Don Phillips in Sept. Trains

[Paul_D_North_Jr]

I believe the management of the "Rat Hole" route - the Cincinnati, New Orleans & Texas Pacific, or CNO&TP - by the City of Cincinnati is pretty passive, and at least back then was essentially limited to merely approving what the railroad wanted to do and put up the money for. 

The North Carolina State Railroad is a different story.  I attended a 1/2-hour presentation on the Norfolk Southern - NSDOT partnership at the AREMA Conference in Orlando in August - the NS presenter was Brad Kircher (who used to be an Asst. Division Engineer on the Middle Division between Harrisburg and Altoona, PA).  That's a much more collaborative endeavor with the 2 entities cooperating on the planning and the funding of the improvements.  While some people are concerned over the government's 'came'l poking its nose into the railroad's 'tent', these people and organizations seem to have found a way to make it work at the practical and operating level - perhaps because they're small enough to know each other on a personal basis, and also "off the radar screen" of national political dogma.  Also, NCDOT's Rail Division gets something considerable back for its money - use of the tracks for its passenger trains, at higher speeds/ shorter transit times than before, plus less grae crossings, etc. - so that doesn't seem to be quite either the pure subsidy that was the subject of Mr. Hemphill's essay, or the kind of "squish" that Mr. Frailey is concerned about. 

Mr. Hemphill's 2005 essay also mentioned what he thought was a legitimate use of public money that wasn't a subsidy - the traditional "terminal district" with joint access, reduced grade crossings, rationalization of duplicate tracks, etc.  So not all public funding involvement needs to be inherently evil.

- Paul North. 

[blue streak 1]

Paul_D_North_Jr

Murphy Siding:

  Convicted One:

Well, last night during organizing and sorting out my Trains collection after our recent move, I ran across a column by former Trains editor Mark W. Hemphill in an early 2005 issue* on the exact same topic.  His main point was that the railroads can either accept public funding whole-heartedly and all that comes with it, or not - there's no middle ground, such as a tax or fee on rail operations that would then be used as government-managed reinvestment.  His secondary point was that any such tax scheme must inherently be less efficient and effective than the railroads managing such reinvestment by themselves, as they see fit.  It's good reading and to the point, so I thought it was worth mentioning in connection with the concerns and debate over Fred Frailey's "squish".

EDIT: January 2005, Vol. 65 No. 1, "Subsidies for All or Subsidies for None -  If You Think Railroads Are Worth Having, You Must Choose One of the Above", pp. 20-21.

- Paul North. 

But can we look at the government own RR ROWs. 2 quick examples the Cincinnati owned NS route from Cincinnati to Chattanooga and the NC DOT owned Charlotte - Morehead City route? Both routes have had the user fees reinvested with outstanding results.

1. The Rat-Hole thru very difficult terrain is now a 1st class operation with the restricted tunnels gone and many cuts and bridges reducing grades.

2. NC Dot has started reinvesting the user fees (but also putting in funds originally given to state over the years into the general fund). Results? curve mitigation and grade crossing elimination.

I am sure there are other examples.

[Paul_D_North_Jr]

Murphy Siding

  Convicted One:

Murphy Siding:  
   I'm not sure I agree with that.  Had one of the two been forced into bankruptsy,  it would probably have ended up in receivership, as most bankrupt railroads did back then.  That would have given that railroad a leg up on the other road...which probably would have ended up in bankruptsy.  At that point, both PRR and NYC would have been looking for a merger, or government help.  
    

 Stealing a line from the great Fred Frailey: "Squish-squish-squish"...

  Maybe you could steal an explanation from him as well? What does that mean?

 

Pardon me for resurrecting a thread from 2 months ago - and some now deeply-buried posts within it - but you'll see why in a moment:

I believe that later on we clarified that Frailey's "squish" referred to the 'soft' and blurry line between the public funding of those railroad capital improvement projects or operations with a well-defined and legitimate public interest on the one hand, and those where that link is a whole lot more tenuous and nebulous on the other hand - perhaps to the point where the public interest is minimal or remote, and the funding seems to be primarily benefitting the railroad (only).  At least, that's how I understood Fred's column.

