JACKSONVILLE, Fla. — Now that E. Hunter Harrison is calling the shots at CSX Transportation headquarters, he faces the same daunting problem that former CEO Michael Ward had to grapple with: How to replace nearly $2 billion in coal revenue that...
http://trn.trains.com/news/news-wire/2017/03/10-hunter-update
Brian Schmidt, Editor, Classic Trains magazine
Brian Schmidt JACKSONVILLE, Fla. — Now that E. Hunter Harrison is calling the shots at CSX Transportation headquarters, he faces the same daunting problem that former CEO Michael Ward had to grapple with: How to replace nearly $2 billion in coal revenue that... http://trn.trains.com/news/news-wire/2017/03/10-hunter-update
From the link as posted by Brian Schmidt:
FTA:"...Minimize car dwell time in yards. Since cars spend most of their time in yards, reducing dwell time is the most effective way to improve car velocity, or the number of miles they travel per day. Minimize car classifications. Switching a car as few times as possible also reduces car cycle times, allowing the railroad to use fewer cars. Build large blocks of traffic or, in lower-density lanes, haul a block as close as possible to the destination to minimize handling at intermediate yards en route. Use multiple traffic outlets. By having more than one way to get a block of cars to its destination, a railroad can balance traffic flows, improve transit times, and reduce the need for extra trains. Run general-purpose trains. A unit train is more efficient only when loading and unloading times are 24 hours or less, the train shuttles between the same origin and destination, and operates seven days a week in each direction. Unless a train meets all three criteria, run the traffic in general-purpose trains. Balance train movements by direction. Canceling trains on low-volume weekend days can leave locomotives and crews in the wrong places, resulting in deadhead moves that increase costs. Minimize power requirements. Get the most out of every locomotive, the most expensive piece of rolling stock on the railroad. Limit hours spent idling and maximize available horsepower. Strive for steady workflow. Avoid surges and lulls by leveling out work as much as possible across every location on the railroad..."
It is one thing to write a 'How To" book, something else to preform that in real life. EHH has done that in his tenures at ICRR,and CN, and CPR...At least he instituted those programs, and was reportedly successful in achieving his goals while there.
I am really curious to know if those programs have outlasted his tenure, and are they still successful? One has to wonder how successful he will be at CSX? It seems what he is proposing is a 180 degree turn around, of a long-held 'company culture'. Is he going to be able to 'win' a place in the 'corporate hearts and minds', without the onus of having to create a "bloodbath" in the ranks; in order to get his way. Does the "Deep Management,[ sort of a shadow-governing group] come together to sabotage EHH's efforts, similarly to what is currently, happening in D.C.?
samfp1943 From the link as posted by Brian Schmidt: FTA:"...Minimize car dwell time in yards. Since cars spend most of their time in yards, reducing dwell time is the most effective way to improve car velocity, or the number of miles they travel per day. Minimize car classifications. Switching a car as few times as possible also reduces car cycle times, allowing the railroad to use fewer cars. Build large blocks of traffic or, in lower-density lanes, haul a block as close as possible to the destination to minimize handling at intermediate yards en route. Use multiple traffic outlets. By having more than one way to get a block of cars to its destination, a railroad can balance traffic flows, improve transit times, and reduce the need for extra trains. Run general-purpose trains. A unit train is more efficient only when loading and unloading times are 24 hours or less, the train shuttles between the same origin and destination, and operates seven days a week in each direction. Unless a train meets all three criteria, run the traffic in general-purpose trains. Balance train movements by direction. Canceling trains on low-volume weekend days can leave locomotives and crews in the wrong places, resulting in deadhead moves that increase costs. Minimize power requirements. Get the most out of every locomotive, the most expensive piece of rolling stock on the railroad. Limit hours spent idling and maximize available horsepower. Strive for steady workflow. Avoid surges and lulls by leveling out work as much as possible across every location on the railroad..."
And it isn't like CSX hasn't been implementing all these ideas since John Snow parachuted out of the corporation. None of these are new concepts and all have previously been implemented in various iterations of the operating plan.
Never too old to have a happy childhood!
Wouldn't the easiest way to replace nearly $2 billion in coal revenue be just to fire a bunch of people and call it a day?
Thanks to Chris / CopCarSS for my avatar.
