overall Let's play "what if". What if 2019 comes and CSX is bankrupt after two years of mis-management by EHH. Does either UP or BNSF step in and buy the whole thing to extend their reach into the southeast? Does CSX get divided up among the railroads it interchanges with i.e. UP,NS,BNSF and maybe CN? Does CN or CP try to buy the whole thing? Because the STB is generally against mergers and aquisitions, does the federal government take over and try to fix CSX ala Conrail from the 70's? Is there something else that I haven't thought of? Thank all of you in advance for your input. If the remaining Class I's buy this beast they'll probably slowly or immediately abandon or sell off as much of the system as possible. They aren't willing to invest much of anything to upgrade or repair the CSX machinery or rehire the people needed to help it get back up and running. All the Class I railroads need federal government grants, they just don't want to admit it.
Let's play "what if". What if 2019 comes and CSX is bankrupt after two years of mis-management by EHH.
Thank all of you in advance for your input.
If the remaining Class I's buy this beast they'll probably slowly or immediately abandon or sell off as much of the system as possible. They aren't willing to invest much of anything to upgrade or repair the CSX machinery or rehire the people needed to help it get back up and running. All the Class I railroads need federal government grants, they just don't want to admit it.
Karl Scribner
Sunfield Twp. Michigan
Kentucky Southern Railway
samfp1943 If CSX were judiciously slimmed down somewhat, it may become a more attractive partner to CP or whoever would pair up with it.samfp1943 A McIntosh One other possibility is that CSX could have done to it what the IC pre Harrison went through, that is , spinning off some of the secondary lines to G&W and other shortline and regional operators to get it down as close to the core system as possible. That 'period' was also the time(70's/80's(?) that the 'Mainline of Mid-America' was mostly reduced from a double tracked speedway to a one-tracked, w/CTC, more pedestrian railroad. IC Industries, was formed and picked up some non-railroad side businesses ( Whitman's Chocolates,Pepsi Bottlers were a couple, I recall (?). The 1980's passage of the Staggers Act allowed the IC to divest itself of some of its excess track, and prepared it for the eventual combination with the Canadian National.Remember that EHunter Harrison was with SLSF and then the BN(post merger w/Frisco) and with the ICRR 1989/1998; then on to CNR as it acquired IC in 1998. A McIntosh One other possibility is that CSX could have done to it what the IC pre Harrison went through, that is , spinning off some of the secondary lines to G&W and other shortline and regional operators to get it down as close to the core system as possible. That 'period' was also the time(70's/80's(?) that the 'Mainline of Mid-America' was mostly reduced from a double tracked speedway to a one-tracked, w/CTC, more pedestrian railroad. IC Industries, was formed and picked up some non-railroad side businesses ( Whitman's Chocolates,Pepsi Bottlers were a couple, I recall (?). The 1980's passage of the Staggers Act allowed the IC to divest itself of some of its excess track, and prepared it for the eventual combination with the Canadian National.Remember that EHunter Harrison was with SLSF and then the BN(post merger w/Frisco) and with the ICRR 1989/1998; then on to CNR as it acquired IC in 1998.
If CSX were judiciously slimmed down somewhat, it may become a more attractive partner to CP or whoever would pair up with it.
samfp1943 A McIntosh One other possibility is that CSX could have done to it what the IC pre Harrison went through, that is , spinning off some of the secondary lines to G&W and other shortline and regional operators to get it down as close to the core system as possible. That 'period' was also the time(70's/80's(?) that the 'Mainline of Mid-America' was mostly reduced from a double tracked speedway to a one-tracked, w/CTC, more pedestrian railroad. IC Industries, was formed and picked up some non-railroad side businesses ( Whitman's Chocolates,Pepsi Bottlers were a couple, I recall (?). The 1980's passage of the Staggers Act allowed the IC to divest itself of some of its excess track, and prepared it for the eventual combination with the Canadian National.Remember that EHunter Harrison was with SLSF and then the BN(post merger w/Frisco) and with the ICRR 1989/1998; then on to CNR as it acquired IC in 1998.
