The Norfolk Southern was officially created 25 years ago.
There was obviously a Pre-Merger period for NW and SOUTHERN.
This is still evident in the number of NORFOLK AND WESTERN and SOUTHERN painted freight cars in a uniform scheme that can still be seen today.
How long was the Pre-Merger Period that lead to the Norfolk Southern?
Andrew Falconer
Watch my videos on-line at https://www.youtube.com/user/AndrewNeilFalconer
Thanks to Chris / CopCarSS for my avatar.
I think he's asking how long were N&W and SOU around before the merger? That or how long before they started slapping NS on everything after the merger?
Andrew Falconer, could you elaborate on this question?
The Trains web site, in its railroad family trees, provides the answer you're looking for. I'll save you the effort of finding it:
Norfolk Southern RailwayNorfolk Southern Corp. was created as a new holding company to acquire Norfolk & Western Railway and Southern Railway, effected June 1, 1982. Full merger effected Dec. 31, 1990, as N&W became a subsidiary of Southern, and Southern changed its name to Norfolk Southern Railway.
So, your "pre-merger era" was between 1982 and 1990.
Carl
Railroader Emeritus (practiced railroading for 46 years--and in 2010 I finally got it right!)
CAACSCOCOM--I don't want to behave improperly, so I just won't behave at all. (SM)
NW and Southern was a great merger. Two regional powerhouses formed quite a carrier. Can you think of equivilately great mergers between railroads vs takeovers? UP didnt really merge with MP, they took them over.
What other great mergers were made?
ed
The NW and SOU holding period or pre-merger under the Norfolk Southern Corporation was about 8 years long.
Was this long period before a full merger just extremely cautionary?
It is mentioned but not as clear in Norfolk Southern Annual Reports.
The CSX mergers and UP mergers seemed to be quick compared to the NS merger.
The original CSX merger was a long process....
Chessie System was incorporated 26 February 1973. 15 June 1973, the B&O, C&O, and WM became subsidiaries of Chessie. B&O merged WM on 1 May 1983, and C&O merged B&O on 30 April 1987. From Chessie Corp to a single Chessie operating company was just over 14 years.
On 1 November 1980, Chessie and Seaboard Coast Line merged to form CSX Corporation, but the two sides continued to operate independently. Seaboard changed it's name to CSX Transportation on 1 July 1986. On 31 August 1987, CSXT formally merged C&O. From CSX Corp to a fully integrated CSXT was just under 7 years.
Nick
Take a Ride on the Reading with the: Reading Company Technical & Historical Society http://www.readingrailroad.org/
MP173 wrote: NW and Southern was a great merger. Two regional powerhouses formed quite a carrier. Can you think of equivilately great mergers between railroads vs takeovers? UP didnt really merge with MP, they took them over.What other great mergers were made?ed
Ed,
Good question. The funny thing is, in answering it, bad mergers jump into my head more quickly than good ones.
I thought the N&W/Wabash/Nickle Platte was pretty successful. Although I hated to see the Nickle Platte go--even though it went before I was born.
To me, bad mergers seem to involve one--or two--failing railroads. This is in contrast to the BNSF or NS mergers which both involved two well run railroads that were not struggling.
I have a theory that it might be better to let failing roads be distributed via bankruptcy rather than to attempt to save them via merger. It seems like the struggling railroad can often end up pulling the non-struggling railroad under after the merger.
People might frown, and say that will cause more tracks to be pulled up. But, I don't know if that is the case. Are the remnants of the GM&O any more prolific than that of the MILW or the Rock Island? I am amazed at how much of the Rock and MILW survive today--once again, this is a sharp contrast to the GM&O.
In my, admittedly, shallow understanding, bankruptcy allows railroads that are making it to purchase lines--usually at cheaper prices--without being incumbered by the debt that brought the struggling road down in the first place.
I think there are other advantages to this approach as well--the surviving line only purchases the lines from the bankrupt railroad that fit within its system, which allows a more compact, lean and mean surviving railroad.
I often wonder if the railroading world would not have been better off to just let the SP file for bankruptcy, and carve it up that way. I am not sure RR maps would be much different than they are now, and UP might have a little more cash on hand. But, then again, that is why I do not run railroads.
Gabe
Who decided to merge first NW and SOU or Chessie and Seaboard?