How about hiring a thousand straight commission sales reps? Nothing wrong with B2B telemarketing.. For some reason the railroads don't do this or at least they don't do it to the same extent as the truckers do. A good old fashioned boiler room operation is what's needed with sales people who aren't afraid to call on prospects and who have the smarts to close deals on the phone...hustle hustle hustle..
Murphy Siding Wouldn't the easiest way to replace nearly $2 billion in coal revenue be just to fire a bunch of people and call it a day?
Balt ACD mentioned that Michael Ward had been implementing some of EHH's ideas mentioned in the Newswire article. Bet he is glad his 'exit' was so timely!
My thought is that the Corporate Game of " Putting lipstick on the pig" is about to start. Guessing that the first moves will be to see Who gets to hold the lipstick, and Who gets to hold the pig? Should be really interesting, to watch from the sidelines.
Those long sidings for Chicago-Waycross are going to come from relaying rail made available by reducing the double track to single track with long sidings on the former B&O east of Greenwich and the former NYC east of Cleveland.
Someone should pass a law right now that specifies that CSX may not be considered "too big to fail" for at least 10 years after Mr Harrison et.al. conclude their little looting expedition. No need to hang the taxpayers for what these folks have in store.
CN and CP turned out fine after EHH's tenure there.. why would CSX be any different? I don't understand the dislike for this man.
Convicted One Someone should pass a law right now that specifies that CSX may not be considered "too big to fail" for at least 10 years after Mr Harrison et.al. conclude their little looting expedition. No need to hang the taxpayers for what these folks have in store.
Every time one of the hedge funds gets involved in something like this I can't help but think of them as corporate raiders; get the money and leave the company a skeleton of it's former self. The stockholders may benefit but will the corporation survive?
Norm
Article is about 3 years old.
http://www.canadianbusiness.com/companies-and-industries/forward-fast/
Quote from the linked article. In the full article, this quote appears towards the end of it.
"Shippers’ advocacy groups are hardly convinced, though. “When Hunter Harrison was at CN, the results were pretty mixed,” says Bob Ballantyne, chairman of the Coalition of Rail Shippers. May concurs. Although CN’s service remained largely unchanged after Harrison’s retirement, the company adopted a gentler approach to customer relations. “One of the problems with Hunter was, he was pretty gruff,” May says. “It was hard to get anything but a ‘screw you’ out of CN if you were complaining.”
By way of illustrating how efficiency and service sometimes clash, May recalls a branch line in Alberta, on which CN served four companies with a 120-car train. One of the customers doubled its business, and wanted 80 cars instead of its usual 40. But a 160-unit train was too long, and CN balked at adding another train. “The response by the railway, initially, was to not give them the service they wanted,” May recalls. “And when pressured, they took away cars from the other customers on that line. But nobody ended up getting what they needed.” Customer service, he says, became thoroughly subordinated to driving profitability for shareholders. “That’s really what’s at the core of what’s wrong with Mr. Harrison’s model.”
Some customers fear CP’s service is now suffering. “Some of our members have expressed concern over how much service, attitude and communications have deteriorated at CP over the last several months,” says Susan Murray, spokesperson for the Forest Products Association of Canada. But customers probably have less leverage than the unions. Their best hope was the Fair Rail Freight Service Act bill, the result of years of complaints and lobbying about rail service in Canada. Unveiled in December, it would give shippers new rights to service contracts with railways, and a new system to resolve disputes. But May calls the legislation underwhelming, saying it benefits railways more than shippers."
