The Milwaukee Road

[MichaelSol]

The ICC believed relative successes of the Northern Lines out West compared to the Milwaukee did not reflect poor management, or even a structural weakness of the Milwaukee's route system, but rather that it reflected unfair competitive practices in terms of setting joint rates

The Milwaukee, "notwithstanding its superior grades and shorter route, is hamstrung and shorthauled, and is continually losing effectiveness as a competitor in this territory ... because of restrictive routings imposed by connecting lines." Commissioners Tuggle, Freas, Murphy, Walrath, and Goff, United States Government Interstate Commerce Commission Reports, 328 ICC 534. March 31, 1966.

And, this was after approximately 10 years of testimony and hearings about the relative strengths and weaknesses of the northern tier railroads from the railroads themselves, including GN and MILW's engineering departments, subject to examination and cross-examination under oath.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by MP173

So, no data exists....just the comments of a dispatcher.

Just clarifyiing that the comment was not mine nor my observation.

He has detailed specific observations, such as GN's auto yard emptying out after Milwaukee's big Kent facility opened up. He has, on a Milwaukee List, provided a good deal of specific observation and data ( he has a barn full of traffic data), and his remark was his summation of that data and those observatons.

He was a long time and careful observer while at the BN. Not the kind to rely on outdated textbooks for his railroading knowledge nor to ignore the significant context of rail operations. Simply because he has been careful with his observations and almost always right on details of any recollection or fact, I tend to offer his comments credibility, based on a number of years of familiarity with his observations and comments, and particularly on matters BN.

Best regards, Michael Sol

[MP173]

So, no data exists....just the comments of a dispatcher.

Subjective analysis rears it's ugly head again.

ed

[MichaelSol]

QUOTE: Originally posted by MP173

Well, I am really not obsessed with BN's profit on PNW traffic other than you stated that MILW was cleaning their clock or something to that effect...so I just thought their financial data for their long haul traffic would be interesting to compare.

But, I think you answered it when you stated all roads were looking for the long haul. No doubt, BN was doing just fine on that segment and just buying time system wide until the coal started running.

I quoted a BN Dispatcher familiar with both companies in the PNW who stated, based upon his observations of traffic changes after the BN merger that "Milwaukee was having BN for lunch."

It would be interesting, however, to compare.

Best regards, Michael Sol

[MP173]

Well, I am really not obsessed with BN's profit on PNW traffic other than you stated that MILW was cleaning their clock or something to that effect...so I just thought their financial data for their long haul traffic would be interesting to compare.

But, I think you answered it when you stated all roads were looking for the long haul. No doubt, BN was doing just fine on that segment and just buying time system wide until the coal started running.

ed

[MichaelSol]

QUOTE: Originally posted by MP173
[brSo all you can do is compare MILW's LW financial's to GN's SYSTEM financials which would include:

1. Passenger trains
2. All branch lines
3. Short haul traffic

No adequate means is available to compare Chicago - PNW financials of MILW and BN (or GN)...which makes my assessment that BN's long haul traffic was probably pretty profitable.

Just how much traffic moved from L'ville to PNW? I would assume some auto traffic from the Ford plant, and probably interchange off of L&N and Southern, at least until service imploded.

Hi Ed, I guess I am not sure why BN's profit is necessarilly relevant. Interesting, surely, but Milwaukee's LW was, as a separate railroad, doing pretty good and that's the bottom line of course. Well, it was doing a lot better than Lines East, and the OR is handsome by railroad standards.

The station revenue reports for Kent, WA, for instance, shows virtually all auto traffic, carloads and revenue. We can know just about exactly what MILW received for hauling autos. Louisville has a very high revenue to carload figure. Not being aware of anything railroads hauled that would generate that kind of revenue for a short haul to Chicago, Milwaukee or even Twin Cities, I suspect, without more, that a good amount was bound for Seattle/Portland, and vice versa. If I have time this week, I will call some of the traffic people and see what they remember.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by MP173
I would think most long haul traffic back then was very profitable due to the very nature of the rates, pricing and costs structures.

