SHhhhh!!!!
jeffhergertIt's not just that finance people are in charge. I believe Lance Fritz has always been in fiance, but I've heard that he wasn't keen on going down the PSR route as hard core as he has done. CEOs are also just employees. They need to deliver what the majority ownership of shares wants. (You don't have to own 51% of shares, just convince the owners totaling 51% of shares to follow the path you've proposed.) If they want large returns, as soon as possible, with no concern of long term ramifications, the managment team had better deliver. Or there will be a new management team in town. In this day and age, I think this affects almost every industry. That being said, I've been working for over 23 years on the railroad. Almost every year it seems we announced record or near record profits. Without the cutting and gutting and termoil that G-55 (a lighter form of PSR) and the more aggressive full blown PSR has brought. Yet it wasn't enough for the activist investors and hedge funds. They saw, and see, money that they think should be in their pocket. Jeff
That being said, I've been working for over 23 years on the railroad. Almost every year it seems we announced record or near record profits. Without the cutting and gutting and termoil that G-55 (a lighter form of PSR) and the more aggressive full blown PSR has brought. Yet it wasn't enough for the activist investors and hedge funds. They saw, and see, money that they think should be in their pocket.
Jeff
I am surprised that the bean counters don't want the OR to be in negative numbers.
Never too old to have a happy childhood!
It's not just that finance people are in charge. I believe Lance Fritz has always been in fiance, but I've heard that he wasn't keen on going down the PSR route as hard core as he has done. CEOs are also just employees. They need to deliver what the majority ownership of shares wants. (You don't have to own 51% of shares, just convince the owners totaling 51% of shares to follow the path you've proposed.) If they want large returns, as soon as possible, with no concern of long term ramifications, the managment team had better deliver. Or there will be a new management team in town. In this day and age, I think this affects almost every industry.
greyhounds SD70Dude You would never have risen to such a high position in a PSR railroad. The first and only goal is keeping the operating ratio low and keeping the shareholders happy. The easiest way to do this in the short term is to make cuts and not try anything new. Finance people don't need to understand the nature of their company's operations because their jobs have nothing to do with that, this also applies to HR. Their purpose is to cut costs and funnel money to the shareholders. That's it. If you can do that at one company, you can do it at any company Well, I didn’t rise to such an elevated position anywhere. But I strongly disagree with the idea that: “Finance people don’t need to understand the nature of their company’s operations.” I’ll use the example of Katie Farmer, the new BNSF CEO. The railroad spent decades developing her recognized innate talents and abilities. Evaluating her as she was moved to positions of ever-increasing responsibility in various departments. She worked in operations, marketing, and finance. Those departments, and others, all interact. And such interactions need to be understood by all those involved. This includes people well below the CEO level. Otherwise, there will be a sub-optimization of the company’s performance. A well-run company will move talented people into various departments so that they develop diverse experience and knowledge. In the end it must all come together well and that won’t happen if one department dominates to the extent that over all corporate performance is harmed. Does every company do this? Hell NO. But the best ones do. I do agree that “The Cult of the OR” got out of hand. Especially at the UP.
SD70Dude You would never have risen to such a high position in a PSR railroad. The first and only goal is keeping the operating ratio low and keeping the shareholders happy. The easiest way to do this in the short term is to make cuts and not try anything new. Finance people don't need to understand the nature of their company's operations because their jobs have nothing to do with that, this also applies to HR. Their purpose is to cut costs and funnel money to the shareholders. That's it. If you can do that at one company, you can do it at any company
"The Cult of the OR" was out of hand when it was first created. I get it, businesses need to be profitable and have an obligation to run efficiently, but obsessively focusing on improving one number was never a good idea, and runs directly against the idea of adding revenue to existing trains where you can.
The finance people have been in the driver's seat for years, and there is precious little real-world experience in today's executive suites. I agree that all executives need to understand the fundamentals of the field in which their company operates, but that's not where the North American business world sits right now.
We had a real good COO (Mike Cory) for a few years who had started out as a labourer on the shop floor in Transcona. He was moved around the company over the years as you described, mostly in various transportation and operations managment positions though he did also spend some time in customer service and marketing.
I think he didn't last as COO because he kept spending money on silly things like double track and new locomotives, as well as adopting a more respectful approach to on-the-ground employee relations, all the Hunter-era harassment disappeared overnight after he was put in charge (it has slowly been coming back since he left).
In his three years Cory did more for CN than every other executive of the last 20 years put together.