Jeff
jeffhergertArticle is about 3 years old. http://www.canadianbusiness.com/companies-and-industries/forward-fast/ Quote from the linked article. In the full article, this quote appears towards the end of it. "Shippers’ advocacy groups are hardly convinced, though. “When Hunter Harrison was at CN, the results were pretty mixed,” says Bob Ballantyne, chairman of the Coalition of Rail Shippers. May concurs. Although CN’s service remained largely unchanged after Harrison’s retirement, the company adopted a gentler approach to customer relations. “One of the problems with Hunter was, he was pretty gruff,” May says. “It was hard to get anything but a ‘screw you’ out of CN if you were complaining.” By way of illustrating how efficiency and service sometimes clash, May recalls a branch line in Alberta, on which CN served four companies with a 120-car train. One of the customers doubled its business, and wanted 80 cars instead of its usual 40. But a 160-unit train was too long, and CN balked at adding another train. “The response by the railway, initially, was to not give them the service they wanted,” May recalls. “And when pressured, they took away cars from the other customers on that line. But nobody ended up getting what they needed.” Customer service, he says, became thoroughly subordinated to driving profitability for shareholders. “That’s really what’s at the core of what’s wrong with Mr. Harrison’s model.” Some customers fear CP’s service is now suffering. “Some of our members have expressed concern over how much service, attitude and communications have deteriorated at CP over the last several months,” says Susan Murray, spokesperson for the Forest Products Association of Canada. But customers probably have less leverage than the unions. Their best hope was the Fair Rail Freight Service Act bill, the result of years of complaints and lobbying about rail service in Canada. Unveiled in December, it would give shippers new rights to service contracts with railways, and a new system to resolve disputes. But May calls the legislation underwhelming, saying it benefits railways more than shippers." Jeff
Guess CSX will have to change their slogan - "It starts with the customer". Now it will have to be "It starts with EHH"
Ulrich CN and CP turned out fine after EHH's tenure there.. why would CSX be any different? I don't understand the dislike for this man.
First off, neither carrier really turned out fine until after new management had a chance to repair the damage to customer service and employee morale after EHH left, as a matter of fact, CP is still trying to fix those issues. CN has had plenty of time to right the ship since EHH left, so they're in a much better position today than when he first left. Instead of just going by what EHH says perhaps you should listen to railroaders and shippers, not to investors and hedge funds(neither of which know a damn thing about how to run a railroad, but certainly know how to make a cash grab).
What has really helped CN is that EHH then moved to CP. CN's new team was aware that EHH often upset customers (their needs got in the way of "operating a precision railroad") and CN has been able to get more than a few to change. This does not happen instantly, since sometimes contracts have to expire. And of course many shippers are captive and don't have the luxury of choice.
CP is still apparently fine but loss of volume leads to long term problems in a capital intensive industry. EHH has only just left; it is too early to say how positive his legacy will be. There may be cracks growing behind the wallpaper!
Convicted OneSomeone should pass a law right now that specifies that CSX may not be considered "too big to fail" for at least 10 years after Mr Harrison et.al. conclude their little looting expedition. No need to hang the taxpayers for what these folks have in store.
My guess is Mantle Ridge will go belly up before CSX. Where is 'The Childrens Fund' these days?
GERALD L MCFARLANE JR Ulrich CN and CP turned out fine after EHH's tenure there.. why would CSX be any different? I don't understand the dislike for this man. First off, neither carrier really turned out fine until after new management had a chance to repair the damage to customer service and employee morale after EHH left, as a matter of fact, CP is still trying to fix those issues. CN has had plenty of time to right the ship since EHH left, so they're in a much better position today than when he first left. Instead of just going by what EHH says perhaps you should listen to railroaders and shippers, not to investors and hedge funds(neither of which know a damn thing about how to run a railroad, but certainly know how to make a cash grab).
He hasn't really said anything to me. I go by what I read and see. The numbers (financial, sales and safety) don't lie. Sure, its not perfect, but CN and CP are far better companies today than they were 20 years ago. I don't know EHH personally, but I wouldn't disparage him based on what I've seen.
Two things:
1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing. (A couple weeks ago I sold off all my 'bubbled' CSX and doubled down on CN, but that's another story.)
2) EHH appears to be 'channeling' John Kneiling on 3 (only) of his 7 precision railroading service-design principles: Minimize car dwell time in yards, minimize car classifications, and minimize power requirements. On most of the others, JGK never expressed an opinion, as far as I know.
On unit trains, John would have disagreed with EHH on 2 of his 3 points - the same O-D pair and and the 7 days a week (they kind of agree on the less than 24 hours to load/ unload - except John would have wanted ~1 hour). Also, on cancelling trains on low-volume weekends and other moves to discourage what EHH views as low margin traffic: John would run any train that makes money above its variable cost in the situation then presented (including what seems like surplus locomotives, track, etc., unless they're worth more being sold or scrapped). Otherwise, I'd go with Kneiling on any differences.
- PDN.
Ulrich why would CSX be any different?
why would CSX be any different?
The buisness prospects for railroads in general were brighter in years past than they are at present. "Slash and Burn" might have more relevance now than it did in the goot olde days.
