Supposedly E. Hunter Harrison's prime skill is improving railroad's operations.
wanswheel Excerpt from the Globe and Mail, Nov. 23 http://www.theglobeandmail.com/report-on-business/no-plans-to-move-cp-rail-headquarters-out-of-canada-ceo-says/article27438287/ Canadian Pacific Railway Ltd. expects to generate substantial proceeds by selling surplus land owned by Norfolk Southern Corp. if its proposed $28-billion (U.S.) takeover of the U.S. railroad goes ahead. “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” . . . [snipped - PDN]
http://www.theglobeandmail.com/report-on-business/no-plans-to-move-cp-rail-headquarters-out-of-canada-ceo-says/article27438287/
Canadian Pacific Railway Ltd. expects to generate substantial proceeds by selling surplus land owned by Norfolk Southern Corp. if its proposed $28-billion (U.S.) takeover of the U.S. railroad goes ahead.
“I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” . . . [snipped - PDN]
But maybe NS is thinking of long-term plans, and doesn't want to foreclose its options by selling adjoining land that might be useful in the future, and which it would be unable to buy back after that land has been sold and converted to other uses. NS seems to be sophisticated enough about real estate matters, too - it has its own real estate arm:
http://www.nscorp.com/content/nscorp/en/real-estate/about-norfolk-southern-real-estate.html
plus Pocohontas Land Corp., mostly coal resource land:
http://www.nscorp.com/content/nscorp/en/about-ns/subsidiaries/pocahontas-land-corporation.html
- Paul North.
The voting trust is an interim step, to hold the deal in place pending STB approval. Each railroad retains its own separate identity, but the ownership and management is coordinated more than the previous status. It's kind of like an engagement before the marriage ceremony takes place.
A voting trust keeps the eggs from being scrambled in the first place, so the tentative merger is easier to unwind if the deal isn't approved. I believe the last time one was actually used was the abortive SF+SP merger back in the early 1990's.
Jeff's echoed my thoughts on this perfectly. It's about stock valuation in the face of a lacklustre economic situation in Canada and tepid recovery in America. I'm sceptical there is any material upside, stock prices is what this is about.
Excerpt from Wall Street Journal, Nov. 25
http://blogs.wsj.com/moneybeat/2015/11/25/dealpolitik-canadian-pacific-deal-faces-steep-uphill-grade/
To implement a voting trust requires formal STB approval following public comment. The STB would have to make a finding that the use of the trust is consistent with the public interest.
We don’t know how long the trust approval process would take because it doesn’t appear that there has been a proceeding relating to a major transaction since the current rules were put in place more than a decade ago.
kgbw49 To borrow a metaphor from the Battle of Jutland, this seems like it is really the cruiser squadrons skirmishing. The big guns of the dreadnoughts have not yet spoken, but they are moving in to position. If Norfolk Southern is going to be owned by a holding company, do we all really think it will be CP? It is an interesting time indeed and will be fascinating to watch play out, for sure.
To borrow a metaphor from the Battle of Jutland, this seems like it is really the cruiser squadrons skirmishing. The big guns of the dreadnoughts have not yet spoken, but they are moving in to position. If Norfolk Southern is going to be owned by a holding company, do we all really think it will be CP? It is an interesting time indeed and will be fascinating to watch play out, for sure.
What? Did Warren Buffet shoot you an e-mail?
I'm assuming the Holding Company would be a way to navigate the legal pitfalls associated with the merger;when Burlington Northern tried to acquire Canadian National back in the 90's they planned to use a similiar scheme. The holding company in that case was to be called North American Transportation.
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
Thanks to Chris / CopCarSS for my avatar.
jeffhergert schlimm Norm48327 wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run. Maybe. Or maybe he knows that there is a lot of dead wood and waste at NS that can be converted to finance the takeover and to make it more efficient. I do not know. EHH has a mixed history, for sure, but it strikes me as a bit odd that all the unrestrained, "free market rules!" types on here seem so hostile to him. As is that it seems that one of EHH's biggest defenders on this thread is one that is usually towards the left on such matters of CEOs and corporations. Jeff
schlimm Norm48327 wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run. Maybe. Or maybe he knows that there is a lot of dead wood and waste at NS that can be converted to finance the takeover and to make it more efficient. I do not know. EHH has a mixed history, for sure, but it strikes me as a bit odd that all the unrestrained, "free market rules!" types on here seem so hostile to him.
Norm48327 wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.” That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run.
wanswheel “I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.”
That sounds like a Carl Ichan plan. Rape, rob, leave them destitute. Just get the cash and run.
