dakotafred My, it was instructive to watch Harrison on Bloomberg today. He hardly looked or sounded enfeebled by age, as one or two on here have suggested (thinking wishfully?) that he is.
My, it was instructive to watch Harrison on Bloomberg today. He hardly looked or sounded enfeebled by age, as one or two on here have suggested (thinking wishfully?) that he is.
Now that was good for a chuckle.
Typically, when your over the age of 65 and then when a Board of Directors only does yearly extensions of your contract it means they think your old......although it is not politically correct to say so, it is a pretty big hint your in the sunset years as far as that current Company is concerned. If CP was as enamored with him as you think they should be they would have extended his tenure by 3-5 years and from his comments that is what it seems he wants BUT it was not offered by the Board and it is highly likely they are NOT going to grant year by year extensions as that creates uncertainty in the company and Wall Street would probably not support it.
High Probability that EHH is gone from CP after 2017 and he probably knows it.
CMStPnP High Probability that EHH is gone from CP after 2017 and he probably knows it.
Thanks to Chris / CopCarSS for my avatar.
Excerpt from the Globe and Mail, Nov. 23
http://www.theglobeandmail.com/report-on-business/no-plans-to-move-cp-rail-headquarters-out-of-canada-ceo-says/article27438287/
Canadian Pacific Railway Ltd. expects to generate substantial proceeds by selling surplus land owned by Norfolk Southern Corp. if its proposed $28-billion (U.S.) takeover of the U.S. railroad goes ahead.
“I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.”
Excerpt from the Globe and Mail, Dec. 7, 2012
http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/cps-hunter-harrison-there-is-a-new-sheriff-in-town/article6122334/
It has been 16 months since Hunter Harrison, the crusty, Memphis-born railway legend hauled himself to a New York museum he can’t remember for a business lunch he’ll never forget.
The locale was the Museum of Modern Art and his dining companion was Bill Ackman, master of the modern art of shareholder activism. Mr. Harrison had only just met Mr. Ackman that morning, in August, 2011. But when the 2 1/2 -hour meal ended, the gruff railroader and the blunt hedge fund mogul shook on a deal that would culminate in a humiliating boardroom coup at Canadian Pacific Railway this May and hand Mr. Harrison the controls at the struggling carrier.
Earlier this week, Mr. Harrison sat down in yet another museum he has never heard of – the Art Gallery of Ontario – to revisit the “godawful” lows of the CP proxy battle along with the early triumphs of his first six months at the Calgary-based railway.
Before that, however, there is the tricky business of food-ordering at Frank, an austere maple-panelled restaurant named after AGO architect Frank Gehry. It’s a proposition that Mr. Harrison, a hard-core red-meat man, now finds taxing because, in addition to fixing CP, Mr. Ackman is trying to make over Mr. Harrison.
“He’s got me on to a trainer and his personal nutritionist,” says Mr. Hunter, shifting his well-upholstered, 68-year-old frame into his chair.
“I lost 12 pounds in the first two weeks.” How? “I have that Greek yogurt stuff with berries, power bars, protein shakes and sugar-free popsicles to fight the munchies.”
As for alcohol, the man with the bourbon-soaked southern drawl says: “I have cut it out completely.” Pausing to offer me a toothy grin, he adds, “Except when I drink.”
And so, as he scans the menu, Mr. Ackman’s newest fitness disciple looks past the beet salad, vegetarian pozole and chestnut soufflé and exclaims: “My eyes are drawn immediately to this.” A beef burrito.
Which is to say that, even though Mr. Harrison is backed by Mr. Ackman (“a real player”), has negotiated the richest salary of his career (“I said, ‘I don’t think you can afford me.’ He said: ‘Don’t kid yourself.’”), and commutes on his private jet (“one of the little things I bought for myself,”), he is still essentially the same hard-nosed railroader who began his career 49 years ago squirting oil at the underbellies of trains.
https://ca.shine.yahoo.com/photos/canada-s-10-highest-paid-ceos-in-2012-slideshow/former-canadian-national-railway-president-photo-181742388.html
Murphy Siding CMStPnP High Probability that EHH is gone from CP after 2017 and he probably knows it. ....Unless he is at the center of some big, harry thing like a mrger or something..