One thing we are all in agreement on is 1) EHH will enact some radical changes and it will not be the same old same old at CSX 2) we will probably see the final rounds of mergers, which actually is pretty exciting to watch as the end games are played out on the chessboard.
Paul_D_North_Jr1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing.
Paul Tellier seems to receive much praise for being CEO of CNR before EHH. Given the distaste on here for government and bureaucrats, it strikes me as odd that prior to going to CNR in 1993, he was Clerk of the Privy Council and Secretary to the Cabinet of the Government of Canada, i.e., a career government bureaucrat!!
C&NW, CA&E, MILW, CGW and IC fan
schlimm Paul_D_North_Jr 1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing. Paul Tellier seems to receive much praise for being CEO of CNR before EHH. Given the distaste on here for government and bureaucrats, it strikes me as odd that prior to going to CNR in 1993, he was Clerk of the Privy Council and Secretary to the Cabinet of the Government of Canada, i.e., a career government bureaucrat!!
Paul_D_North_Jr 1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing.
ERR wrong there as regards UK,we dont like or trust most politicians! or civil servants.
They are usualy in their own little Whitehall bubble,they are mostly out of touch with Jo public,hence the surprise over the Brexit result.
Don,
gwyn68 ERR wrong there as regards UK,we dont like or trust most politicians! or civil servants. They are usualy in their own little Whitehall bubble,they are mostly out of touch with Jo public,hence the surprise over the Brexit result. Don,
I'd suggest people's like or dislike of government officials and agencies, or politicians for that matter, hinges on what value they percieve they're getting for their tax money.
Take the armed forces for example. Very few people dislike the military in this country because they believe they're getting their money's worth out of them. Other government functions not so much, at least not that they can see.
I'll tell you one thing, I sensed a change in people's attitude toward the EPA thirty years ago. Don't laugh, but remember that movie "Ghostbusters?" Who was the "bad guy" jerk in the film? The New York City cops? The mayor? Nope, it was the EPA guy played by William Atherton. Made me wonder.
Yes the left never got over that one. It's their weak spot...no fun, ever. Fun is officially approved and sanctioned only. Loopy.
schlimm Paul_D_North_Jr 1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing.
TO JEFF HERGERT [March 10, 2017] AND ALL:
Perusing through the posts of this thread it was noted that your thoughts seemed to be more aware of reality that many. Tell me if this hits a bell … Everyone tries to maximize their gains. E. Hunter Harrison is no different, it is just that who he works for (read stockholders) is more influential than, say, a railroad shipping customer. Thus, Harrison maximizes profits, and that maximizing doesn’t allow for others to maximize theirs. Hence, shipping customers are often unhappy. It is an age old situation, a situation that induces violence and discontent in the world.
If everyone understood people’s right to be on a sliding stick (picture something like a slide rule math instrument), for example, they would focus on the overall benefit to everyone on that sliding stick. But, if one wants to maximize their position on the sliding slick to the exclusion of others, well that will cause war. EHH is one that maximizes in a very, very focused way, and the results are not surprising. If, on the other hand, if the focus was on everybody’s right to make money, that sliding stick would eventually move to the maximizing position for a while and everyone would benefit and there would be peace.
It is unlikely that Harrison at CSX will think of others on the sliding stick. He is paid not to. But, that “old” guy’s time left is running out. What will investors do if he drops dead tomorrow?
Myself, I think Harrison has the right concept with “precision railroading.” It is just that precision railroading has to be done with a sliding stick in mind, i.e., others have to benefit too, or eventually nobody will.
I for one will have to see the results before applauding Mr. Harrison. His history does not bode well for customer or labor relations. And in CSX, he will be dealing with quite a different animal than at IC, CN or CP. All of those are relatively linear systems - several far-flung endpoints and usually one or two ways to get between them; perfect for his operating habits. On the other hand, CSX has a network that someone once described as "looking like a bowl full of cooked spaghetti", with multiple ways to get between endpoints and business widely distributed over that network. I know nothing about running a railroad, but it has to be easier to run a linear railroad like those he has run than a spiderweb-type system like CSX. Time will tell.
After the dust settles, do not be surprised to see CSX and CPac married, and EHH at the helm. "Two ways to skin a cat", and the non-compete clause was just a smokescreen.
Vancouver, Chicago, & Eastern.
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