It looks like NW and SOU incorporation under the Norfolk Southern Corporation helped propel the management and lawyers at Chessie and Seaboard to finish their merger before NS had all the details completed.
Andrew
gabe wrote: This is in contrast to the BNSF or NS mergers which both involved two well run railroads that were not struggling.
I don't think the GN/NP/CBQ people would agree. John Budd claimed the merger was "crucial" to his railroad's survival. Public relations baloney aside, things were pretty gloomy.
If "well run" means continually improving profitability and operating ratios, then the proposition is simply false. Utterly, conclusively false.
Within their territories, the NP and the Milwaukee were the fastest growing in terms of revenue; GN and CBQ falling behind, and NP, notwithstanding its growth, was the least profitable of the four. Milwaukee's revenues grew 14% in the mid-1960s, GN's grew only 6% in the same time period, substantially less than the growth of its expenses. The ultimate outcome, at the time, was not inevitable. It looked pretty gloomy at the Northern Lines. Now, this is just based on revenue reports, not press releases or railfan magazines.
"Well run" is a term generally supported by economic data, as is "not struggling". That conclusion is not supported by the evidence in this instance. Their world was crumbling, it was crumbling at an astonishing rate. and they were engaged in a struggle for their veritable survival. Those trend lines were not just negative, they were relentlessly negative, and there didn't seem to be a d**** thing they could do to turn it around. They tried everything. Nothing worked. They were desperate, the merger was the only card they had left, and time was running on even that. John Budd saw that clearly.
Indeed, in 1962, the Northern Lines refused to acede to Milwaukee's Western Gateways conditions. In 1965, they suddenly reversed themselves and quickly accepted the conditions. You can see from the chart exactly why that happened. And it was not because they "were not struggling."
Railfans have apparently concluded they were "not struggling." The gentlemen who ran the railroads knew better.
Andrew Falconer wrote: Who decided to merge first NW and SOU or Chessie and Seaboard?
Southern Pacific was trying to force Seaboard into a merger by buying SCL Industries stock. Seaboard sought out Chessie as a partner in response, which forced Southern and N&W together.
MichaelSol wrote: gabe wrote: This is in contrast to the BNSF or NS mergers which both involved two well run railroads that were not struggling. I don't think the GN/NP/CBQ people would agree. John Budd claimed the merger was "crucial" to his railroad's survival. Public relations baloney aside, things were pretty gloomy. If "well run" means continually improving profitability and operating ratios, then the proposition is simply false. Utterly, conclusively false.Within their territories, the NP and the Milwaukee were the fastest growing in terms of revenue; GN and CBQ falling behind, and NP, notwithstanding its growth, was the least profitable of the four. Milwaukee's revenues grew 14% in the mid-1960s, GN's grew only 6% in the same time period, substantially less than the growth of its expenses. The ultimate outcome, at the time, was not inevitable. It looked pretty gloomy at the Northern Lines. Now, this is just based on revenue reports, not press releases or railfan magazines."Well run" is a term generally supported by economic data, as is "not struggling". That conclusion is not supported by the evidence in this instance. Their world was crumbling, it was crumbling at an astonishing rate. and they were engaged in a struggle for their veritable survival. Those trend lines were not just negative, they were relentlessly negative, and there didn't seem to be a d**** thing they could do to turn it around. They tried everything. Nothing worked. They were desperate, the merger was the only card they had left, and time was running on even that. John Budd saw that clearly.Indeed, in 1962, the Northern Lines refused to acede to Milwaukee's Western Gateways conditions. In 1965, they suddenly reversed themselves and quickly accepted the conditions. You can see from the chart exactly why that happened. And it was not because they "were not struggling."Railfans have apparently concluded they were "not struggling." The gentlemen who ran the railroads knew better.
I was referring to the BN + SF merger, not the underlying mergers that made up BN.
gabe wrote: I was referring to the BN + SF merger, not the underlying mergers that made up BN. Gabe
Well, ... never mind.
I do recall looking at BN's numbers in the BNSF pre-merger era and recall a somewhat different picture. What economic data suggests that BN was "well managed" or "not struggling"?
MichaelSol wrote: gabe wrote: I was referring to the BN + SF merger, not the underlying mergers that made up BN. GabeWell, ... never mind.I do recall looking at BN's numbers in the BNSF pre-merger era and recall a somewhat different picture. What economic data suggests that BN was "well managed" or "not struggling"?