....Unless he is at the center of some big, harry thing like a mrger or something..
or dead
Never too old to have a happy childhood!
wanswheel“I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.”
That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run.
Norm
Harrison has a succession plan at CP. Keith Creel, his long time protege, will take over, If a merger does happen, in all likelihood Creel or Squires would get the top job.
Norm48327 wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run.
wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.”
Maybe. Or maybe he knows that there is a lot of dead wood and waste at NS that can be converted to finance the takeover and to make it more efficient. I do not know. EHH has a mixed history, for sure, but it strikes me as a bit odd that all the unrestrained, "free market rules!" types on here seem so hostile to him.
C&NW, CA&E, MILW, CGW and IC fan
schlimm Norm48327 wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run. Maybe. Or maybe he knows that there is a lot of dead wood and waste at NS that can be converted to finance the takeover and to make it more efficient. I do not know. EHH has a mixed history, for sure, but it strikes me as a bit odd that all the unrestrained, "free market rules!" types on here seem so hostile to him.
As is that it seems that one of EHH's biggest defenders on this thread is one that is usually towards the left on such matters of CEOs and corporations.
Jeff
Suppose he knows other ways to sqeeze money out of a corporation that other, less timid railroad managers might not be interested in chasing down? Let's just say for example, that EHH knows that there are some big efficiencies to be made up by running 13,000 foot freight trains through Chicago suburbs. If that makes the railroad more efficient, surely nobody should voice any concern-right? I'd have to believe that the STB would look at all the ramifications of a merger on the transportaion system of our country and the effect on the national economy beore allowing the next mega-merger. To be approved, a mega-merger would have to prove better for everyone in general, not just for a hedge fund hoping to make a quick buck. Side note: When I read about hedge funds and such and some of their tactics, it makes me think of the German banker who was playing games with the money policies in his country after World War 1 for his own benefit, triggering hyperinflation and other issues that followed on.
jeffhergert schlimm Norm48327 wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run. Maybe. Or maybe he knows that there is a lot of dead wood and waste at NS that can be converted to finance the takeover and to make it more efficient. I do not know. EHH has a mixed history, for sure, but it strikes me as a bit odd that all the unrestrained, "free market rules!" types on here seem so hostile to him. As is that it seems that one of EHH's biggest defenders on this thread is one that is usually towards the left on such matters of CEOs and corporations. Jeff
I only defend his position as a legitimate one. Personally and philosopically, I do not think his cost-cutting at IC, CN and CP is good in the larger sense of social responsibility. But from a pure, "making a profit is our business, our only business" perspective, his attempt to rationalize the inefficiencies in North American railroading should be applauded, especially by all the "free market" "government is bad" folks on here.
To borrow a metaphor from the Battle of Jutland, this seems like it is really the cruiser squadrons skirmishing. The big guns of the dreadnoughts have not yet spoken, but they are moving in to position. If Norfolk Southern is going to be owned by a holding company, do we all really think it will be CP? It is an interesting time indeed and will be fascinating to watch play out, for sure.
kgbw49 To borrow a metaphor from the Battle of Jutland, this seems like it is really the cruiser squadrons skirmishing. The big guns of the dreadnoughts have not yet spoken, but they are moving in to position. If Norfolk Southern is going to be owned by a holding company, do we all really think it will be CP? It is an interesting time indeed and will be fascinating to watch play out, for sure.
What? Did Warren Buffet shoot you an e-mail?
I'm assuming the Holding Company would be a way to navigate the legal pitfalls associated with the merger;when Burlington Northern tried to acquire Canadian National back in the 90's they planned to use a similiar scheme. The holding company in that case was to be called North American Transportation.
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
Excerpt from Wall Street Journal, Nov. 25
http://blogs.wsj.com/moneybeat/2015/11/25/dealpolitik-canadian-pacific-deal-faces-steep-uphill-grade/
To implement a voting trust requires formal STB approval following public comment. The STB would have to make a finding that the use of the trust is consistent with the public interest.
We don’t know how long the trust approval process would take because it doesn’t appear that there has been a proceeding relating to a major transaction since the current rules were put in place more than a decade ago.