That was the whole point. Midwestern railroads were all in trouble. They all had these 100 -300 mile hauls. The transcontinentals were much healthier with their 500-1000 miles hauls. That is exactly why Milwaukee VPO Garelick said that "every railroad in the country was looking to get longer hauls, that what was driving much of the merger movement. Milwaukee had very long hauls. It was trying to get rid of them. It was arguing that it could make money off of short hauls. Nobody else could. It didn't make any sense."

Best regards, Michael Sol

[MP173]

Michael:

So all you can do is compare MILW's LW financial's to GN's SYSTEM financials which would include:

1. Passenger trains
2. All branch lines
3. Short haul traffic

No adequate means is available to compare Chicago - PNW financials of MILW and BN (or GN)...which makes my assessment that BN's long haul traffic was probably pretty profitable.

Just how much traffic moved from L'ville to PNW? I would assume some auto traffic from the Ford plant, and probably interchange off of L&N and Southern, at least until service imploded.

ed

[MichaelSol]

QUOTE: Originally posted by MP173

I would bet, that BN had similar profits on it's long haul traffic.

Oddly, Milwaukee had about 30% of the traffic carried within Washington State, according to the WSDOT, which was very high all things considered. That is, originated and terminated within Washington State. Lines West was a short haul carrier as well, and certainly not high-grading the Long Haul by any stretch.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by MP173

It is very difficult to assess the profitability of the MILW line vs BN's line.

Michael, we have your figures for the MILW's line. I assume those were internal accountings and at this time in history, are all we have to go on.

But, do such accountings exist for BN? Have I missed that in this long continuing epic of a thread?

Milwaukee's long haul was Portland to Louisville, and there was quite a bit of it. When first opened, Louisville made MILW the longest line haul in the country. And looking at the traffic carloadings and revenue at Portland, Tacoma, Seattle, and Louisville, the very long haul character -- of very high revenue character -- of Milwaukee's traffic is obvious.

It is possible to assess station revenue reports and connecting traffic and, with a little knowledge of what was being shipped from where, and see that Milwaukee had very profitable traffic. Auto traffic is a good example. MILW knew exactly what UP was getting because they jointly operated the Kent Auto facility. They charged and received the same rates. So much for that theory, unless of course UP was undercharging as well.

While average revenue per carload is a pretty generic analytical tool, Milwaukee LW average revenue per carload was significantly higher than the system whole, and higher than BN's of the era. At least from that tool, it is possible to see if the Company was buying market share or making money, and the Company was definitely making money.

We do specifically know the component profitability of the BN system, since the merger only took place in 1970. There was some initial improvement in OR but after a very few years, the OR of the BN was just about exactly where the combined OR trends had been headed for the NP, GN, and Q prior to the merger. That has been a fairly consistent observation about mergers in general. There is sometimes a pretty good consolidation, and some expenses are cut, but when the slack is taken out, the underlying economic fundamentals that drove the merger partners prior to the merger drives the consolidated company once again. They don't seem to really do much to "solve" any particular problem, just make the problem bigger later on.

And this was interesting about the BN because, as far as rail mergers go, it was a very well managed merger effort, probably one of the most successful of rail mergers. But merger "benefits" only seem to last four or five years. Of course, you started to see a strategy of merger, just about the time those underlying economic fundamentals started to drive the OR again, and BN has followed this strategy fairly consistently. When they start to run out of merger partners, .....?

Certainly any comparison with GN would be comparing MILW Lines West with the best of the lot. And, of course, BN did not obtain any longer hauls with the merger, but was able to report significantly longer hauls.

Of course, the point is, we know the OR of the LW as a separate system.

We know it was very good.

Best regards, Michael Sol

[MP173]

It is very difficult to assess the profitability of the MILW line vs BN's line.

Michael, we have your figures for the MILW's line. I assume those were internal accountings and at this time in history, are all we have to go on.

But, do such accountings exist for BN? Have I missed that in this long continuing epic of a thread?

I would bet, that BN had similar profits on it's long haul traffic. Perhaps a bit lower, as more $$$ would have been sunk into capital spending and maintennace. Also at that time (late 70's) BN would have been ramping up for the Powder River Coal project, which no doubt affected bottom line system wide.

So, anyway, what were BN's financials for the Pacific Northwest traffic?

