Clay Feet: The Merger Movement and The Erie Lackawana

[arbfbe]

A MILW with EL merger would have had quite a few competitive advantages until the GN/PRR merger happened.  Integrating the management styles of the easterners with the westerners and midwesterners might have been problematic.

 

I doubt any of the large mergers have been quite as successful as touted prior to the combination.  What was gained through centralization and overhead reduction was offset by the loss of contact with customers.  Over time it looks like the larger companies have grown into their new size and have been able to take advantage of their political and economic mass. 

[wallyworld]

An interesting counterpoint...in pdf format..worth a read.

Standard thinking of the mid-1950s, as reflected in several of

the popular transportation textbooks, was that consolidation would

make it possible to concentrate heavier trains on fewer lines and

use the savings for capital improvement. It was assumed that the

capacity lost in this slimming-down process would never be needed

again, and it was further assumed that economies of scale were

real. Affluent railroads might have more private motives for

consolidation, such as a desire to eliminate their own railroad

competition, but it suited them to adopt this "textbook" rationale

for public posture. It had a nice ring of economic realism and

it might, if not ease the pain, at least excuse the inconvenience

for those who were going to pay a price -- some shippers, some

communities, and many of the men and women who had devoted their

careers to railroads, from track workers to vice-presidents.

http://coursesa.matrix.msu.edu/~business/bhcweb/publications/BEHprint/v006/p0106-p0119.pdf

We appear to be at a saturation point or stasis in the merger movement. In hindsight, was the merger movement a case of immediate gratification at the expense of long term issues of re-establishing regulatory constraints, increasingly empowering shippers as a leveraging political force, and failing to produce any real savings?  Were smaller roads more adaptable, responsive and less vulnerable to the possibilty of regulation? Was the driver of the merger movement, the failure of PC..inevitable.?.in other words did the regulatory constraints in of themselves drive the merger movement...? Now they are absent from this equation...should mergers be considered a failure or success?