Jeff's echoed my thoughts on this perfectly. It's about stock valuation in the face of a lacklustre economic situation in Canada and tepid recovery in America. I'm sceptical there is any material upside, stock prices is what this is about.
The voting trust is an interim step, to hold the deal in place pending STB approval. Each railroad retains its own separate identity, but the ownership and management is coordinated more than the previous status. It's kind of like an engagement before the marriage ceremony takes place.
A voting trust keeps the eggs from being scrambled in the first place, so the tentative merger is easier to unwind if the deal isn't approved. I believe the last time one was actually used was the abortive SF+SP merger back in the early 1990's.
- Paul North.
Supposedly E. Hunter Harrison's prime skill is improving railroad's operations.
wanswheel Excerpt from the Globe and Mail, Nov. 23 http://www.theglobeandmail.com/report-on-business/no-plans-to-move-cp-rail-headquarters-out-of-canada-ceo-says/article27438287/ Canadian Pacific Railway Ltd. expects to generate substantial proceeds by selling surplus land owned by Norfolk Southern Corp. if its proposed $28-billion (U.S.) takeover of the U.S. railroad goes ahead. “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” . . . [snipped - PDN]
“I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” . . . [snipped - PDN]
But maybe NS is thinking of long-term plans, and doesn't want to foreclose its options by selling adjoining land that might be useful in the future, and which it would be unable to buy back after that land has been sold and converted to other uses. NS seems to be sophisticated enough about real estate matters, too - it has its own real estate arm:
http://www.nscorp.com/content/nscorp/en/real-estate/about-norfolk-southern-real-estate.html
plus Pocohontas Land Corp., mostly coal resource land:
http://www.nscorp.com/content/nscorp/en/about-ns/subsidiaries/pocahontas-land-corporation.html
Murphy Siding Harrison's Operational Mode is to run trains on a tight schedule. Container traffic is the commodity that you want to keep on a reliable schedule. If you can beat the competition (usually trucks), you can win the service. Now if you're just delivering to Chicago, that's not a problem, until you consider a water-level route like the old Illinois Central from New Orleans into Chicago. Less fuel would be used (both by container ship and train) from Asia to Chicago by New Orleans than by Montreal. So there is no market growth there. If you going through Chicagoland to Kansas City, Milwaukee or Minneapolis, and you can't get a train through Chicago, how in the heck could a schedule be kept? That's problem #1. Problem #2 is The Detroit-Windsor Tunnels, which are currently only single stack capable. Harrison can fix problem #2, but without fixing problem #1, it's a waste of Capital Dollars. Technically, CP can run around Lakes Huron and Superior to fix problem #1, bypassing Chicago, but the line generates little on-line traffic. And it's the long way into Chicago, Milwaukee, Minneapolis or Kansas City, via Thunder Bay, Ontario. Think of the line around the north side of the Great Lakes as a VERY LONG BRIDGE, getting you from one side of where traffic is generated to the other side, but generating no revenue (kind of like the D&H). So the traffic producing parts of the railroad have to pay for a line that connects them. In the long run, that's no way to be efficient. EHH, Ackman and CP need a line that generates traffic over every mile and they want to cut anything that doesn't (say goodbye to the D&H). If they can ever get to scheduling Double-Stack trains from Montreal, through Toronto, Mississauga, Windson, Detroit, Chicago, Milwaukee and Minneapolis or Kansas City, they'll make real money (and dump the North Shore route). Now with that being said, either CSX or NS allows Harrison to get through Chicagoland on a schedule. And remember, he said that he'd trade "open access" for any merger. EHH and Bill Ackman NEED control of the Indiana Harbor Belt to get their trains through. That means CSX or NS who each own 25.5% of it. Also, from a blog post I wrote https://www.blogger.com/blogger.g?blogID=1158766641710713668#editor/target=post;postID=1000680567962151355;onPublishedMenu=posts;onClosedMenu=posts;postNum=2;src=postname, CP's piece of the intermodal container freight pie is limited as to the markets that they serve. With the opening of the new PanaMax Lane of the Panama Canal, it will be cheaper to ship containers to the East Coast of the US and have trains to Market Cities (e.g. Atlanta, Cincinnati, Kansas City, Dallas, etc.) docked on an Atlantic Ocean port and shipped to a market in that region than shipping containers transcontinentally by rail. wanswheel Excerpt from The Globe and Mail, Nov. 9 http://www.theglobeandmail.com/report-on-business/canadian-pacific-said-to-explore-norfolk-southern-takeover/article27176306/ Benoit Poirier, an equities analyst with Desjardins Capital Markets, noted................................ Mr. Harrison has made strides to improve CP’s efficiency and profitability. Building a better rail network and applying his operational model to the underperforming Norfolk Southern.................... What is Harrison's operational model that is so different from everybody else?