Maybe. Or maybe he knows that there is a lot of dead wood and waste at NS that can be converted to finance the takeover and to make it more efficient. I do not know. EHH has a mixed history, for sure, but it strikes me as a bit odd that all the unrestrained, "free market rules!" types on here seem so hostile to him.
As is that it seems that one of EHH's biggest defenders on this thread is one that is usually towards the left on such matters of CEOs and corporations.
Jeff
I only defend his position as a legitimate one. Personally and philosopically, I do not think his cost-cutting at IC, CN and CP is good in the larger sense of social responsibility. But from a pure, "making a profit is our business, our only business" perspective, his attempt to rationalize the inefficiencies in North American railroading should be applauded, especially by all the "free market" "government is bad" folks on here.
C&NW, CA&E, MILW, CGW and IC fan
Suppose he knows other ways to sqeeze money out of a corporation that other, less timid railroad managers might not be interested in chasing down? Let's just say for example, that EHH knows that there are some big efficiencies to be made up by running 13,000 foot freight trains through Chicago suburbs. If that makes the railroad more efficient, surely nobody should voice any concern-right? I'd have to believe that the STB would look at all the ramifications of a merger on the transportaion system of our country and the effect on the national economy beore allowing the next mega-merger. To be approved, a mega-merger would have to prove better for everyone in general, not just for a hedge fund hoping to make a quick buck. Side note: When I read about hedge funds and such and some of their tactics, it makes me think of the German banker who was playing games with the money policies in his country after World War 1 for his own benefit, triggering hyperinflation and other issues that followed on.
Harrison has a succession plan at CP. Keith Creel, his long time protege, will take over, If a merger does happen, in all likelihood Creel or Squires would get the top job.
wanswheel“I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.”
Norm
Murphy Siding CMStPnP High Probability that EHH is gone from CP after 2017 and he probably knows it. ....Unless he is at the center of some big, harry thing like a mrger or something..
CMStPnP High Probability that EHH is gone from CP after 2017 and he probably knows it.
High Probability that EHH is gone from CP after 2017 and he probably knows it.
....Unless he is at the center of some big, harry thing like a mrger or something..
or dead
Never too old to have a happy childhood!
Excerpt from the Globe and Mail, Nov. 23
“I think we’ll be able, like we did at CP, to take some of their yards that are probably not needed in my view, and convert them to maybe real estate and generate huge cash flow – huge – without having a negative impact on the railroad,” Canadian Pacific CEO Hunter Harrison said in an interview. “It’s gravy. It could be a lot. That’s why I’m excited.”
Excerpt from the Globe and Mail, Dec. 7, 2012
http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/cps-hunter-harrison-there-is-a-new-sheriff-in-town/article6122334/
It has been 16 months since Hunter Harrison, the crusty, Memphis-born railway legend hauled himself to a New York museum he can’t remember for a business lunch he’ll never forget.
The locale was the Museum of Modern Art and his dining companion was Bill Ackman, master of the modern art of shareholder activism. Mr. Harrison had only just met Mr. Ackman that morning, in August, 2011. But when the 2 1/2 -hour meal ended, the gruff railroader and the blunt hedge fund mogul shook on a deal that would culminate in a humiliating boardroom coup at Canadian Pacific Railway this May and hand Mr. Harrison the controls at the struggling carrier.
Earlier this week, Mr. Harrison sat down in yet another museum he has never heard of – the Art Gallery of Ontario – to revisit the “godawful” lows of the CP proxy battle along with the early triumphs of his first six months at the Calgary-based railway.
Before that, however, there is the tricky business of food-ordering at Frank, an austere maple-panelled restaurant named after AGO architect Frank Gehry. It’s a proposition that Mr. Harrison, a hard-core red-meat man, now finds taxing because, in addition to fixing CP, Mr. Ackman is trying to make over Mr. Harrison.
“He’s got me on to a trainer and his personal nutritionist,” says Mr. Hunter, shifting his well-upholstered, 68-year-old frame into his chair.
“I lost 12 pounds in the first two weeks.” How? “I have that Greek yogurt stuff with berries, power bars, protein shakes and sugar-free popsicles to fight the munchies.”
As for alcohol, the man with the bourbon-soaked southern drawl says: “I have cut it out completely.” Pausing to offer me a toothy grin, he adds, “Except when I drink.”
And so, as he scans the menu, Mr. Ackman’s newest fitness disciple looks past the beet salad, vegetarian pozole and chestnut soufflé and exclaims: “My eyes are drawn immediately to this.” A beef burrito.