I would think most long haul traffic back then was very profitable due to the very nature of the rates, pricing and costs structures.

ed

[MichaelSol]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by PNWRMNM

I think you are stretching it a bit to claim that the MILW "dominated" in Seattle and Tacoma.

Mac, anytime one competitor can get 76% of Port traffic, in the face of two other competitors, plus capture the Auto market, plus 50% of all intermodal, well ....

Now, things had begun to slow down by 1977, compared to the peak year of 1974, but here is the official record for Milwaukee in 1977:
Per day:
St. Maries to Othello, 9 trains average/day
Othello to Black River, 9 trains.
Seattle/Tacoma, 11 trains
Tacoma to Portland, 9 trains

I cannot speak to it personally as I was not there, and couldn't stay awake for 24 hours a day to observe even if I was. However, this was information presented to the ICC by the Milwaukee in "Appendix I, Train Operations," Petition to Abandon, August 8, 1979.

During 1976 and 1977, Trains 200, 201, 202 and 205 were operated seven days a week, and Trains 206 and 207 were operated five days a week. Trains 200 and 201, and their predecessors, #261 and #262, frequently ran in two sections, a C, Chicago, and a TC, Twin Cities, section.

Best regards, Michael Sol

Market share is important - but you can't buy it and survive. I had a good friend named Dorthy Cranshaw from Northwestern U. grad school. She was hired by Cruckshank (SP?). He "acquired" her for the MILW by promissing operating experience - something that was unusual and critical for a woman in those days. (She was sharp, left the MILW for CSX, as has disappeared for all I know.)

She just railed about how the MILW got that auto traffic. She claimed they bought it with low rates. You can't do that. You've got to cover cost, not just produce a positive cash flow. The MILW couldn't do that and they died.

Well, you have the documented figures that Milwaukee Road earned nearly 35% net over its costs of operation, better than any competitor. What other information do you need?

Are you suggesting that, in order to reach this profit margin, that Milwaukee was overcharging on the remainder of its business?

And yet it was still getting the traffic?

Best regards, Michael Sol

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by PNWRMNM

I think you are stretching it a bit to claim that the MILW "dominated" in Seattle and Tacoma.

Mac, anytime one competitor can get 76% of Port traffic, in the face of two other competitors, plus capture the Auto market, plus 50% of all intermodal, well ....

Now, things had begun to slow down by 1977, compared to the peak year of 1974, but here is the official record for Milwaukee in 1977:
Per day:
St. Maries to Othello, 9 trains average/day
Othello to Black River, 9 trains.
Seattle/Tacoma, 11 trains
Tacoma to Portland, 9 trains

I cannot speak to it personally as I was not there, and couldn't stay awake for 24 hours a day to observe even if I was. However, this was information presented to the ICC by the Milwaukee in "Appendix I, Train Operations," Petition to Abandon, August 8, 1979.

During 1976 and 1977, Trains 200, 201, 202 and 205 were operated seven days a week, and Trains 206 and 207 were operated five days a week. Trains 200 and 201, and their predecessors, #261 and #262, frequently ran in two sections, a C, Chicago, and a TC, Twin Cities, section.

Best regards, Michael Sol

Market share is important - but you can't buy it and survive. I had a good friend named Dorthy Cranshaw from Northwestern U. grad school. She was hired by Cruckshank (SP?). He "acquired" her for the MILW by promissing operating experience - something that was unusual and critical for a woman in those days. (She was sharp, left the MILW for CSX, as has disappeared for all I know.)

She just railed about how the MILW got that auto traffic. She claimed they bought it with low rates. You can't do that. You've got to cover cost, not just produce a positive cash flow. The MILW couldn't do that and they died.

[MichaelSol]

QUOTE: Originally posted by PNWRMNM

Michael,I was counting trains each way, you counted total trains, a 2:1 difference.

Well, I hope that was clear and that no one thought I was implying Milwaukee had 18 trains a day both ways.

Best regards, Michael Sol

[PNWRMNM]

Michael,

I was counting trains each way, you counted total trains, a 2:1 difference.

My count of MILW is admitidly impressionistic. Maybe I should call by freind who was a locomotive engineer between Tacoma and Othello. He would know what MILW did in the last decade.

Mac

[MichaelSol]

QUOTE: Originally posted by PNWRMNM

I think you are stretching it a bit to claim that the MILW "dominated" in Seattle and Tacoma.

Mac, anytime one competitor can get 76% of Port traffic, in the face of two other competitors, plus capture the Auto market, plus 50% of all intermodal, well ....

Now, things had begun to slow down by 1977, compared to the peak year of 1974, but here is the official record for Milwaukee in 1977:
Per day:
St. Maries to Othello, 9 trains average/day
Othello to Black River, 9 trains.
Seattle/Tacoma, 11 trains
Tacoma to Portland, 9 trains

I cannot speak to it personally as I was not there, and couldn't stay awake for 24 hours a day to observe even if I was. However, this was information presented to the ICC by the Milwaukee in "Appendix I, Train Operations," Petition to Abandon, August 8, 1979.

During 1976 and 1977, Trains 200, 201, 202 and 205 were operated seven days a week, and Trains 206 and 207 were operated five days a week. Trains 200 and 201, and their predecessors, #261 and #262, frequently ran in two sections, a C, Chicago, and a TC, Twin Cities, section, so in that instance there was a 261C and a 261TC, for example.

Best regards, Michael Sol

[Anonymous]

Mac,

You're counting trains, not traffic percentages. You're going by subjective memory, not objective published data.

[PNWRMNM]

Michael,

I think you are stretching it a bit to claim that the MILW "dominated" in Seattle and Tacoma.

I worked for BN at Balmer yard in the late 1960's and early 1970's,just after the merger, railfanned the area at the same time, and in late 1970's travelled the area as an inspector for the Bureau of Explosives.

Before the merger the GN did three through freights daily each way between Seattle and Wenatchee, plus the Westbound only mail train #5 from Spokane to Seattle. The NP did two or three trains per day over Stampede. The SP&S was about three a day between Vancouver and Pasco. As I recall the MILW was in the range of 1-2. This also included all of their Longview and Portland business.

A score of 8 to 2 BN to MILW is hardly dominance. My recollection is that MILW track was in worse physical condition than the BN components as well. Tideflats yard track was far worse than anything I recall on the BN components.

Mac

[MichaelSol]

QUOTE: Originally posted by VerMontanan
If Mr. Sol is right, the legacy of the deteriorating financial condition of the Great Northern and its lack of prescience in discontinuing passenger trains along its transcontinental route seems to be in conflict with historical reality as relected today with regard to the GN route:

The thesis here is that historical reality -- of which GN's declining performance is documented -- is not really a historical reality if something else happened later on. And of course the poor performance of the passenger service was actually a good thing for the Great Northern Railway.

"F" on historical reality exam.

Best regards, Michael Sol

[nanaimo73]

Was the Flathead tunnel line a Great Northern project or an USACE project ?

[VerMontanan]

QUOTE: Originally posted by MichaelSol

What underscores VerMontanans lengthy perambulations is that GN was frantically spending millions and millions of dollars attempting to re-engineer its line, and at that point in time at which the railroads were comparable, 1960-1970, still could not match Milwaukee Road's fast freight transit times to the Pacific Northwest.

Again....could not or did not? Interesting that in 1971, however, BN operated the Pacific Zip which was hours faster than anything the Milwaukee every operated.

As for the GN "frantically" spending money trying to compete with the Milwaukee: While such a term is unprovable from any perspective, it does little to explain why the Milwuakee didn't upgrade its route with double track and CTC as did the GN. (But, I'm sure the answer is that their route was so superior, there was no need.)

If Mr. Sol is right, the legacy of the deteriorating financial condition of the Great Northern and its lack of prescience in discontinuing passenger trains along its transcontinental route seems to be in conflict with historical reality as relected today with regard to the GN route: The primary route for freight traffic between the Upper Midwest and Pacific Northwest, handling America's single most-ridden passenger train. But, this is undoubtedly a fluke.

[MichaelSol]

QUOTE: Originally posted by greyhounds

They were the third railroad to the "north coast" with the BN on their north and the UP to their south. There was nothing they could do - and they died.

If history were so obvious and so easy.

Of course, what the actual history shows is that, in its market service area, MILW had the larger market shares, particularly over UP.

Those pesky shippers and their ridiculous preferences. Didn't they know that UP was located to the south and BN was located to the north?

Well, I am sure they did, but those kinds of analyses just don't move shippers to inevitable historical and financial conclusions and they don't move me much in that direction either. The fact is, UP was strong in Portland, Milwaukee dominated Seattle/Tacoma, and BN was good in Portland and dominated Everett. By 1977, Milwaukee had made Portland a $45 million agency. Seattle and Tacoma combined generated about $70 million. Those would be good numbers today, and they were good numbers then.

Milwaukee's "Washington Division," had become the Company's largest revenue generator, even though both trackage and employees were significantly lower than some of the Midwestern divisions. It's revenue efficiency was higher than the remainder of the Milwaukee by far, and in fact exceeded that of both the UP and BN.

Analysis focused on Lines West of Miles City. This was problematic as Miles City was neither the historical nor the accounting demarcation between Milwaukee's "Lines West," and its "Lines East," and so this made historical comparisons necessarily more difficult. This "choice" also took out Milwaukee's heavy coal traffic it received from BN at Miles City.

Without the coal traffic, Lines West of Miles City earned, in 1977, $158 million in gross revenue. With the coal traffic, it was $166 million.

Expenses included $13.3 million in MOW, $30.2 million in equipment maintenance, $258,000 traffic, $43.5 million transportation, $1.6 million misc. general, $11 million in employee fringe benefits, $1 million in taxes, and $2.6 million in rent and joint costs.

This produced operating cash flow of $53,713,049. Since everyone has a different definition of cash flow, let's just say this is the net profit after the operating bills have been paid. That would be $174.3 million in 2005 dollars, earned off of $513 million in revenue. That's an Operating Ratio of 66%.

And this had remained fairly constant, 1970-1978, so it is safe to say that Milwaukee's Lines West generated $1.6 Billion in net operating income in 2005 dollars, or $486 million in 1977 dollars.

The Company as a whole, however, lost a total of $65 million (1977 dollars) over that same time period, 1970-1978.

Now, this is not a revelation now, and it was not a revelation then. The Planning Department staff saw all of this. After Stanley Hillman became determined in 1978 to dump Lines West, the Planning Staff could not make a projection for 1979 that had much hope. With Lines West revenue, in 1978 the Company had lost $23 million. Because of general economic conditions, this loss was going to increase substantially in 1979.

Hillman wanted to lop off $54 million in net income to the Company. Hillman saw it as cutting $104 million in operating expenses. The Planning Staff saw it as losing $157 million in revenue, or possibly even $221 million in revenue if they could find the equipment..

The Staff went to Hillman. I think this was the first inkling that Hillman may have had that "things weren't right" about what he had been told about Lines West. The Staff made their presentation. If Lines West was shut down, the Company losses in 1979 could exceed $90 million. Shutting down Lines West would not avoid a financial catastrophe, it would create one. It was the profitable core of the Company.

Hillman looked around, and finally announced that "better minds than yours have looked at this." He recommended that they had better "either get on the team or get off." The planner who had made the presentation got up, walked out the door, and quit.

Lines West was effectively ended as an operating railroad in 1979, although the technical shut down occured in March, 1980.

Exactly as the Planning Department had predicted, Milwaukee Road's losses skyrocketed to $92 million in 1979.

This was Lines East operating on its own, finally "unburdened" by the Pacific Coast Extension.

As this was unfolding before Hillman's no-doubt frustrated eyes in the Spring of 1979, on May 11, BAH delivered its final report. The Milwaukee made its money out West. There was no configuration of Lines East alone that could be profitable, and there was no configuration of the Company as a whole that could be profitable without Lines West.

His Trusteeship had turned a bad enough situation into an absolute debacle. His reputation as a careful financial analyst crumbled. He had words with the senior staff that had advised him in this direction. He developed a perforated ulcer and resigned.

No doubt the hapless victim of the PCE "cult."

Best regards, Michael Sol

[MP173]

UP and CNW were pretty much seamless by the late 70's, as I recall.

You are correct regarding the single line issue in the PNW by the mid 70's.

However, looking at things today, wouldnt the line I just described by a viable carrier? Not dominate, but viable.

ed

[greyhounds]

Ed, I don't think single line service is that big of a deal. I know interline freight created some problems in ltl, but CNW-UP worked just fine. It was the service route from Chicago to Seattle. And they ran competitively with the Santa Fe between Chicago and LA. Their joint line "Falcon" and Santa Fe #188 both did Chicago-LA in 50 hours.

In any event, the Milwaukee's single line "advantage" was gone in 1971 with the BN merger. They were the third railroad to the "north coast" with the BN on their north and the UP to their south. There was nothing they could do - and they died.

[MP173]

I will take exception with both of you, at least in the investment world.

Cash flow is basically net income and depreciation/amoritization plus a few other items such as deferred tax provisions and changes in working capital.

Free cash flow is cash flow less capital expenditures.

This is very critical because it takes into account the yearly investment a company makes into fixed assets. In the case of an asset rich company like a railroad which constantly needs to replenish physical plant, it is critical to analyze.

I do not have the data available. But, my guess is that MILW was using it's free cash flow, which was inflated due to NOT reinvesting in physical plant (deferred maintenance and car/locomotive repairs) and passing it to the investors in the form of dividends.

In such a case, it was liquidating the corporation.

I guess I dont know where we are going with all this.

Without going back and reading 18 pages of thread, is the point that the PCE was a superior route and should never have been lifted? Or that the MILW was a poorly ran railroad that would have been a force today with a streamlined operation and proper management?

To argue the MILW PCE was superior to the BN's routing is inconclusive. Data is being mined which suggests the line was superior, yet the argument does not hold water, as it is comparing a LINE SEGMENT to the entire BN system. To properly analyze this the LINE SEGMENT of MILW must be compared to the LINE SEGMENT of the BN. Dont think that can be done today.

Here is what I think happened, and if this was stated elsewhere, then my apologies for not properly crediting the source.

Managers tend to fall in love with, or at least become emotionally attached to certain divisions or portions of organization. Most of the time it is because it is where they developed. Looking at the map, geographically, MILW was tilted to the Midwest. My guess is most of the managers came from that area and had their mindset based on the Chicago - Omaha - Minneapolis triangle.

The PCE appears almost to have been an afterthought...and it was based on the historical developement.

The management appeared to be so set on the Midwest that they overlooked the opportunity to provide SINGLE LINE SERVICE from Chicago to the Pacific Northwest. Out of four railroads (GN, NP, UP, MILW) MILW was the only one capable of doing that.

They were stuck in the midwest, with a midwest mindset. What the heck would a merger with CNW have accomplished? Duplicate lines everywhere, with abandonment of half the lines? Do you really think the ICC would have allowed abandonment of all those lines in the 60's? or 70's? I think not.

Throw in the line to Southern Indiana and the trackage rights to Louisville and you could have even gone around Chicago! Did the MILW own a portion of the IHB? If I recall correctly, they did.

Imagine today, if you can...

A railroad running from Louisville to PCE via Mpl/StP with the Kansas City line (connecting with KCS). The Omaha line would be gone. The river line would run up to Mpls....lots of machinery manufactured in those old river communities, plus all of that corn. The line to Rapid City would be sitting on the edge of PRC.

What in the world were they thinking of 40 years ago?

I dont think MILW would have had the best route to PNW. But it would have been viable. I know they would not have had the best route to Kansas City, but it would have served the purpose.

From what was posted on this thread, even late in the game, MILW management didnt attempt to save the PCE line by refusing to negotiate with BN.

Game over, game set and match...MILW eliminated.

ed

[Murphy Siding]

QUOTE: Originally posted by Murphy Siding

MichaelSol: Since you're never at a loss for words,could you explain why the Milwaukee Road Went Broke? If I read all your posts, it would seem impossible,but it did happen. What are your thoughts about why?

[MichaelSol]

QUOTE: Originally posted by greyhounds
[MBA from Loyola of Chicago. MS in transportation from Northwestern in Evanston, IL. BA in political science from the University of Illinois at Urbana-Champaign.

Don't get me wrong. I respect these educational credentials, and anyone who takes the time to get them. In this instance, I just don't happen to see them applied to the questions at hand.