Harrison's Operational Mode is to run trains on a tight schedule. Container traffic is the commodity that you want to keep on a reliable schedule. If you can beat the competition (usually trucks), you can win the service. Now if you're just delivering to Chicago, that's not a problem, until you consider a water-level route like the old Illinois Central from New Orleans into Chicago. Less fuel would be used (both by container ship and train) from Asia to Chicago by New Orleans than by Montreal. So there is no market growth there.
If you going through Chicagoland to Kansas City, Milwaukee or Minneapolis, and you can't get a train through Chicago, how in the heck could a schedule be kept? That's problem #1.
Problem #2 is The Detroit-Windsor Tunnels, which are currently only single stack capable. Harrison can fix problem #2, but without fixing problem #1, it's a waste of Capital Dollars.
Technically, CP can run around Lakes Huron and Superior to fix problem #1, bypassing Chicago, but the line generates little on-line traffic. And it's the long way into Chicago, Milwaukee, Minneapolis or Kansas City, via Thunder Bay, Ontario. Think of the line around the north side of the Great Lakes as a VERY LONG BRIDGE, getting you from one side of where traffic is generated to the other side, but generating no revenue (kind of like the D&H). So the traffic producing parts of the railroad have to pay for a line that connects them.
In the long run, that's no way to be efficient. EHH, Ackman and CP need a line that generates traffic over every mile and they want to cut anything that doesn't (say goodbye to the D&H). If they can ever get to scheduling Double-Stack trains from Montreal, through Toronto, Mississauga, Windson, Detroit, Chicago, Milwaukee and Minneapolis or Kansas City, they'll make real money (and dump the North Shore route).
Now with that being said, either CSX or NS allows Harrison to get through Chicagoland on a schedule. And remember, he said that he'd trade "open access" for any merger. EHH and Bill Ackman NEED control of the Indiana Harbor Belt to get their trains through. That means CSX or NS who each own 25.5% of it.
Also, from a blog post I wrote https://www.blogger.com/blogger.g?blogID=1158766641710713668#editor/target=post;postID=1000680567962151355;onPublishedMenu=posts;onClosedMenu=posts;postNum=2;src=postname, CP's piece of the intermodal container freight pie is limited as to the markets that they serve. With the opening of the new PanaMax Lane of the Panama Canal, it will be cheaper to ship containers to the East Coast of the US and have trains to Market Cities (e.g. Atlanta, Cincinnati, Kansas City, Dallas, etc.) docked on an Atlantic Ocean port and shipped to a market in that region than shipping containers transcontinentally by rail.
wanswheel Excerpt from The Globe and Mail, Nov. 9 http://www.theglobeandmail.com/report-on-business/canadian-pacific-said-to-explore-norfolk-southern-takeover/article27176306/ Benoit Poirier, an equities analyst with Desjardins Capital Markets, noted................................ Mr. Harrison has made strides to improve CP’s efficiency and profitability. Building a better rail network and applying his operational model to the underperforming Norfolk Southern....................
Excerpt from The Globe and Mail, Nov. 9
http://www.theglobeandmail.com/report-on-business/canadian-pacific-said-to-explore-norfolk-southern-takeover/article27176306/
Benoit Poirier, an equities analyst with Desjardins Capital Markets, noted................................ Mr. Harrison has made strides to improve CP’s efficiency and profitability. Building a better rail network and applying his operational model to the underperforming Norfolk Southern....................