Which is to say that, even though Mr. Harrison is backed by Mr. Ackman (“a real player”), has negotiated the richest salary of his career (“I said, ‘I don’t think you can afford me.’ He said: ‘Don’t kid yourself.’”), and commutes on his private jet (“one of the little things I bought for myself,”), he is still essentially the same hard-nosed railroader who began his career 49 years ago squirting oil at the underbellies of trains.
https://ca.shine.yahoo.com/photos/canada-s-10-highest-paid-ceos-in-2012-slideshow/former-canadian-national-railway-president-photo-181742388.html
dakotafred My, it was instructive to watch Harrison on Bloomberg today. He hardly looked or sounded enfeebled by age, as one or two on here have suggested (thinking wishfully?) that he is.
My, it was instructive to watch Harrison on Bloomberg today. He hardly looked or sounded enfeebled by age, as one or two on here have suggested (thinking wishfully?) that he is.
Now that was good for a chuckle.
Typically, when your over the age of 65 and then when a Board of Directors only does yearly extensions of your contract it means they think your old......although it is not politically correct to say so, it is a pretty big hint your in the sunset years as far as that current Company is concerned. If CP was as enamored with him as you think they should be they would have extended his tenure by 3-5 years and from his comments that is what it seems he wants BUT it was not offered by the Board and it is highly likely they are NOT going to grant year by year extensions as that creates uncertainty in the company and Wall Street would probably not support it.
I think the silence from Ft. Worth and Omaha is a vote on the probability this ever gets done. Should either of them believe this deal stands a snowball's chance, I believe one or both or them would jump into the fray with a clearly superior offer.
Gee I guess you don't like EHH! As to his medical competence, I am in a far better place to offer an informed opinion on that. Watching his interview, I would conclude your dislike of the man has led you to make a rather rash and ill-informed comment. But go ahead and vent, as you are free to say almost anything you want.
schlimm Paul_D_North_Jr Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst.
Paul_D_North_Jr Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst.
schlimm One only needs to look at operating ratios at both CN and CP pre-EHH and after he implemented his plans and then examine CP's current operating ratio and NS's to see that it is not smoke and mirrors and puffery, but a proven record of success. Of course the consequence might be elimination of deadwood, but that is what shareholders want these days.
One only needs to look at operating ratios at both CN and CP pre-EHH and after he implemented his plans and then examine CP's current operating ratio and NS's to see that it is not smoke and mirrors and puffery, but a proven record of success. Of course the consequence might be elimination of deadwood, but that is what shareholders want these days.
But is CP's lower operating ration sustainable? Is the rise in stock prices due to short term policies that could damage CP in the long term? Long after EHH is gone and Ackman has dumped his shares. I have read (admittadly anecdotal) accounts from people working for CP or who work for customers of CP.
EHH may have gone has far as he can with cutting CP into prosperity. That's why some think he has been proposing mergers, first with CSX now with NS. Only way to keep the stock price up. Well, maybe not the only way, but the easiest way.
schlimm Paul_D_North_Jr Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst. The suggestion that EHH does not understand the realities of rails or is delusional is a pretty strong indication of a kneejerk opposition.
The suggestion that EHH does not understand the realities of rails or is delusional is a pretty strong indication of a kneejerk opposition.
Paul_D_North_JrIgnoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst.
Last week (Thurs., 19 Nov. ?) the Wall Street Journal had an article on page B-1 about how this deal would have to bear of heavy burden of proving that it's in the public interest, submitting "a tower of paper", and other railroads would oppose it, meaning it would take several years at best. Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst.
What if NS turned the tables and made an offer for CP - providing EHH with a "golden parachute", of course ? (reminds me of the joke about the mouse and the cat . . . ).
The problem is Chicago and the CP merger with NS will have a great benefit for both Canada and the USA. The CPR is and has always been well run.
MP173 How does EHH squeeze efficiencies you ask?Last Friday I happened to see the Halifax - Chicago intermodal train pass thru town and as is my habit, I counted the containers on the train....354 domestic and international containers were being handled. My estimate was this was over 13,000 ft in length. No second section, just run the train. Ed
How does EHH squeeze efficiencies you ask?Last Friday I happened to see the Halifax - Chicago intermodal train pass thru town and as is my habit, I counted the containers on the train....354 domestic and international containers were being handled.
My estimate was this was over 13,000 ft in length. No second section, just run the train.
Ed
and don't care that it can't meet opposing traffic effectively and no terminals can originate or terminate the train without extraordinary measures and delays to other traffic.