A McIntosh One other possibility is that CSX could have done to it what the IC pre Harrison went through, that is , spinning off some of the secondary lines to G&W and other shortline and regional operators to get it down as close to the core system as possible.
One other possibility is that CSX could have done to it what the IC pre Harrison went through, that is , spinning off some of the secondary lines to G&W and other shortline and regional operators to get it down as close to the core system as possible.
That 'period' was also the time(70's/80's(?) that the 'Mainline of Mid-America' was mostly reduced from a double tracked speedway to a one-tracked, w/CTC, more pedestrian railroad. IC Industries, was formed and picked up some non-railroad side businesses ( Whitman's Chocolates,Pepsi Bottlers were a couple, I recall (?). The 1980's passage of the Staggers Act allowed the IC to divest itself of some of its excess track, and prepared it for the eventual combination with the Canadian National.Remember that EHunter Harrison was with SLSF and then the BN(post merger w/Frisco) and with the ICRR 1989/1998; then on to CNR as it acquired IC in 1998.
daveklepperWhat evidence is there that HH studied CSX's operations in detail before instituting changes? Again, it appears to me that he simply assumed that what worked for CN and CP would also work for CSX.
Exactly. In fact, when he was chasing NS, he said things that showed this.
He'll reduce OR at CSX, but not nearly as far as his proponents are assuming.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
If CSX reduced itself to only the triangle and nothing else, it would find NS even tougher competition. NS is less direct to Florida (from the northeast but not from the midwest and Chicago), but can be competitive, and has better coverage of a growing Southeast already. Add the Meridian shortcut to the western connections, the greater revenue and ton-miles would go to NS.
CSX has to keep some of the spaghetti in the spaghetti bowl to be competitive.
To a significant extent, CSX (and for that matter NS) have done most of the route shaving that would make sense. CSX did a ton of it around 2004-2006, even in good traffic times. There's very little left in terms of branchlines that would make sense to shortline, except for perhaps some new opprotunities in the coal fields, now that the coal sector is significantly weaker than in the past.
The real "core" of CSX is their "CSX of Tomorrow" Triangle between Chicago, the Northeast, and Florida. Only keeping that core would ignore tons of medium-density lines in the middle which feed the outer superhighways that make up their triangle.
So I think you can add this to the "low hanging fruit" basket, long since picked off by Harrison's predecessors at CSX.
daveklepperBut how can CSX ever compensate shippers and receivers whose business suffered because of car shortages and missed deliveries?
CSX could compensate them by offering better service than in the past, and explain that the cost of the improvement was a short term disruption as the changes were made.
What evidence is there that HH studied CSX's operations in detail before instituting changes? Again, it appears to me that he simply assumed that what worked for CN and CP would also work for CSX. But he isn't dumb. He apparently is learning, and am willing to grant the possibility, but not a guarantee, that he may leave the system overall better off than before.
Some business that went from CSX to NS and to trucks may then return.
But how can CSX ever compensate shippers and receivers whose business suffered because of car shortages and missed deliveries?
Saturnalia...while operations have suffered,...
If you're trying to improve a property, why would you institute changes that cause operations to suffer? This isn't the UP/SP meltdown where the attempt to merge various parts of the system went badly. This is an established business. Can there be improvements? Without a doubt. Can they be made without the amount of disruption we seen?
Saturnalia...he hasn't made many changes which couldn't be easily undone,...
If succeeding management will have to undo changes, why make them in the first place?
The underlying belief with regard to his actions seems to be that he's making changes that will benefit his handlers in the short term.
Perhaps if he'd outline what he has in mind for an end-state (other than the nebulous "precision scheduled railroading," folks wouldn't be so doubtful of his motives.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Norm48327 What was accomplished by management before Harrison's arrival at CSX? In my mind management wasn't asleep back then and were playing ' follow the leader' to a degree. Harrison came in with his slash and burn phylosophy and set CSX on a course toward destruction. He did well at IC and CN but when he took over CP he failed and left things for his follower to clean up. Watching closely to see what mess he leaves behind.