What is Harrison's operational model that is so different from everybody else?
zugmann oltmannd I don't think so. NS doesn't need autorouter/movement planner to centralize. Just having UTCS is enough. Any desk can be dispatched from any other desk on the system right now. But, NS's whole operations managment is decentralized to a greater degree than on other roads. Most places, whether to run an extra or annul a train is made by a central office. On NS, these decisions are made at the division level - sometime to the detriment of the network as a whole. That would have to change before you'd see consolidated distpatch offices. UTCS without autorouter required people to run the system. With autorouter enabled, not as much. I think that will be the key to consolidation (if it ever gets to the point of running the railroad unencumbered). And you know many of those decisions made at the division level used to be made at the local level. It's heading in that direction already. CYO/OSS now handles all customer issues - many of which were at one time local decisions. Writing's on the wall. I could be wrong, but I would be surprised.
oltmannd I don't think so. NS doesn't need autorouter/movement planner to centralize. Just having UTCS is enough. Any desk can be dispatched from any other desk on the system right now. But, NS's whole operations managment is decentralized to a greater degree than on other roads. Most places, whether to run an extra or annul a train is made by a central office. On NS, these decisions are made at the division level - sometime to the detriment of the network as a whole. That would have to change before you'd see consolidated distpatch offices.
UTCS without autorouter required people to run the system. With autorouter enabled, not as much. I think that will be the key to consolidation (if it ever gets to the point of running the railroad unencumbered). And you know many of those decisions made at the division level used to be made at the local level. It's heading in that direction already. CYO/OSS now handles all customer issues - many of which were at one time local decisions. Writing's on the wall.
I could be wrong, but I would be surprised.
I hope you are wrong, but suspect you have a point. Looking at UTCS w/autorouter as a vehicle to reduce headcount in the division office should be WAY down on the priority list of things "to do", but....
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Talk to the bank.
If this goes through, it makes one wonder how leveraged the deal will be.
Railroad operator CSX Corp. (CSX) on Wednesday lowered its earnings forecast for fiscal 2015, noting that coal headwinds have increased for the remainder of the year.
http://www.rttnews.com/2482857/csx-lowers-2015-earnings-outlook.aspx
Next?
The stock dropped 1.56%
Norfolk Southern Corp. has rejected Canadian Pacific Railway Ltd.’s unsolicited acquisition offer, valued at over $28 billion, saying the tie-up undervalues the company and is unlikely to be cleared by regulators.
In a news release, Norfolk Chief Executive James A. Squires said there was a “high probability” that the deal would be rejected by the U.S. rail-industry regulator, the Surface Transportation Board.
http://www.wsj.com/articles/norfolk-southern-rejects-canadian-pacifics-offer-1449232264
NSC stock dropped over 6% early Friday on news of rejection of CP bid and shareholder lack of confidence in Squires' probability of cost-cutting in 2016.
http://www.nscorp.com/content/nscorp/en/news/norfolk-southernboardofdirectorsunanimouslyrejectsunsolicitedind.html
A very fancy, detailed and wordy, "No, thanks!"
Probably moot now, excerpt from Credit Suisse webcast transcript
http://www.cpr.ca/en/investors-site/Documents/CS-Transcript.pdf
ALLISON LANDRY
Since then it was a couple of weeks since we’ve heard from you last. Has there been any discussion with either Squires, or you know, (unclear). I’m sure you’ve been talking to shareholders.
HUNTER HARRISON
Oh yeah, I mean there’s -- I think that our friends at NS have indicated that we’d be receiving a response from them I think soon. So I think we will hear from them…
Takeover wars seem to have lost their sizzle. What happened to the battles of corporate goliaths? Where have they gone, those swaggering deal makers? "Harriman vs. Hill" is a corporate dust-up that takes us back to the beginning of the 20th century, when tycoons who traveled by private rail merrily raided each other's empires while the world around them cringed.....
http://www.wsj.com/articles/SB10001424052702303496804579369203810705602
Is there any chance of Harrison at CP launching a hostile take over attempt?
A hostile takeover might be possible but it would be expensive, think back to the takeover mania of the 1980's. It might also leave the surviving corporation in poor financial shape.
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