CN Purchased BC Rail

[fuzzybroken]

QUOTE: Originally posted by andrewjonathon

The problem with comparing the customers that a shortline, such as WSOR, will serve with the customers a Class 1 like CN will serve is that shortlines have a very different cost structure. What may be a money loser for CN may very well be profitable for a shortline like WSOR. Maybe Class 1's should consider contracting out online switching to shortlines similar to how airlines contract out food preparation and airline maintenance etc.

Exactly!!!!!

-Mark

[CSSHEGEWISCH]

That sort of contracting out would be difficult to impossible under current union contracts. BN had a long dispute with the International Association of Machinists regarding contracting out of shopwork on the Oakway SD60's and LMX B39-8's.

[bobwilcox]

QUOTE: Originally posted by CSSHEGEWISCH

That sort of contracting out would be difficult to impossible under current union contracts. BN had a long dispute with the International Association of Machinists regarding contracting out of shopwork on the Oakway SD60's and LMX B39-8's.

I think the BN won the argument. You can contract out as long as you protect current employees with a job somewhere on the system.

[CSSHEGEWISCH]

It could be argued that BN won the argument but lost the war. The Oakway SD60's and the LMX B39-8's marked the beginning and the end of the power-by-the-hour concept of leasing and maintenance of the power by the lessor.

[Anonymous]

Let us not forget that any business, including railroads, is in business to make money, not make or provide a specific product. If the company cannot make or provide their product at a competative price and make a profit they will be forced out of business. Cases in point: Studebaker, Pan Am, Rock Island, NYO&W. Many times a stronger competitor will try to starve out the competition with money loosing prices. Look at the loss leaders ads in the paper or look at, say American Airlines, who have 75% of the business out of Dallas Fort Worth. The fares they charge for a no competition flight of "X" miles is far more than the cost for the same milage where there is competition.

A given management style will not fit all situations. The sales agent who calls on Peabody Coal or UPS and sets up unit trains to travel thousands of miles will not function in a situation where one box car per week is picked up from a small factory. Conversely, the sales agent from the short line who sets up the one box car service probably could not function when dealing with UPS.

Unfortunately Wall Street runs the business of America. The CEO of any company dances to the band of Wall Street. What they want is what he tries to deliver. Wall Street does not care about the one box car per week for which the profit is minimal. They want to see the big bucks and big contracts. Enter the short line who is not beholden to Wall Street. They can go after the one box car trade and do it well.

CN bought BC Rail as a strategic link fir North South traffic. They were the natural player for BC Rail as they owned connections at each end of BC Rail. BNSF and CP only had connections to BC Rail at the southern end and were at a distinct disadvantage. Remember that BC Rail was initially an instrument of the provincial government whose mission was to foster development of the interior part of British Columbia. They did this well, however, a change in governmental policy lead away from outback development and BC Rail went on the block. CN, although a previous Crown corporation, is now profit driven and not into the single box car load from the two man saw mill in the middle of the province.

We all like nostalgia, however it does not pay the bills. Steam engines are a foamer's dream but the nightmare of operationg and management personnel. Look at the staffing required to service and run a steam engine compared witha diesel. It does not take a rocket scientist to see the advantage of diesel power. Railroads are not in the nostalga bsiness as it alone will not pay the bills.

[SALfan]

QUOTE: Originally posted by futuremodal

And utilities are charged with providing their service to both urban and rural customers. If the electric utilities behaved like the Class I's, they'd stop service to rural customers and focus soley on urban customers, because the maintenance costs of serving rural customers are higher than those for serving denser populations.

This idea of railroads being just like any other business is ridiculous.

Here's a news flash - investor-owned electric utilities DON'T serve rural areas. Those areas are served by Rural Electric Cooperatives, which were one of FDR's better ideas. I have a stock certificate dated mid-1940 showing my grandfather as one of the owners of his local cooperative. Rural areas aren't generally served by natural-gas pipelines, either; ever wonder why so many houses out in the country have a big propane tank in the yard, or a diesel or kerosene tank up next to the house?