Greetings from Alberta
-an Articulate Malcontent
CMStPnP SD60MAC9500 Well it appears Maine potatoes are hitting the rails again! Albeit in a much reduced capacity... Anyhow.. Roughly 3 weeks ago LaJoie Growers LLC/Grand Prix Inc. Shipped two UP reefers full of Maine Russet potatoes billed to the West Coast. I can't share the video here, but if you have a Linkedin account. Login to view the video. Here's the link. https://www.linkedin.com/posts/jay-lajoie-00701939_our-first-two-of-many-up-rail-cars-full-of-ugcPost-6877533451751317504-ufE6 Not sure if this traffic will redevelop, and in order for it too. Rails will have to show consistent reliability. Don't let Penn Central leave a bad taste in your mouth.. This traffic can be regained if the C1's want it. I think this is good news but one item I have always wondered is if they could get the perishible freight expedited in a hot shot type train through Chicago FAST, without all the typical delays and around the congestion. I trully wonder if more perishible West to East Coast and vice versa traffic could not be handled. Because the only reason in my view that rail does not have more of this traffic segment is total shipping time and in my view the culprit is Chicago and it's congestion. Get a train to the West or East Coast in less than 4 days and you got a winner for perishable traffic......in my view.
SD60MAC9500 Well it appears Maine potatoes are hitting the rails again! Albeit in a much reduced capacity... Anyhow.. Roughly 3 weeks ago LaJoie Growers LLC/Grand Prix Inc. Shipped two UP reefers full of Maine Russet potatoes billed to the West Coast. I can't share the video here, but if you have a Linkedin account. Login to view the video. Here's the link. https://www.linkedin.com/posts/jay-lajoie-00701939_our-first-two-of-many-up-rail-cars-full-of-ugcPost-6877533451751317504-ufE6 Not sure if this traffic will redevelop, and in order for it too. Rails will have to show consistent reliability. Don't let Penn Central leave a bad taste in your mouth.. This traffic can be regained if the C1's want it.
I think this is good news but one item I have always wondered is if they could get the perishible freight expedited in a hot shot type train through Chicago FAST, without all the typical delays and around the congestion. I trully wonder if more perishible West to East Coast and vice versa traffic could not be handled. Because the only reason in my view that rail does not have more of this traffic segment is total shipping time and in my view the culprit is Chicago and it's congestion. Get a train to the West or East Coast in less than 4 days and you got a winner for perishable traffic......in my view.
Don't know that speed is required for perishable shipping. It wasn't back when we were kids. Stuff from the PNW and other food growing areas were shipped via circuitous routes in order to give the growers the time to find a buyer for what they were shipping. During trans the product would eventually be sold and the car(s) contining the product would be reconsigned and diverted to the ultimate customer.
SD60MAC9500Well it appears Maine potatoes are hitting the rails again! Albeit in a much reduced capacity... Anyhow.. Roughly 3 weeks ago LaJoie Growers LLC/Grand Prix Inc. Shipped two UP reefers full of Maine Russet potatoes billed to the West Coast. I can't share the video here, but if you have a Linkedin account. Login to view the video. Here's the link. https://www.linkedin.com/posts/jay-lajoie-00701939_our-first-two-of-many-up-rail-cars-full-of-ugcPost-6877533451751317504-ufE6 Not sure if this traffic will redevelop, and in order for it too. Rails will have to show consistent reliability. Don't let Penn Central leave a bad taste in your mouth.. This traffic can be regained if the C1's want it.
I think sector dominance within corporations runs in cycles. At one time with many rails it might have been operations, then marketing. Now it's finance and accounting with PSR riding the wave. That might look very different in a few years if BNSF's approach wins out. If not...?
I agree with Greyhounds that the cream should rise to the top. The problem with P$R and chasing the OR is that said cream probably gets shut down if they propose something like what we're discussing.
You can only do what you're allowed to do, no matter how great an idea sounds.
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...