Well, last night during organizing and sorting out my Trains collection after our recent move, I ran across a column by former Trains editor Mark W. Hemphill in an early 2005 issue* on the exact same topic.  His main point was that the railroads can either accept public funding whole-heartedly and all that comes with it, or not - there's no middle ground, such as a tax or fee on rail operations that would then be used as government-managed reinvestment.  His secondary point was that any such tax scheme must inherently be less efficient and effective than the railroads managing such reinvestment by themselves, as they see fit.  It's good reading and to the point, so I thought it was worth mentioning in connection with the concerns and debate over Fred Frailey's "squish".

(*I don't have that issue with me at the moment, and forget the details - but I'll post the citation tonight, for those of you who might care.)

EDIT: January 2005, Vol. 65 No. 1, "Subsidies for All or Subsidies for None -  If You Think Railroads Are Worth Having, You Must Choose One of the Above", pp. 20-21.

- Paul North. 

[edblysard]

Paul,

The safety aspect is first and foremost, but there is a secondary consideration, you have to repeat it back word for word, and you only get three tries per crew!

Screw it up, and the FRA says all of you get a 90 day vacation!

We listen in a lot because we share that channel often, and sometimes the dispatchers will allow a little fudging, but it depends...from what I can tell, as long as the train crew gets it close enough for the DS to know they have a clear and concise understanding of what they are allowed to do, it usually gets by...but if a crew gets too sloppy, they want it word for word, number for number.

I prefer to get it right the first time simply to minimize any chance of a problem cropping up, plus writing it down gives me a hard copy for later reference, or proof that what we did is what we were told to....even though that channel is recorded, having a paper copy can't hurt.

[CSSHEGEWISCH]

Ed, it's really good to see that your crew and that dispatcher both firmly believe in Safety First, especially since you would be operating under rules that are not part of your everyday routine.

[edblysard]

Johnny,

Each "desk" is actually several dispatchers...like ATCs there is a bunch of them in there at any given time with a division of responsibilities, although I am not privy to how they divided it all up.

I do know that on certain days when we call for a signal to say, cross into CTC at 5A and head to Pasadena, or call for the Market Street signal to get headroom out of the yard we get the same person, and their shifts seem to end right about 3 pm.

If your in Pasadena and trying to get to Strang, you get someone else....but they all respond to "TD3 Spring", so my guess is the Metroplex is divided into sections handled by different folks.

There is a young lady with a terribly sexy voice who works Saturday through Wednesday, and she seems to be there from around 6 am to 3pm, and has this place down pat.

If you call her on the radio, she is all business, but we like to call her on the phone first, because we don't use or run in CTC often, and because it has to be precisely word for word repeat, we call her and get her to walk us through it while we write it down.

Things like breech protection and such, track and time, things like that are not normally used on the PTRA as we are "dark territory" and run under RTC...most of the time when we call her on the phone she will tell us she was expecting our call and takes all the time we need to make sure we have it right.

I don't know how exactly the chain of command runs, but I do know both Ft. Worth and Omaha can request a train be expedited in and out of Houston.

We build a diesel fuel train for BNSF every day, the empty inbound hits our yard, the crew swaps out and gets on the outbound load with power BNSF has left here just for this train and they are gone as soon as they call TD3.

UP has a pet coke train from Sweeny that has dedicated power sets, they pull in, the UP crew gets off the loaded inbound and gets on the empty and they are gone just as fast.

When we run the windmill trains up out of the docks and hand them of to the class 1 crews, its kinda neat to watch.

As soon as they can, the dispatchers will line these trains up all the out of the city...and these things must be worth a pretty penny to the Class 1, because every switch we pass over in our own yards are locked and spiked for the movement, and nothing meets these trains inside the Metroplex...pretty cool to look down the Belt sub and watch all those signals pop green.

[Deggesty]

Thanks, Ed, for this information. I remember reading about the meltdown, but I do not recall any detail on this part of the solution of the problem.

Now, for a question about the operation.

