The Interstate system in Wisconsin, for instance, was completed in 1969.

Oddly, during this period of carloading losses, the OR for MILW and CNW actually improved. Traffic analysis shows that the two companies were apparently losing short haul traffic to the highways, and this actually improved their bottom lines. The Burlington, on the other hand, continued a 20 year trend of deterioriating Operating Ratios, so it's not as clear as it might be what was going on.

In 1967, MILW carried approximately 230,000 carloads of freight on its Western Lines, about half of which was transcontinental as measured by the car count at Avery.

After the BN merger conditions took effect, MILW annual system-wide carloading losses continued, but dropped to half of the annual losses compared to prior to the merger.

Continued losses on Lines East were offset by significant increases on Lines West. From 230,000 in 1967, by 1977, Lines West was originating, terminating, and connecting 330,000 carloads, 150% of the levels of ten years earlier.

VPO Paul Cruikshank's comments to the ICC, that an additional $64 million [1977 dollars] could not be carried because of equipment shortage, represents over 100,000 additional carloads at the $635 average carload revenue of Western traffic in 1977.

BAH found, however, that the average carload of uncarried traffic represented about $1,100 in revenue, and so that would mean about 58,000 carloads.

Either way, it is clear why Lines West went from 2-4 trains per day prior to the BN merger, to 6-10 trains per day afterwards. The carloadings increased from 230,000 to 330,000, and would have been between 380,000 and 430,000 carloads had equipment been available.

Now, Greyhounds suggests that Milwaukee didn't have "too much business," and punctuates this by his "poor Sol" remarks.

Yet, the physical plant out West was pounded to pieces by something and it was not simply deteriorating by lack of use. Rather, the statistical record clearly shows that the enormous upsurge in traffic exceeded the Milwaukee's ability to maintain the track as well as provide an adequate car supply. It had more business than it could handle. Paul Cruikshank and I cordially disagree about the Milwaukee on many things, but that isn't one of them.

Since Greyhounds offers that "he knows" the real reasons, and because he suggests a rationale that is specifically contrary to the written record, I want to know what he specifically bases his comments on, and I want to see them posted to this thread so that they can be examined in the light of the available written record.

Best regards, Michael Sol

[nanaimo73]

Murphy-
Management should get most of the blame. The Milwaukee Road almost took over the Chicago and North Western in the 1950s and seemed to spend the next 25 years waiting for this merger. During this time the C&NW expanded into St. Louis (Litchfield and Madison). Then they added the Minneapolis and St. Louis, keeping the best parts and abandoning the rest. Next they got to Kansas City by grabbing the Chicago Great Western. Then the C&NW got some valuable pieces of the Rock Island.
The Milwaukee Road had way too much light density track and took to long to try to get rid of it.
There is still over 4,700 miles of the Milwaukee Road being operated (not counting the trackage rights they had). The DME-ICE have over 1,100 miles, BNSF have about 1,100 miles, Canadian Pacific has about 600 miles, WSOR about 500 miles and about 30 other companies run parts as well.

[MP173]

Michael:

Back off on the "free cash flow" comments to Hegewich. He never brought it up...you did.

As far as him "ignoring" it, you are getting way too wrapped up in semantics. He didnt have the financial data and thus he couldnt "ignore" it.

You bring up a lot of good points...but remember this....we are not your college students nor are we studying for the next test. Most of us here are working and have distractions going on in our lives other than 100% Milwaukee Road.

And please, dont even say I am name calling, etc. For the most part I tend to find most of what you have to say interesting. Perhaps I dont agree with all of it, but it is interesting.

ed