SD70DudeYou would never have risen to such a high position in a PSR railroad. The first and only goal is keeping the operating ratio low and keeping the shareholders happy. The easiest way to do this in the short term is to make cuts and not try anything new. Finance people don't need to understand the nature of their company's operations because their jobs have nothing to do with that, this also applies to HR. Their purpose is to cut costs and funnel money to the shareholders. That's it. If you can do that at one company, you can do it at any company
greyhounds mudchicken If you were the El Grande Heffe of the Yellow Peril, your Operations manager would simply report back that there is no money to be made in moving potatoes because of the restrictions imposed by the post-PSR regime driven by finance and the lack of "service" that that demands If I were in that position (dream on) his/her giving such a response would cause me to consider requiring him/her to find another source of income. Such a response would indicate that he/she doesn’t understand the micro-economics of our firm. And that should be the first requirement for any high-level position in any company. Railroads are volume driven. Up to the point of congestion, more volume equals lower average costs per load. Get the freight on the railroad if it covers its incremental costs. Adding some potato loads to an existing train cost but few extra bucks. But it can kick up revenue big time. Also, and furthermore, and henceforth, that’s why you’ve got to include the finance people in the assignment. You want the money folks understanding and supporting the endeavor. Not fighting it.
mudchicken If you were the El Grande Heffe of the Yellow Peril, your Operations manager would simply report back that there is no money to be made in moving potatoes because of the restrictions imposed by the post-PSR regime driven by finance and the lack of "service" that that demands
You would never have risen to such a high position in a PSR railroad. The first and only goal is keeping the operating ratio low and keeping the shareholders happy. The easiest way to do this in the short term is to make cuts and not try anything new.
Finance people don't need to understand the nature of their company's operations because their jobs have nothing to do with that, this also applies to HR. Their purpose is to cut costs and funnel money to the shareholders. That's it. If you can do that at one company, you can do it at any company.
Or so think upper management and shareholders.....
Nevermind.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
mudchickenIf you were the El Grande Heffe of the Yellow Peril, your Operations manager would simply report back that there is no money to be made in moving potatoes because of the restrictions imposed by the post-PSR regime driven by finance and the lack of "service" that that demands
If you were the El Grande Heffe of the Yellow Peril, your Operations manager would simply report back that there is no money to be made in moving potatoes because of the restrictions imposed by the post-PSR regime driven by finance and the lack of "service" that that demands. You have already driven anything of a competitive nature over to BNSF.
While you're at it, the Colorado red potato market is basically controlled by UP as SL&RG and SLC can only interchange with UP. (Since UP bailed out of the San Luis Valley and Ed Ellis mishandled the SL&RG, almost all of the San Luis Valley taters leave by truck [taxpayer subsidized] from the packing houses. Anything time sensitive is doomed by the paper barrier at Walsenburg where SL&RG cannot reach BNSF)
OK, as a former marketing guy I just find this stuff fascinating:
https://www.nass.usda.gov/Publications/Todays_Reports/reports/pots0920.pdf
What I see is revenue and profits. Maine produces 3.94% of the potatoes in the US. Idaho and Washington produce 56.51%. (Page 8) And people here eat a lot of potato stuff. (65.5 pounds retail weight for every man, woman and child in 2019) So, focus on Idaho and Washington.
If I was the head UP honcho (in my wildest dreams) I'd call in the VP of marketing, the VP of operations, and the VP of finance. I'd tell them if one load of potatoes went east of Denver by truck, or South of Salt Lake City by truck, or west of Reno by truck, they'd better have a very good explanation.
And do not forget about the onions and apples.
Well, McDonalds just chartered three 747 freighters to move US french fries to Japan. They were running quite low over there. And now, the McDonalds in Taiwan are short of hash browns. You gotta' do what you gotta' do.
Penn Central did bankrupt some Maine potato farmers. They had temperature controlled shipments of spuds en route when PC filed bankruptcy. In the chaos the potatoes went bad. Normally the railroad would have paid a freight loss and damage claim. But everything was delayed in court and the farmers ran out of money waiting.
I'll check out Maine potato production, but I don't think it's what it used to be.
Well it appears Maine potatoes are hitting the rails again! Albeit in a much reduced capacity... Anyhow.. Roughly 3 weeks ago LaJoie Growers LLC/Grand Prix Inc. Shipped two UP reefers full of Maine Russet potatoes billed to the West Coast. I can't share the video here, but if you have a Linkedin account. Login to view the video. Here's the link.
https://www.linkedin.com/posts/jay-lajoie-00701939_our-first-two-of-many-up-rail-cars-full-of-ugcPost-6877533451751317504-ufE6
Not sure if this traffic will redevelop, and in order for it too. Rails will have to show consistent reliability. Don't let Penn Central leave a bad taste in your mouth.. This traffic can be regained if the C1's want it.
Our community is FREE to join. To participate you must either login or register for an account.