"Part of the solution was to create the Spring Dispatching center. It has 3 "desks" ..TD1 (train dispatcher 1) routes all main line traffic into the metroplex, TD2 handles all the outbound, and TD3 takes care of all the traffic inside the metroplex, yard to yard moves, yard transfers, clearance or headroom moves out of yard limits into CTC, things like that."

Three desks x three tricks a day x seven days a week = 63 tricks a week–and no DS works more than five tricks a week. Nine DS’s work the same trick each day they work (45 tricks); three DS’s each work five tricks, swinging from time slot to time slot (I knew an agent-operator in Brookhaven, Miss., who had four days off every week while he was working 40 hours–he worked 7-3 on Saturdays and Sundays, had a day off until 3:00 Monday afternoon, worked 3-11 Mondays and Tuesdays, had a day off until 11:00 Wednesday night, worked 11-7 Wednesday night-Thursday morning, and had two days off until 7:00 Saturday morning–and another operator worked that station 11-7 Thursday night-Friday morning; I do not know where this fifth man worked the other four tricks in his work week, perhaps in McComb or in four other continuous stations). Following this pattern, you have twelve DS’s covering all but three tricks (12 x 5 =60), and another DS fills the week out, working three tricks. Does this last DS cover for vacations and sick time; are there other jobs nearby that he covers?

　It is unusual for two companies to cooperate in such a manner–but these two companies realized that it was either cooperation or death.

I still wonder as to why Amtrak #2 was held for about three hours a little bit east of Houston on this past 8 June (I could not tell just where it was); the conductor knew nothing except that there was a red signal.

[Paul_D_North_Jr]

Thanks, Ed, for jumping in and providing those details, as well as the clear and comprehensive explanations of the "before", the "after", and the "fix".  I've not seen that in print anyplace before, and coming from you - a guy 'on the ground' - it has huge credibility with me.  I know that operation is perhaps "the exception that proves the rule" as Railway Man sometimes said - but it also illustrates the real-world weaknesses in the 'One Dispatching Center' theory and application. 

And to the point of this thread and ICLand's comment, that mergers don't always - and maybe hardly ever - provide the hoped-for efficiencies.  This is undoubtedly one outcome and method of reaching it that no one in the SP-UP or BN-SF mergers ever anticipated.  As the guy who wrote Rich Man, Poor Man said, something to the effect of "Pay attention to what Life is trying to teach you".

And isn;t it just amazing what can be done when the petty turf wars and empires are set aside, and people are united to perform a well-defined mission . . . even better than when they tried to protect their own employer.  "What goes around comes around . . . " 

Now I'd like to someday meet the tough, single-minded, hard-nosed, thick-skinned SOB who had to actually set-up and implement the Spring Dispatch Center and get all those different people working together over 3 'tricks' and 7 days a week, and persuade and perhaps even overrule all the Vice Presidents and Superintendents, etc. . . .  

Thanks again, Ed.

- Paul North.  

[edblysard]

Paul_D_North_Jr

I believe BNSF and UP each did something similar - set-up a local dispatching operation - in the Houston area to jointly solve the late 1990's "melt-down" there after the SP-UP merger.  Ed Blysard has mentioned it once or twice here in passing - perhaps he or someone else familiar with that area can add more details.

- Paul North.    

Your thinking of the joint dispatching center in Spring, Texas, a suburban town just north of Houston .The Spring Joint Dispatch Center, housed in the old MoPac dispatch center in Lloyd yard

Staffed jointly by BNSF and UP dispatchers, the concept has worked wonders.

With more railroad track inside three counties, Harris, Montgomery and Ft. Bend than exist in a lot of states, getting trains in and out of here back in the days required at least one crew just to get a train out of yard onto the mains, often hogging out before ever reaching the city limits.

With the UP meltdown it became apparent that having each railroad trying to dispatch not only their own trains but handling trains from other Class 1s over trackage rights would never work.

UP guys would hold up the BNSF and KCS just to let a yard crew run a transfer, not out of meanness but because they were paid to keep UP fluid, not BNSF....and each train that died out on any main created a ripple effect that wrecked everything.

