Edit post

Edit your reply below.

Post Body
Enter your post below.
[quote]QUOTE: Originally posted by M.W. Hemphill Ed: You said: "I think it is obvious, and perhaps already stated on this and other threads, that the thing that "saved" the railroading industry, was the death (harsh wording intended) of the Penn Central." My response. Complete agreement. Deregulation was a series of responses to PC and Conrail -- 3R Act, 4R Act, Staggers, ICC Sunset act. Rock Island and Milwaukee had neither the population and industrial base, nor were they the only rail game in town. [/quote] My response: Same here, Mark. And, if you look at the colossal management blunders hounding the airline industry (ignore 9/11--the setup for the current meltdown was in place long before that happened) you can readily conclude that, vis-a-vis PC, those who ignore history are indeed doomed to repeat it. One point I (as a business owner) think needs to be emphasized some here is that all of these schemes, including the ICC environment that preceded ithe PC collapse, had at their cores accounting systems that, legally or illicitly, cooked the books to provide whatever immediate-term cash return objectives top management and usually a few very big stockholders wanted. The point made about the diversification atmosphere of the 60's is a valid one and is highly relevant here. Play the shell game well enough and you can pull the rip cord on your golden parachute and be long gone and out milking company 2 well before the company 1 system crashes. Gould and friends did it with the Katy and MP, etc. in the 1880's and 90's (see the string from about a week ago on why TX required corporate domicile for RRs operating in the state) This is also exactly what LTV did with Braniff Airlines in the late 60's and 70's, raiding their coffers to pay for more and more expansion in other business areas until the airline virtually collapsed (the first time--not the big one of the 1980's, although that one was ultimately a result of Ling's earlier raid on the coffers). The infamous "ICC Formula" that came in in the 1950's with the RRs' blessings and allowed them to calculate huge and unrealistic losses on paper from pax operations (e.g., being allowed to charge a third of the track maintenance cost on a heavy freight line with a tri-weekly pax train-you can figure out which one in this example-to the pax train) was the same sort of creature and some of the companies were truly shocked when the trains came off but the costs didn't go down dramatically as predicted! One of the dangers of believing your own stuff. PC did basically all of the above, and became, for practical purposes, a real estate company at the expense of the transportation company. Now that doesn't downplay the very real on-the-ground problems they had, which have been discussed well and in great detail here, and need no additional input from the likes of me. My point is that if you look hard enough at these disasters and corporate meltdowns (except those where the market simply evaporated), you will almost inevitably find financial manipulation and disproportionate rewarding of top management going on, even in spite of massive strategic and tactical blunders. PC was not immune to these hijinks, and one can argue that it hastened the downfall. So have we learned anything from it? That remains to be seen, but up to now I doubt it (this includes RRs and all kinds of other corporations). One positive note about the UP operational meltdowns--they seem to be making a concerted effort to plow a big chunk of their earnings back into fixing the physical plant , which can only help them. But, as others have pointed out, shot themselves in the feet numerous times with their corporate arrogance in places like Houston, which is where the dominoes consistently start to fall.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag