Ulrich I agree, and from the reports I've read they're all making massive investments in upgrading their plant and in realigning assets to meet anticipated future demands. They're on the right track (yeah I know.. pun).
I agree, and from the reports I've read they're all making massive investments in upgrading their plant and in realigning assets to meet anticipated future demands. They're on the right track (yeah I know.. pun).
Let's hope so. Up-to-date or even ahead-of-its-time infrastructure (not limited to cyberspace) is essential to economic growth and prosperity for our future.
C&NW, CA&E, MILW, CGW and IC fan
UlrichExecutives who contribute nothing to the workflow?
Based upon the nature of this and other of your replies, I don't believe that you paid close attention to my original post.
In my post I clearly stated: "already well compensated executives and 'contribute nothing to the productive work flow' stockholders"
Where did you ever get the idea I said that the executives were the ones contributing nothing to the productive work flow?
I likewise believe that your typifying the majority stock holders as being small time "mom and pop" type investors is a little naive. What about the large institutional investors and hedge funds, both often having representation on the board? Personally I suspect they see any penny saved as going right into their pocket. But I'm a cynic.
Convicted One Ulrich Based upon the nature of this and other of your replies, I don't believe that you paid close attention to my original post. In my post I clearly stated: "already well compensated executives and 'contribute nothing to the productive work flow' stockholders" Where did you ever get the idea I said that the executives were the ones contributing nothing to the productive work flow? I likewise believe that your typifying the majority stock holders as being small time "mom and pop" type investors is a little naive. What about the large institutional investors and hedge funds, both often having representation on the board? Personally I suspect they see any penny saved as going right into their pocket. But I'm a cynic.
Ulrich
Stock corporations today could give a flying flip about the 'mom & pop' stock holders - their only concern is the institutional investors that can buy or sell enough stock to require SEC filings on their activities and have a big enough voice to get the company leaders to listen to what the institutional investors have to day.
Never too old to have a happy childhood!
I don't care if they only care about the large institutional investors. Ever heard the phrase "a rising tide lifts all boats"? If ABC Aggressive Funds forces the stock to rise then my stock goes up too.. I, the little "mom and pop guy" gets a free ride on their efforts. The only difference is that the folks who invest in the funds pay fund managers out of their earnings while my stock goes along for the ride (for free). So who's smarter here? A good case in point is Bill Ackman and Pershing Square. CP's stock went up due to his investment in time, effort and resources and due in large measure to his smarts in bringing about much needed management changes. Guess what.. the price of my stock went up too... and my contribution in time and effort and thought was nothin.
A rising tide lifts all boats. Unless your boat has some holes in it.
Many activist investors will think nothing of ruining a company long term for short term profit. Once they are through with them, Mom and Pop may have a few extra dollars in their portfolio. However, if their livelihood was working for, or owning a business that served employees at that company, are they better off if the company was shut down to gain that stock increase?
Jeff
True Jeff; however I doubt very much that's what happening at any of the big 7...I've read of that happening but I can't think of any specific examples.. can you?
Research "Carl Ichan" and "corporate raiders". You'll find plenty.
Norm
Whether Ichan is a corporate raider or not is certainly open to debate and probably not relevant to this discussion. All I've stated is that stockholders aren't what's drivng the interest in one person train crews. Most stockholders, including myself, aren't all that interested in that issue and defer to whatever solution management and labor can come to terms with. What do I care if trains have one crew member or ten so long as the railroads remain safe and profitable. Notice I stated SAFE too..because I'm interested in the longterm profitability of the businesses I invest in.
The investors ideal is the one button company. Push the button and it returns money in mass quantities - without the necessity of having employees, raw materials, structures, equipment or anything that requires expenditure.
Euclid If two-man crews are more cost effective than one-man crews, wouldn’t the railroads want to use two-man crews so the investors would have more money to plunder?
Money to plunder? Yikes, I take it you're not an investor.
BaltACD The investors ideal is the one button company. Push the button and it returns money in mass quantities - without the necessity of having employees, raw materials, structures, equipment or anything that requires expenditure.
I don't know about ideal companies. None of us live in candyland, and we all make due with whatever resources are made available to us. Investing intelligently and for the longterm beats digging ditches in retirement, and I have to park my money somewhere.. under the mattress is no good and socking it away in a bank account isn't as good as reinvesting it in something like a railroad. So that's what I do. I certainly don't have all the answers though, if there's a better way I'm all ears to hear it.
Ulrich Euclid If two-man crews are more cost effective than one-man crews, wouldn’t the railroads want to use two-man crews so the investors would have more money to plunder? Money to plunder? Yikes, I take it you're not an investor.
I just use the term "plunder" in regard to the characterization of what people are saying when they blame investors for taking money out of the company without earning it. My question is directed at them. Maybe Norm could chime in with the explanation. I just want to know how this alleged unearned skimming by investors is related to crew size.
Ok.. there's no correlation. Somebody got started about stockholders assaulting the middle class. Stockholders have no more say in crew size than hotdog saleman have in how pigs are slaughtered.
Ulrich Ok.. there's no correlation. Somebody got started about stockholders assaulting the middle class. Stockholders have no more say in crew size than hotdog saleman have in how pigs are slaughtered.
Yes, I understand that. I agree with it. But am just trying to understand the contrary point made by Convicted One and others. I am asking them to explain their point so I can understand what their point is. But it probably does not make any difference what it is. The premise seems to be that because the companies are losing money by investor abuse, the company is poorer and thus cannot afford two-man crews.
Yes, and if they were losing money and if there was investor abuse I guess their point would have some merit.
Don't be too sure about that hotdog salesman. There's actually a lot of restaurant chains becoming very vocal about how meat is produced throughout the entire process.
EuclidBut am just trying to understand the contrary point made by Convicted One and others. I am asking them to explain their point so I can understand what their point is
Okay, once quick through:
You do agree that there are such things as "large, institutional investors"?
And if there are, by their very nature they are more likely to have a larger stake in a target company than would some "hobbyist" individual investor?
Now, have you ever heard of the practice where large share or majority share holders holding a substantial portion of a company's stock use the power resulting from that influence to install representatives onto the target company's board of directors?
And do you agee that among the tasks of a company's board of directors is to set the company's priorities and objectives, and give direction to executive staff. Often to the point where the board tells the exec what they expect, and it's the exec's job to deliver it?
In instances where members of the board of directors as well as majority ownership are one in the same, is it THAT difficult to see that the priorities and objectives given to the staff executives might very well be inclined more towards the short term benefit of the majority owners, than any other party (example: "CUT COSTS NOW, OR ELSE WE'LL REPLACE YOU WITH SOME ONE WHO CAN")
Cutting payroll has historically been a preferred method for American business to cut costs, so is it really that hard to see how a push for one man crews could be grounded in the ambition of "Well compensated executives and contribute nothing to the productive workflow stockholders".
I don't think the interest in one man crews comes from the rail shippers, I don't think it comes from the unions, the end customers, regulatory angencies, or even the Line side NIMBYS who watch the trains coming down the track.\
The interest comes from people hoping to put that laid-off conductor's paycheck in their own pockets.
jeffhergert Ulrich Ok.. there's no correlation. Somebody got started about stockholders assaulting the middle class. Stockholders have no more say in crew size than hotdog saleman have in how pigs are slaughtered. Don't be too sure about that hotdog salesman. There's actually a lot of restaurant chains becoming very vocal about how meat is produced throughout the entire process. Jeff
Very true Jeff..
Convicted One I don't think the interest in one man crews comes from the rail shippers, I don't think it comes from the unions, the end customers, regulatory angencies, or even the Line side NIMBYS who watch the trains coming down the track.\ The interest comes from people hoping to put that laid-off conductor's paycheck in their own pockets.
Somewhere I have a late 1990s issue of a defunct railfan magazine. In it is a column written by a person employed in a company that ships by rail. As a rail customer he wasn't looking forward to one man crews. No, he was looking forward to no man crews. Completely automated through trains. His reasoning, which I think was a bit naive, was that the railroads having a substantial savings in wages and benefits would pass that along to customers in greatly reduced freight rates.
So maybe customers aren't pushing for it, but...
I haven't seen any communication from any investor, large or small, advocating one person or two person crews.. nothing, but maybe I missed it somewhere.
The crew size discussion may simply be posturing on the part of some in management who use it as a boogeyman to keep wages and benefits in check. With record breaking low operating ratios and overall good financial results how do you keep the lid on wages? Answer: by trotting out the one crewman boogeyman at every opportunity.
Most investors aren't consulted about the inner workings of the companies they invest in and for the most part they like it that way provided the numbers look good at the end of the quarter and year.
Convicted One Euclid But am just trying to understand the contrary point made by Convicted One and others. I am asking them to explain their point so I can understand what their point is Okay, once quick through: You do agree that there are such things as "large, institutional investors"? And if there are, by their very nature they are more likely to have a larger stake in a target company than would some "hobbyist" individual investor? Now, have you ever heard of the practice where large share or majority share holders holding a substantial portion of a company's stock use the power resulting from that influence to install representatives onto the target company's board of directors? And do you agee that among the tasks of a company's board of directors is to set the company's priorities and objectives, and give direction to executive staff. Often to the point where the board tells the exec what they expect, and it's the exec's job to deliver it? In instances where members of the board of directors as well as majority ownership are one in the same, is it THAT difficult to see that the priorities and objectives given to the staff executives might very well be inclined more towards the short term benefit of the majority owners, than any other party (example: "CUT COSTS NOW, OR ELSE WE'LL REPLACE YOU WITH SOME ONE WHO CAN") Cutting payroll has historically been a preferred method for American business to cut costs, so is it really that hard to see how a push for one man crews could be grounded in the ambition of "Well compensated executives and contribute nothing to the productive workflow stockholders". I don't think the interest in one man crews comes from the rail shippers, I don't think it comes from the unions, the end customers, regulatory angencies, or even the Line side NIMBYS who watch the trains coming down the track.\ The interest comes from people hoping to put that laid-off conductor's paycheck in their own pockets.
Euclid But am just trying to understand the contrary point made by Convicted One and others. I am asking them to explain their point so I can understand what their point is
A train stopped for other than train meets is a line blockage - how much blockage can you afford!
BaltACD A train stopped for other than train meets is a line blockage - how much blockage can you afford!
It depends on how much it costs to eliminate blockage.
Ulrich The crew size discussion may simply be posturing on the part of some in management who use it as a boogeyman to keep wages and benefits in check. With record breaking low operating ratios and overall good financial results how do you keep the lid on wages? Answer: by trotting out the one crewman boogeyman at every opportunity.
This was related to us at a union meeting before the last US Presidential election.
By chance at a social function, one of the union's negotiators happened to meet one of the carrier association's negotiators. The union's guy asked the carrier's guy what the railroads were thinking about for the next contract. The answer was it depended on the election. If the Republicans took the Presidency they were going to go for one man crews. If the Democrats retained the White House they were going for more give-backs on health care. The latter is what happened.
I really think if they had ever been able to get a one man crew contract before the fairly recent PTC requirements, they would've fought tooth and nail against that mandate. While I'm sure they don't like the PTC mandate (although PTC would've eventually come anyway) they are looking that it will be the vehicle to ultimately bring about one man crews. First on lines with PTC, then maybe on those that aren't equipped. Like so many other things it depends on the political climate when they go whole hog for it.
Euclid BaltACD A train stopped for other than train meets is a line blockage - how much blockage can you afford! It depends on how much it costs to eliminate blockage.
I was told by an old head that about a derailment on the CNW. A brand new caboose was involved, but still upright. It was bulldozed over to get it out of the way to allow them to lay track panels and get the line back open. The cost of the caboose was insignificant compared to the money they were losing every hour the line was closed.
jeffhergerthe was looking forward to no man crews. Completely automated through trains.
Personally, I feel that "no-man" crews are inevitable. My guess is that eventually they all will be automated, and perfectly synchronized such that (example) all trains might move at a maximum speed of 30-40 mph but meets will always happen perfectly so that they all keep moving. that's a ways away yet, but I suspect it's only a matter of time.
EuclidSo if that is true, and yet you lay him off and pocket his paycheck, you are suddenly hit with the cost of losing what the conductor contributes, which exceeds the value of his paycheck that you just pocketed. If the conductor does not contribute more that the cost of his paycheck, it would be a net plus to lay him off. So why would that not be a sound business decision if it actually saves money to lay off the conductor? How can you argue that the conductor should be retained when he is not worth his pay?
I'm just speculating, but someone else here pretty much hit the nail on the head earlier in this thread. When everything goes "right", the second man pretty much sits on his duff and is paid for warming a seat. That is the kind of stuff that drive Management and ownership to ponder ways to avoid that "waste", (so they can pocket the "savings" that results from eliminating said 'waste'.
When things go wrong, however, that second position turns productive, expediting correction of whatever problem has interrupted the productive work flow.
SO, I'm guessing that the Owners/Managers have some form of data that indicates that "good times" outweigh the "bad times" to such an extent that the aggregate savings accrued while everything is going right, outweighs any "penalty" they will have to absorb everytime the unexpected (bad times) comes about.
Like I said earlier, I'm only speculating about this, but I'd be surprised if they are making a decision of this magnitude without hard data to steer them.
They THINK they can get away with it.
jeffhergertI was told by an old head that about a derailment on the CNW. A brand new caboose was involved, but still upright. It was bulldozed over to get it out of the way to allow them to lay track panels and get the line back open. The cost of the caboose was insignificant compared to the money they were losing every hour the line was closed. Jeff
- PRR Wreckmaster Frederick Alan Blumer to a PRR official, as quoted in one of the anniversary/ "commemorative" issues of Trains sometime back in the late 1960's - early 1970's.
Perhaps the parable about "killing the goose that lays the golden eggs" ought to be considered for this issue as well.
- Paul North.
There is a cost to having the main line blocked, although to a certain extent how it gets defined is arbitrary. If a coal train arrives a day later the railroad still gets paid the same amount, so actual revenue losses are small (at least in the short term). Detours, if used, can indeed be measurable costs. Delay is delay, whether for railroad convenience or line blockage. But costs of delaying a train waiting for more tonnage is typically ignored.
When the accountants look greedily at the labor savings from single man operation do they add in costs for resulting possible lengthy train delays?
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