Awe shucks, you caught me. I now realize that Burlington Northern was in such dire financial straights in 1996 that it was the aquiring railroad in the merger.
I am further embarrased by the fact that BN's perilous financial condition was in such sharp contrast to the Milwaukee Road, which clearly went bankrupt as a result of all of those profits you cite in your study.
Go figure . . .
gabe wrote: MichaelSol wrote: gabe wrote: I was referring to the BN + SF merger, not the underlying mergers that made up BN. GabeWell, ... never mind.I do recall looking at BN's numbers in the BNSF pre-merger era and recall a somewhat different picture. What economic data suggests that BN was "well managed" or "not struggling"?Awe shucks, you caught me. I now realize that Burlington Northern was in such dire financial straights in 1996 that it was the aquiring railroad in the merger.I am further embarrased by the fact that BN's perilous financial condition was in such sharp contrast to the Milwaukee Road, which clearly went bankrupt as a result of all of those profits you cite in your study.Go figure . . .
Actually, I was looking for the economic basis for a very broad conclusion. If sarcasm is the only basis for your opinion, I suppose it is just as relevant to compare 1960s ORs with 1990 ORs on a different railroad under different circumstances. Good grief. If your conclusion derived from some satisfying sense of "being" why don't you just say so, and that facts don't count for anything at all.
My point is, there is economic data out there. It often does not support the glib and self-congratulatory conclusions endemic in the railfan community.
If you had the data that supported your conclusion, I was interested to see it, because my personal recollection, as a long-time investor in the BN who has tracked it closely, it wasn't all that hot during that era. However, I wasn't inclined to go back and do a study to see how it actually looked, and my memory, at this point in time, is at best an impression of that time frame.
I offered no conclusions on NS since I have never looked closely at the financial data for the pre-merger roads, and would think it careless to offer an opinion on how good the management was, or how well the railroads were doing, pre-merger, without a detailed review of those figures. I am different from you on that approach.
Regarding BNSF, since your opinion differed from my recollection, thought I would ask you first, since you offered a strong and confident opinion on the topic; the kind of confident opinion that ordinarily results from considerable detailed familiarity with the topic. So, I thought I'd ask.
Understanding by your response that you did not have that detailed familiarity, I cannot say I am surprised by your sarcastic response.
I understand very clearly your objection to looking at operating ratios and trend line analysis as a basis for anything at all and won't burden you with a look at the BN and ATSF ratios.
Or the stock performance for the six years afterward ...
I dont know about everyone else, but it sure is great to have everyone back on board. It sure was boring for a month or so.
No economic data yet, it is on the bookshelf, but my railfan observations are that BN has merged itself pretty well over the years. Not great, but pretty good. The merger with Frisco was probably a slip up. MoPac would have been better. The Santa Fe merger has been pretty sound. A few years ago a Trains article described BNSF as basically being four railroads: coal hauler, grain hauler, intermodal carrier, and finally trackage rights.
I look at the BN/Milw issue as survival. One can slice and dice the MILW into Lines East and Lines West, but the simple fact was the corporation was not able to survive as a railroad. Energy, time, and money was spent on mergers which didnt happen (CNW). Looking back, the MILW stripped down to Louisville to Pacific Coast could have survived. Mismanagement brought down the entire railroad.
Was it luck that BN sat on top of all that coal? Possibly, but they did convert that luck into quite a franchise. It wasnt easy. The capex involved in the investment in that franchise just about drowned the company.
One thing I have found interesting about BN. They have seemed to look outside their company for management talent, particularly CEO.
Why?