What was accomplished by management before Harrison's arrival at CSX? In my mind management wasn't asleep back then and were playing ' follow the leader' to a degree. Harrison came in with his slash and burn phylosophy and set CSX on a course toward destruction. He did well at IC and CN but when he took over CP he failed and left things for his follower to clean up.
Watching closely to see what mess he leaves behind.
As I've said before, Harrison leaving some bits to cleanup for his sucessor is nothing new...but it has never been a huge mess, so it is doubtful that it'd happen again.
Yes, the previous management was making cuts, but there are plenty of examples where they cut with just as dull a knife as many argue Harrison does. In many cases the gain was minimal, while causing a significant amount of headaches or circuitous routing. At least Harrison's methodology places *some* emphasis on good operational outcomes.
Sometimes I really wonder what "mess" Harrison has created here. To the best of my observation, while operations have suffered, he hasn't made many changes which couldn't be easily undone, except for perhaps middle management.
Harrison will find his balance with CSX's network - and if he does that, there won't be much "mess" left behind.
SaturnaliaPaul_D_North_Jr Don't make the mistake of giving the man credit for something he had little to do with - he's benefitted from that for years (CN). In this case, my reference to his changes at CN and CP were more on the ground of "long term operational damage" than financial impacts. As in, he didn't hurt those companies with his changes. Clearly he helped CP, and CN did *at least* just fine under his tenure. Obviously there's always the debate about how much can be attributed to him!
Don't make the mistake of giving the man credit for something he had little to do with - he's benefitted from that for years (CN).
In this case, my reference to his changes at CN and CP were more on the ground of "long term operational damage" than financial impacts. As in, he didn't hurt those companies with his changes. Clearly he helped CP, and CN did *at least* just fine under his tenure. Obviously there's always the debate about how much can be attributed to him!
Norm
Paul_D_North_Jr Don't make the mistake of giving the man credit for something he had little to do with - he's benefitted from that for years (CN).
Q2 EHH was there (barely), but his changes hadn't yet started taking effect. That's Q3 and after.
- PDN.
Saturnalia The problem with your speculation is multi-fold, but I'll just punch out the big ones. 1. EHH wouldn't be allowed to stay on all the way to bankruptcy. If he's actually driving it into the ground, he's out by early 2018. 2. Railroads don't go bankrupt from trimming operations Harrison style. Keep in mind they're not losing any money, and Q2 was stellar on the long-term. Based on the numbers we have, Q3 will be pretty good, even if it is backtracking from Q2. 3. CSX isn't losing money 4. CSX isn't losing money 5. CSX isn't losing money 6. Harrison has done this same thing before and CP and CN are doing just fine, in the years after he leaves, some pieces are added back in, but he has never done any long-term financial harm to any company he's managed.
The problem with your speculation is multi-fold, but I'll just punch out the big ones.
1. EHH wouldn't be allowed to stay on all the way to bankruptcy. If he's actually driving it into the ground, he's out by early 2018.
2. Railroads don't go bankrupt from trimming operations Harrison style. Keep in mind they're not losing any money, and Q2 was stellar on the long-term. Based on the numbers we have, Q3 will be pretty good, even if it is backtracking from Q2.
3. CSX isn't losing money
4. CSX isn't losing money
5. CSX isn't losing money
6. Harrison has done this same thing before and CP and CN are doing just fine, in the years after he leaves, some pieces are added back in, but he has never done any long-term financial harm to any company he's managed.
+1 Bankruptcy is not happening.
I agree Saturnalia... and from what I've seen (albeit a far away bystander) things are starting to come 'round.
If EHH is allowed to stay in charge as CSX circles the drain from his decisions and the rest of the stockholders allow it to happen - they will deserve the bankruptcy.
However, the 93% that voted EHH in can't be as terminally stupid as their votes in that instance were. They bought a snow job in EHH, they are too smart to let EHH take things fully down the drain.
The problems come after EHH departs! Someone will have to build the company back together - from an employee standpoint, from a customer standpoint, from a business standpoint and from a operational standpoint - anyone of which is a mounumental undertaking, but all four?????????? Whoever does it will be Railroader of the 1st Half of the 21st Century.
Never too old to have a happy childhood!
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