Part of the solution was to create the Spring Dispatching center.

It has 3 "desks" ..TD1 (train dispatcher 1) routes all main line traffic into the metroplex, TD2 handles all the outbound, and TD3 takes care of all the traffic inside the metroplex, yard to yard moves, yard transfers, clearance or headroom moves out of yard limits into CTC, things like that.

The concept is built around the agreement that no dispatcher will give preference to one carrier over another, and it matter not which dispatcher is handling whose train, which means you find a BNSF dispatcher expediting a UP train across the city to meet a crew's time window, or a UP dispatcher holding a UP yard to yard transfer in a siding to allow a BNSF grain train onto the PTRA in time to get the power turned back to South yard..

With all the dispatchers running all trains as soon as they are ready to move, things have become a lot more fluid here.

It doesn't matter whose train it is, or whose track it runs on, the idea is to find the most efficient route for all trains to their destinations.

Reading that last sentence made me realize something...right after the UP meltdown, it was quite common for a train to leave a yard, run up to the first or second signal, get a red board, and hog out right there with their rear cars still in the yard they just left.

I saw many a Class 1 outbound crew get on a train at the PTRA North yard, and hog out with out ever turning a wheel.

Just sit there for 12 hours.

Today, waiting more then 20 minutes for a signal is rare, most of the time your lined up all the way out of town.

[Convicted One]

Murphy Siding

Maybe you could steal an explanation from him as well? What does that mean?

 

Well, the way he used it was coupled with the word "vague", and was postured as the anti-thesis to the concept of  "tangible" as it pertains to any real benefit that the public derives from  public fund investment in private industry

[Paul_D_North_Jr]

I believe BNSF and UP each did something similar - set-up a local dispatching operation - in the Houston area to jointly solve the late 1990's "melt-down" there after the SP-UP merger.  Ed Blysard has mentioned it once or twice here in passing - perhaps he or someone else familiar with that area can add more details.

- Paul North.    

[blue streak 1]

oltmannd

Paul_D_North_Jr

but I believe NS is the only post-merger Class I that has not consolidated its dispatching into One Central Facility,

Yes, but CSX is in the process of "unconsolidating". NS regularly examines how many desks are needed and what territory they should control, so you should see some shuffling from time to time. NS is also in the process of converting their dispatching systems to a common platform which means any desk anywhere could dispatch any territory anywhere.

This is important that if a dispatch desk(s) goes down for whatever reason other desks can take up some slack but of course will not operate as efficiently as the regular desk. CSX has in the past had Jacksonville center go down and almost the whole system went to a crawl.

During one hurricane passage over JAX passenger trains (MARC<VRE, AMTRAK among others were stopped. Too many eggs in the JAX basket. So the reason CSX is unconsolidating. Ex: Now an Atlanta terminal CSX dispatcher that works with the NS dispatcher.

 

 

[dakotafred]

Deggesty

Does this mean that every dispatcher will know all the ups and downs and ins and outs of every line and will move all the trains with dispatch?

I doubt it. Some of the efficiencies the RRs have achieved thru mergers, automation and revision of work rules are squandered in other ways, such as centralized dispatching.

I remember an article by Doyle McCormack not that long ago, in either TRAINS or CLASSIC TRAINS, mentioning that his dispatcher father on the NKP had to requalify EVERY YEAR by making a run over his 100-mile district.

Now I regularly hear dispatching horror stories from my engineer friend on the BNSF, whose 30,000-mile RR is all dispatched from Texas. He says his dispatchers constantly make stupid calls because they have never seen the territory and cannot match their trains to the topography. He also gets deadheaded 200 miles a lot ... then deadheaded home again.

BNSF may be making 9-10 percent return these days, but how much money are they leaving on the table?