MichaelSol wrote: gabe wrote: MichaelSol wrote: gabe wrote: I was referring to the BN + SF merger, not the underlying mergers that made up BN. GabeWell, ... never mind.I do recall looking at BN's numbers in the BNSF pre-merger era and recall a somewhat different picture. What economic data suggests that BN was "well managed" or "not struggling"?Awe shucks, you caught me. I now realize that Burlington Northern was in such dire financial straights in 1996 that it was the aquiring railroad in the merger.I am further embarrased by the fact that BN's perilous financial condition was in such sharp contrast to the Milwaukee Road, which clearly went bankrupt as a result of all of those profits you cite in your study.Go figure . . .Actually, I was looking for the economic basis for a very broad conclusion. If sarcasm is the only basis for your opinion, I suppose it is just as relevant to compare 1960s ORs with 1990 ORs on a different railroad under different circumstances. Good grief. If your conclusion derived from some satisfying sense of "being" why don't you just say so, and that facts don't count for anything at all. My point is, there is economic data out there. It often does not support the glib and self-congratulatory conclusions endemic in the railfan community.If you had the data that supported your conclusion, I was interested to see it, because my personal recollection, as a long-time investor in the BN who has tracked it closely, it wasn't all that hot during that era. However, I wasn't inclined to go back and do a study to see how it actually looked, and my memory, at this point in time, is at best an impression of that time frame.I offered no conclusions on NS since I have never looked closely at the financial data for the pre-merger roads, and would think it careless to offer an opinion on how good the management was, or how well the railroads were doing, pre-merger, without a detailed review of those figures. I am different from you on that approach.Regarding BNSF, since your opinion differed from my recollection, thought I would ask you first, since you offered a strong and confident opinion on the topic; the kind of confident opinion that ordinarily results from considerable detailed familiarity with the topic. So, I thought I'd ask.Understanding by your response that you did not have that detailed familiarity, I cannot say I am surprised by your sarcastic response. I understand very clearly your objection to looking at operating ratios and trend line analysis as a basis for anything at all and won't burden you with a look at the BN and ATSF ratios.Or the stock performance for the six years afterward ...
Michael,
(1) You know more about trains than I do. I have admitted that on multiple occassions, and I admit that now.
(2) With regard to my "strong and confident opinion on the topic," perhaps you should read my post again . . . you know, the one where I qualify my opinion with "my admittedly shallow understanding" and note that there is a pretty good reason I am not running the railroads! I assure you, I can be considerably more bombastic than that. I don't understand your conclusion with regard to this.
(3) You certainly know a great deal more about the numbers than I. But, I am still left scratching my head. Given that the Milwaukee Road went under, it is extremely difficult for me to fathom an assertion that it was healthy and I suspect anything resembling healthy operating ratios derives from grossly deferred maintenance.
As I stated earlier, my conclusions derived from the fact that BN was at the very least healthy enough to be the purchasing railroad in the merger and the fact that the Milwaukee Road did in fact go under. From where I am standing, that is a pretty sound conclusion. It may not be right--due to complexities that a dilittante like myself cannot understand--but it is a long way from obviously wrong.
MP173 wrote:I dont know about everyone else, but it sure is great to have everyone back on board. It sure was boring for a month or so.No economic data yet, it is on the bookshelf, but my railfan observations are that BN has merged itself pretty well over the years. Not great, but pretty good. The merger with Frisco was probably a slip up. MoPac would have been better. The Santa Fe merger has been pretty sound. A few years ago a Trains article described BNSF as basically being four railroads: coal hauler, grain hauler, intermodal carrier, and finally trackage rights.I look at the BN/Milw issue as survival. One can slice and dice the MILW into Lines East and Lines West, but the simple fact was the corporation was not able to survive as a railroad. Energy, time, and money was spent on mergers which didnt happen (CNW). Looking back, the MILW stripped down to Louisville to Pacific Coast could have survived. Mismanagement brought down the entire railroad. Was it luck that BN sat on top of all that coal? Possibly, but they did convert that luck into quite a franchise. It wasnt easy. The capex involved in the investment in that franchise just about drowned the company. One thing I have found interesting about BN. They have seemed to look outside their company for management talent, particularly CEO. Why?ed
I have heard that the Frisco management was a particular problem for the BN.
P.S. I agree, it was a boring month. Michael and I have to kick each other in the shins just for entertainment.
Can I kick someone too?
Gabe-check your PM.
Murphy Siding wrote: Can I kick someone too? Gabe-check your PM.
You can kick me any time you would like. What is a PM, and if I check it, do I have a kick waiting for me?Gabe
gabe wrote: Murphy Siding wrote: Can I kick someone too? Gabe-check your PM.You can kick me any time you would like. What is a PM, and if I check it, do I have a kick waiting for me? Gabe
You can kick me any time you would like. What is a PM, and if I check it, do I have a kick waiting for me? Gabe
Murphy Siding wrote: PM= private message. Go to the top of the screen under the Trains emblem. Below "Welcome back Gabe" is a row of words. The far right one says "Private Message". Press that button to open. If you're lucky, you'll find about 100 messages from forum members who have been sending you messages, but wondering if you were too stuck up to reply.