My carrier is emulating this kind of operation. Trains crossing division borders are limited to 12000 feet (formerly 9000), there is no limit on the size of divisional trains, largest I have seen is 15300 feet - there may have been larger trains. While 130 car coal trains have become the norm, some divisions are 'playing with distributed power' and are running 170 car 24000 ton coal trains. Nobody appears to care these trains are movable derailments when they get to terminals where they have to work.
oltmanndI don't think so. NS doesn't need autorouter/movement planner to centralize. Just having UTCS is enough. Any desk can be dispatched from any other desk on the system right now. But, NS's whole operations managment is decentralized to a greater degree than on other roads. Most places, whether to run an extra or annul a train is made by a central office. On NS, these decisions are made at the division level - sometime to the detriment of the network as a whole. That would have to change before you'd see consolidated distpatch offices.
UTCS without autorouter required people to run the system. With autorouter enabled, not as much. I think that will be the key to consolidation (if it ever gets to the point of running the railroad unencumbered). And you know many of those decisions made at the division level used to be made at the local level. It's heading in that direction already. CYO/OSS now handles all customer issues - many of which were at one time local decisions. Writing's on the wall.
I could be wrong, but I would be surprised.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
Paul_D_North_Jr schlimm Why would control of the BRC be the only improvement in efficiencies? It does not really bypass Chicago. It really seems that as usual EHH is generating strong negative emotional reactions. They may not be based on potential rail efficiencies but on preservation of the status quo. Nah, I don't think I'm negatively emotional - but I will admit to being skeptical, based on past experience with these kinds of things. Because to date, all of the purported efficiencies that EHH claims will be created have been non-specific, thus mere "puffery" = smoke and mirrors. Where's any credible study that identifies and quantifies them ? Without that, what's his basis for making those claims, other than mere wishful thinking ? How does he expect to persuade anyone without that hard information ? If this move was planned and thought through at all, he really should have that kind of information at hand and be able to quote it, instead of spouting vague generalities. Is he accustomed to going off half-cocked like this, making claims and assertions without being to back them up ? Not the kind of guy I'd want running my company. Interesting, too, is that EHH's "Come to Jesus" moment didn't occur when he was retired from CN and could have been viewed as a kind of 'elder statesman' in the industry. Instead, it comes only now when he thinks his current company will directly benefit from it - and when his puppetmaster William Ackman needs the money, too (see several articles in the Wall Street Journal in the past few weeks). - Paul North.
schlimm Why would control of the BRC be the only improvement in efficiencies? It does not really bypass Chicago. It really seems that as usual EHH is generating strong negative emotional reactions. They may not be based on potential rail efficiencies but on preservation of the status quo.
Nah, I don't think I'm negatively emotional - but I will admit to being skeptical, based on past experience with these kinds of things.
Because to date, all of the purported efficiencies that EHH claims will be created have been non-specific, thus mere "puffery" = smoke and mirrors. Where's any credible study that identifies and quantifies them ? Without that, what's his basis for making those claims, other than mere wishful thinking ? How does he expect to persuade anyone without that hard information ? If this move was planned and thought through at all, he really should have that kind of information at hand and be able to quote it, instead of spouting vague generalities. Is he accustomed to going off half-cocked like this, making claims and assertions without being to back them up ? Not the kind of guy I'd want running my company.
Interesting, too, is that EHH's "Come to Jesus" moment didn't occur when he was retired from CN and could have been viewed as a kind of 'elder statesman' in the industry. Instead, it comes only now when he thinks his current company will directly benefit from it - and when his puppetmaster William Ackman needs the money, too (see several articles in the Wall Street Journal in the past few weeks).
zugmann tree68 Check out CSX, which, despite having centralized ops in Jacksonville, retained most, if not all, of the Conrail DSs. The lines in NYS are dispatched out of Selkirk, NY (near Albany). Didn't they centralize and then decentralize? Balt? NS' DSes are decentralized, but with autorouter, it's only a matter of time...
tree68 Check out CSX, which, despite having centralized ops in Jacksonville, retained most, if not all, of the Conrail DSs. The lines in NYS are dispatched out of Selkirk, NY (near Albany).
Didn't they centralize and then decentralize? Balt?
NS' DSes are decentralized, but with autorouter, it's only a matter of time...
I don't think so. NS doesn't need autorouter/movement planner to centralize. Just having UTCS is enough. Any desk can be dispatched from any other desk on the system right now. But, NS's whole operations managment is decentralized to a greater degree than on other roads.
Most places, whether to run an extra or annul a train is made by a central office. On NS, these decisions are made at the division level - sometime to the detriment of the network as a whole.
That would have to change before you'd see consolidated distpatch offices.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
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