[Paul_D_North_Jr]

Paul_D_North_Jr

  [snip]  Instead, my point is that your old boss and his successors have likely done a better job at preserving their business and bringing money back to the stockholders than UA [United Airlines]'s - you've likely seen or heard Warren Buffet's line about the aggregate unprofitablity of the airline business since the Wright Brothers - so I don't begrudge the railroad CEO his pay as long as he performs, notwithstanding the disparity with the rank-and-file.  [snip] 

Here's the Warren Buffett quote that I was referring to, from Great Aviation Quotes at - http://www.skygod.com/quotes/airline.html near the top:

"As of 1992, in fact—though the picture would have improved since then—the money that had been made since the dawn of aviation by all of this country's airline companies was zero. Absolutely zero."

— Warren Buffett, billionaire investor, interview 1999

But since that assertion by Buffett in 1999 to date, I suspect that the airline profit picture has been mostly seriously negative, such that the net result now is still less than zero.

And also - same source and location: 

"The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."

— Warren Buffett, annual letter to Berkshire Hathaway shareholders, February 2008  

 Anybody else see at least a superficial similarity to the railroad business at times in that 1st sentence ?   

- Paul North. 

[oltmannd]

Deggesty

oltmannd

NS is also in the process of converting their dispatching systems to a common platform which means any desk anywhere could dispatch any territory anywhere.

Does this mean that every dispatcher will know all the ups and downs and ins and outs of every line and will move all the trains with dispatch?

No, it just makes it easier to deal with trouble when it comes.

[Deggesty]

oltmannd

NS is also in the process of converting their dispatching systems to a common platform which means any desk anywhere could dispatch any territory anywhere.

Does this mean that every dispatcher will know all the ups and downs and ins and outs of every line and will move all the trains with dispatch?

[oltmannd]

Paul_D_North_Jr

but I believe NS is the only post-merger Class I that has not consolidated its dispatching into One Central Facility,

Yes, but CSX is in the process of "unconsolidating". NS regularly examines how many desks are needed and what territory they should control, so you should see some shuffling from time to time. NS is also in the process of converting their dispatching systems to a common platform which means any desk anywhere could dispatch any territory anywhere.

[Paul_D_North_Jr]

ICLand

[snipped] As was pointed out on this thread earlier, very rarely has any Class I even reached "revenue adequacy" under 30 years of deregulation and after extensive mergers. And I see that touted here as evidence of "outstanding success." Others might argue, validly I think, that failure to achieve even "adequacy" represents at least some level of failure, hardly evidence of success. I guess people have different standards.

[snip]

Why is this a sore spot? Well, it wasn't until I thought about it. But, a friend of mine, a retired Chief Dispatcher, was reminiscing a couple of months ago. His office in 1975 was two blocks from mine. Three years later, it was 350 miles away. By 1985, it was 2,000+ miles away. And he related, "every time you got a chance to catch your breath and put your feet up, it meant that the Company needed to add another territory to your jurisdiction. So, there was this relentless pressure, and every time there was a merger, a new set of geniuses, who had never done this before, came in and upset the apple cart in the name of efficiency. And they removed sidings, closed down yards, consolidated dispatchers, and couldn't figure out why things didn't work as well as they did before. We lost fluidity, had tired crews, tired dispatchers, nobody was happy. They announced that it wasn't their job to make anyone happy. Considering that costs went up, and returns went down, they succeeded." [emphasis added - PDN]

 

I meant to note this before, but it got set aside in the press of other matters . . . that day job thing, you know  . . .

Not sure how significant it is in this context, but I believe NS is the only post-merger Class I that has not consolidated its dispatching into One Central Facility, as all the others have done (that info courtesy of oltmannd/ Don in another thread here about a year ago).  Although, I do see indications of frequent shuffling of the segments of NS territory covered by each division/ DS.  I don't know how or whether a direct correlation can be traced from this unique characteristic to NS profitability, but there it is, at least to keep an eye on in the future. 

And I still like the contrarian thesis advanced above in this thread by ICLand - very briefly, that railroad mergers are usually not all they're cracked up to be.  If nothing else, keeping that thought in mind ought to help us ask some very tough questions the next time such a mega-merger is proposed.

- Paul North.

[Deggesty]

Paul_D_North_Jr

And what is the CEO of Unied Airlines earning - excuse me, being paid -

Paul, I appreciate the distinction you made, which applies to almost anyone who is paid what seem to be unrealistic amounts for whatever services they actually render, whether it be in business or entertainment.