On my computer, I can't get the row with Private message while I'm on a thread. I have to back up to the forum page by clicking on General Discussion
nanaimo73 wrote: Murphy Siding wrote: PM= private message. Go to the top of the screen under the Trains emblem. Below "Welcome back Gabe" is a row of words. The far right one says "Private Message". Press that button to open. If you're lucky, you'll find about 100 messages from forum members who have been sending you messages, but wondering if you were too stuck up to reply.On my computer, I can't get the row with Private message while I'm on a thread. I have to back up to the forum page by clicking on General Discussion
Murphy Siding wrote: Should I have Gabe kick your computer in the shins?
As long as his foot has a passport to re-enter the USA.
nanaimo73 wrote: Murphy Siding wrote: Should I have Gabe kick your computer in the shins?As long as his foot has a passport to re-enter the USA.
MP173 wrote: No economic data yet, it is on the bookshelf, but my railfan observations are that BN has merged itself pretty well over the years. Not great, but pretty good. The merger with Frisco was probably a slip up. MoPac would have been better. The Santa Fe merger has been pretty sound. A few years ago a Trains article described BNSF as basically being four railroads: coal hauler, grain hauler, intermodal carrier, and finally trackage rights.
It has been quite some time since I looked at the long term trends, but my recollection is that BN has followed a pattern that very much reflects the circumstances surrounding the initial Burlington Northern merger. There, a key railroad, the Great Northern, was suffering from the steady and irreversible decline of its core strength -- taconite -- and the handwriting was on the wall. The Northern Pacific had surpassed it in carloadings, and was doubling it in revenue growth, Milwaukee had nearly three times the revenue growth of the GN and had managed to best GN's operating ratio, and of GN's two key connections in the Midwest, the Burlington was suffering the same impending crisis as other Midwest lines, and the North Western was just about to merge with its key transcontinental competitor, the Milwaukee.
From the Boardroom of the Great Northern Railway in 1966, the future had to have looked utterly dismal. The trend lines pointed to inevitable bankruptcy unless something big happened. The Burlington's perspective could not have been much better. Of the Northern Lines, only the NP -- the timber company masquerading as a railroad -- was showing real signs of life. Merger was the only solution to otherwise intractable problems.
The operating results of the merger did indeed show merger benefits. Recall, the ICC had rejected the Northern Lines merger and approved the MILW/CNW merger. Had those two decisions remained operative, there is no doubt to me that today we would be referring to that poor bankrupt Burlington and running maps in Trains of "what's left" amid articles of how the Great Northern was converted to a series of wheat and produce feeder lines.
And inevitable lectures that the result was "inevitable."
Well, impending execution focuses the mind wonderfully.
History was rewritten, and the results inverted. BN got its merger savings, but they evaporated by the late 1970s. Another merger was in the works, the Frisco, and again, a period of merger savings ensued, which gradually evaporated. One reason economists are skeptical of "mergers" in general is their misuse by management to obscure operating deficiencies, or even poor management, by the savings ostensibly resulting from the merger process. Under those circumstances, eventually merger savings are exhausted, and the same old problems crop up again. There is a class of managers out there who ultimately become "serial mergerers" in this fashion to continually overcome their inability to do their fundamental job: improve the operations of the company.
Burlington Northern has, at times, had the look of that pattern.
The merger with the Santa Fe turned the experience on its head, however, and notwithstanding a booming economy, the post merger company suffered almost continual negative cash flows, and long term debt skyrocketed. Its debt to equity ratio crumbled to the worst in its history. It's CEO got the boot. Logit and Altman Z analysis showed a company in serious, serious trouble. The CN merger looked like the only way to reverse what had become an apparently permanently weakened, and weakening, condition -- again, a merger solution to internal problems.
Fortuitously, an administration took charge that did everything regarding the economy just about as right as could be done, creating what has become one of the strongest economic periods we have ever had creating enormous boom times for railroads in particular.
And all the managers became geniuses.
I didn't realize the Southern took over the N&W. Thought it was the other way around.
Our community is FREE to join. To participate you must either login or register for an account.