The MILW execs who most strongly saw the PCE as the viable future of the Company, aside from the Consulting Engineers who independently came to the same conclusion, had Harvard MBAs.

These included: MILW Pres and former VP-Finance, Curtis Crippen, VPO Marty Garelick, Asst VP Wm Brodsky, Asst VP Fred Simpson, and General Manager Lines West QW Torpin.

And, of course too late, Trustee Stanley Hillman.

Why any of these gentlemen would have any reason to be a part of a "PCE Cult" I do not know.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by MP173
[But, I do know enough to realize that you cannot allow emotion get in the way of facts and the simple fact is the Milw folks might have had a decent franchise if they had managed it correctly. They chose not to. They did not use the cash flow properly (regardless of which definition one uses) to invest in their business. They ignored cold hard data which suggested the path that should have been taken.

That's the key, Ed, the "cold hard data." You have the former MILW VP-Finance saying "that line was the life blood of this company," vs the guys on this thread who "believe" something else but can't seem to show any supporting data.

And that's where this breaks into two camps, very senior Milwaukee Road officials intimately familiar with the PCE, vs. Milwaukee officials who were new to the Company but had taken the top spots within months of the receivership. And the difference of opinion between them was striking.

Oh yes, and the third camp.

People who know nothing about it all.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by greyhounds
[There is no real difference between "cash flow" and "free cash flow". I think it's another thing you've made up to support your false ideology. "Cash Flow" is what gets deposited in the bank after you pay your bills. If you're living off your assets, not replacing them, you have cash flow but you're not making money.

You don't/won't understand that.

Wow. How does that square with current modern railroad practice of continual negative cash flows? With record profits and dividends, they're all going broke, right? Just consuming assets?

For the general reader, "cash flow" is generally defined as "cash flow to creditors plus cash flow to stockholders." The identity after you "pay your bills" is called "operating cash flow" or "free cash flow." I not only made it up to support a "false ideology", but so did Ross, Westerfield, Jordan, Corporate Finance, McGraw Hill, 2001, p. 34. And they don't even mention Milwaukee Road. Very subtle, these PCE cults!!

Naturally, the main reason I "don't understand it" is because it doesn't happen to be true.

And you were the guy with the "hot trains delayed" remark? Who couldn't do basic math? With an MBA? That is hilarious.

But, didn't they teach you that you need numbers to make these assumptions.

And that's the question you refuse to answer.

Where are your facts?

Best regards, Michael Sol

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
[brThey also increased their cash flow by not maintianing the railroad. If you don't replace the ties you can keep going for years, you get slower and slower. But you can creep over the railroad for years. Eventually, you face a tremendous rebuilding cost, throw up your hands and retreat. This is what happened.

I keep asking for your actual numbers, but all I get is baloney.

The BN conditions produced approximately $500 million in additional cash flow 1970-1977. Expenses didn't increase by nearly that much.

We know that because we have specific data.

As one retired Milwaukee VPO put it, "the Milwaukee had a choice between the very good revenue from long haul traffic, or the short haul traffic that railroads were trying to get rid of because there was no profit in it Their choice made no sense. Milwaukee was the only railroad in the country that thought it could make money off the short haul."

Why do you argue that long haul was unprofitable, and short haul the way to go?

What school did you get your MBA from? You have already confused "cash flow" with "net cash flow," and this is specifically documented on this thread, and then you pretended you knew there was no difference when in fact there is a huge difference You would have flunked out of the MBA courses I took.

I keep looking for numbers here, and you keep pretending numbers are not important, only your "conclusions."

I guess this comes down to this, since you refuse to offer any support for any of your contentions.

How do you "know" so much about the Milwaukee Road, more than its employees, more than it's officers, more than the numbers, more than anybody?

Please, this time be specific.

Best regards, Michael Sol

MBA from Loyola of Chicago. MS in transportation from Northwestern in Evanston, IL. BA in political science from the University of Illinois at Urbana-Champaign.

There is no real difference between "cash flow" and "free cash flow". I think it's another thing you've made up to support your false ideology. "Cash Flow" is what gets deposited in the bank after you pay your bills. If you're living off your assets, not replacing them, you have cash flow but you're not making money.

You don't/won't understand that.