[Murphy Siding]

Convicted One

Murphy Siding

   I'm not sure I agree with that.  Had one of the two been forced into bankruptsy,  it would probably have ended up in receivership, as most bankrupt railroads did back then.  That would have given that railroad a leg up on the other road...which probably would have ended up in bankruptsy.  At that point, both PRR and NYC would have been looking for a merger, or government help.  
    

 

Stealing a line from the great Fred Frailey: "Squish-squish-squish"...

  Maybe you could steal an explanation from him as well? What does that mean?

[Convicted One]

Murphy Siding

   I'm not sure I agree with that.  Had one of the two been forced into bankruptsy,  it would probably have ended up in receivership, as most bankrupt railroads did back then.  That would have given that railroad a leg up on the other road...which probably would have ended up in bankruptsy.  At that point, both PRR and NYC would have been looking for a merger, or government help.  
    

 

Stealing a line from the great Fred Frailey: "Squish-squish-squish"...

[ICLand]

YoHo1975

I'm sorry you feel my posts were pointless, but I managed to get you to provide what I wanted, so thank you anyway. 

 

And I have to apologize. I "grew up" under a railroad president with an engineering background, went into operations, served in nearly every important supervisory role, including finance, and expected, when you walked into his office, you to know exactly what you were talking about. His background on the railroad gave him an intimate knowledge of virtually everything on the railroad, and when you couldn't answer his questions, the room got very cold. Especially when he already knew the answers.

My lesson has always been, prepare, prepare, prepare. I understand that this is a different environment, but old habits die hard. The Staggers Act is nothing to get bent out of shape over either way. It's a long time ago frankly and the world moves on. However, I would note that for those who believe that Staggers was designed to foster competitiveness, and think that was a useful goal, it should be noted that mergers are always essentially anti-competitive transactions and insofar as they have reshaped the rail industry, they were in many ways designed to undo the market reforms advanced by the Staggers Act.

[selector]

I hear ice cracking.....

[ICLand]

Paul_D_North_Jr

No, I don't really want an answer about the UA CEO .  Instead, my point is that your old boss and his successors have likely done a better job at preserving their business and bringing money back to the stockholders than UA's - you've likely seen or heard Warren Buffet's line about the aggregate unprofitablity of the airline business since the Wright Brothers - so I don't begrudge the railroad CEO his pay as long as he performs, notwithstanding the disparity with the rank-and-file.

 

My original comment on 8/3:  "Cynics charge that the motives for mergers are obvious: ambitious people tend to be empire builders, and managers of larger companies can command higher compensation than managers of smaller companies. Around those motives are built highly artificial constructs of purported merger benefits marketed by management insiders to shareholders who generally don't have the insider's knowledge of their own company, let alone the other company involved in the merger."

I don't begrudge anyone what they "earn". When they claim they earn it because of fuel prices dropping, costs dropping, and the general economy doing for them what they couldn't do otherwise, I'm sorry, I'd choose to pay the stuffed goat exactly what he's worth.

And of course, that's the point of metrics. When a railroad under deregulation and a good economy cannot earn the return that the company earned under the onerous burdens of regulation and a bad economy, I'd look for a better standard of proof.

[Paul_D_North_Jr]

  And what is the CEO of Unied Airlines earning - excuse me, being paid - these days as well ?  After how many bankruptcies, as compared to your former employer ?  At least 1, for sure . . .

No, I don't really want an answer about the UA CEO .  Instead, my point is that your old boss and his successors have likely done a better job at preserving their business and bringing money back to the stockholders than UA's - you've likely seen or heard Warren Buffet's line about the aggregate unprofitablity of the airline business since the Wright Brothers - so I don't begrudge the railroad CEO his pay as long as he performs, notwithstanding the disparity with the rank-and-file.  If all his pay was taken away and redistributed equally among - say, 10,000 employees, then they would each get an additional mere $2,400 - before taxes.  Think that would benefit the company as much as not having that CEO or one as capable ?  Evidently the Board of Directors doesn't, and a majority of the shareholders apparently don't think so either.

- Paul North. 

[ICLand]

Murphy Siding

     ICLand-

    If I'm reading this correctly, you're saying that railroad mergers, since PennCentral at least, have been failures(?)

  

If you are in high management, they have been extraordinarily successful. My old boss was one of the highest paid railroad executives in the industry, at $150,000 a year. Forbes magazine ran a somewhat critical article on that, pointing out that only the CEO of United Airlines earned more in the transportation industry. Many mergers and 40 years later, his successor is earning close to $24 million a year in combined salary, options, perks, etc..  The average employee then earned about $4 an hour. Now its about $27 an hour.

[YoHo1975]

ICLand

YoHo1975

 Your logical point seems to be that because financial figure A has not improved over 35 years, Staggers failed.

 

 

My point is that "Staggers" really doesn't have much to do with anything. What it did do was wake managements up to the harsh reality of competition and the need to watch expenses more carefully because the ICC was no longer around to grant rate increases to protect poor managers.

I think Staggers was an important piece of legislation. I don't think it equates with Genesis or Exodus. But, when the mere mention of the word "Staggers" is supposed to substitute for ordinary common sense comparisons of how companies perform, well, I think that's where the line has to be drawn, and I've drawn it. You don't like the comparisons, I still can't tell why because you don't use any metrics whatsoever, and I still don't know what your point is, but I've done my best to make mine clear by specific examples, specific measures, and offering historical context surrounding those measures.

And that will have to do because this is far more time and investment in what amounts to a pointless and relatively aimless discussion than it deserves.

 

 

This is what I wanted. I didn't feel you were offering historical context. You asked what changed, I offered a specifc thing that changed. I don't give a rat's behind about Staggers. I felt reading this thread that I got a data point with no context and I offered some and was told my comment was pointless and aimless. 

 

Treating any piece of legislation as if it was biblically important is pretty silly.  My posts have been to raise the question of "was staggers an enabler?" You've given some context suggesting perhaps not. Context you didn't provide before I did a bellyflop into this thread.

I'm sorry you feel my posts were pointless, but I managed to get you to provide what I wanted, so thank you anyway. 

[ICLand]

YoHo1975

 Your logical point seems to be that because financial figure A has not improved over 35 years, Staggers failed.

 

 

My point is that "Staggers" really doesn't have much to do with anything. What it did do was wake managements up to the harsh reality of competition and the need to watch expenses more carefully because the ICC was no longer around to grant rate increases to protect poor managers. But, Managements could do a good job prior to Staggers. There is abundant proof that well-managed railroads did as good or better than their post-Staggers counterparts. Managements could do a rotten job before and after Staggers. There is proof of that. Staggers did nothing to change the fact that management abilities are highly variable, in highly variable business environments.

My point is, turning "Staggers" into a kind of  religious experience by misrepresenting both its purpose and effect, distracts entirely from the important purpose of analysis, which is to assess the effectiveness of management performance using recognizable and well-understood measures of that performance.

Just about 50% of railroad tonnage today was completely unaffected by Staggers. Coal was deregulated in 1975. And by the way, things got worse after that. Another 30% of tonnage remains regulated under the R/VC clause of the Staggers Act. That just doesn't leave that much to get too excited about.

Cost benefits? Nothing related to Staggers, per se. Diesel fuel costs, in real terms, declined 30% between 1982 and 1999. Electric power industrial rates nationally declined 40% over the same period; in some areas, 50%. Those account for nearly half of "railroad" productivity increases after "Staggers" and those benefits had nothing to do with either railroad management or Staggers. A stuffed goat would have looked like a good manager with those kind of cost declines rolling across the income statement, year after year.

Accounting for nearly all of the remainder of "productivity" is employee productivity. In general, that was extraordinary, but in some details, horrible. That is, to me, in those instances when it was a penny-wise, pound foolish approach to raising productivity. It had nothing, again, to do with Staggers whatsoever but rather crew law/contract changes, major advances in industrial technology and, ironically, the desire of management to improve their financial metrics!

The result, financially, was extraordinary. The result on the ground was tired crews, tired dispatchers, sometimes expensive congestion, and sometimes deadly mistakes. Applied without some common sense, the drive to improve employee productivity resulted in many instances in less, not more, productivity.

Had the fuel and power costs not declined so dramatically, railroad rates today would be just about where they were in 1979; nearly a historical high. Accordingly, Staggers has little to do with current rates "declining" to the earlier historical high reached in 1975. And it took thirty years to peel the rates down from their 1979 levels to their 1975 levels? Based in large part on utility and fuel cost declines? Tell me again what Staggers actually did?

I think Staggers was an important piece of legislation. I don't think it equates with Genesis or Exodus. But, when the mere mention of the word "Staggers" is supposed to substitute for ordinary common sense comparisons of how companies perform, well, I think that's where the line has to be drawn, and I've drawn it. You don't like the comparisons, I still can't tell why because you don't use any metrics whatsoever, and I still don't know what your point is, but I've done my best to make mine clear by specific examples, specific measures, and offering historical context surrounding those measures.

And that will have to do because this is far more time and investment in what amounts to a pointless and relatively aimless discussion than it deserves.

[ICLand]

YoHo1975

 I'm not suggesting any of that.

I'm suggesting that looking at only the financials tells you nothing of interest unless your only interest is as a stockholder.And even then, only a really poor investor wouldn't look deeper into the industry.<p>

You seem to be saying that "railroads are not doing better now financially than they were then, therefore the entire concept was a failure."

...

My point is that is only one measure of the business absent of the myriad different things that affected the railroad business over these last 35 years and is therefore meaningless.

 

Well, you must think you are on to something here. Staggers was designed to restore the economic viability of the rail industry by permitting rates to rise unfettered. Don't get too invested in Staggers, per se, it was the last of a series of deregulatory actions that covered all transportation, banking, savings & loans, and communications. This followed a decade of extraordinarily poor economic performance of the US economy in general and what was beginning to spur a hyperinflation resulting from the bright idea that the government could spend on a war, and heavily on social programs as well.

"One measure of a business," as you put it, happens to be the way society measures business success. Unless you are into the fuzzy metrics of organic gardening or raising bunnies, there are ultimate measures of business performance and they happen to be financial since that is what business is all about. In fact, profitability is how to measure just how management responds to "the myriad different things" that change and affect businesses.

You say it is "meaningless." Oh, so then the dire economic straits of some railroad companies in the 1970s based on lack of profitability was just a meaningless exercise. It really meant nothing. Staggers was an overreaction because financial metrics are just plain meaningless so why change the system?

Between asserting a premise that is as nearly indefensible as I have ever seen, and putting words in my mouth, I still don't know where you are going. The fact is, and I have nothing to do with the conclusion, is that most mergers fail. Why railroads might be an exception, you have not said, but the metrics available suggest that mergers have, by and large, over a forty year span beginning with the Penn Central, harmed rather than energized the financial position of the merged companies.

And the fact is, in virtually every case that I can lay my hands on, the management that promoted the merger and justified the proceeding based upon specifically identified economic improvements failed dismally to deliver on those economic benefits, over and over. 

And beginning in 1998, industry efficiency as a whole has flattened remarkably. That is consistent with merger experience outside of the rail industry. Rates are beginning to rise again to maintain margins; margins are going to begin to fall for those traffic elements with elastic markets. It's an old story and a continuing cycle. Staggers couldn't, can't and won't change that.

What you are suggesting, of course, is that there is no way to measure success or failure. If true, we would not have the Staggers Act in the first place. Someone could always blame "myriad changes" or "traffic mix" or some other odd excuse for lackluster economic performance. Management certainly would: "h***, it's not our fault, it's the TRAFFIC MIX!" And that is exactly what you are saying.

The best I can offer is that, when you say "that looking at only the financials tells you nothing of interest unless your only interest is as a stockholder," you are just dead wrong. Management performance is judged entirely by financial measures because the ultimate purpose of business enterprise is to successfully convert investment into profit.