Greyhounds, Jeff, Euclid, Ulrich, right on. Charlie Hebdo, In My Humble Opinion not so much.
Tree68, I’ve been there. As a Customer Service agent for an international sales company, I finally quit.
Dad’s (company founder) philosophy was “take of them and they will take care of you”. I witnessed that success.
Sonny boy, new one in charge, SELL new product, don’t fool with parts that customers need. Even with tremendous mark-up for the customer to pay.….. They ONLY need the part and are more than happy to pay the exorbitant price.
Nope, I was cut short of a relatively easy process and thus taking care of customers, add due to the son’s view of doing business. endmrw0616220929
One big, major difference:
Deramus never ever compromised on safety.
Harrison most definitely did. Remember his ending three-point-protection?
Before Harrison, if signal-protection for a facing-point switch into a siding wads disabled for a week before PTC replacemenbt, there would have been additional supervision or a slow-order on the affected stretch of trasck. And an Amtrack train would not have plowed into stading freight cars after taking the siding-aligned switch at almost track speed.
As far as PSR goes, the idea of running huge trains less frequently isn't new, Under William Deramus back in the Fifties, Chicago Great Western was famous (or notorious) for mu'ing every locomotive on the roster and hauling the entire contents of a yard to the other end of the railroad once a day. And cost cutting? Look up his economy measures on the CGW, MKT and KCS. Makes Hunter Harrison seem like a nice, sweet pushover.
"Deramus moved quickly to improve the Great Western’s fortunes and fatten it up for takeover by Chicago & North Western. He promptly dieselized, pushed piggyback, improved the physical plant, cut back on passenger service, abandoned low-density branch lines — the classic moves of the era. He also vigorously cut the payroll, sparking a difficult 1953 strike by the operating unions.
To shed some additional light, I called my friend H. Roger Grant, professor of history at Clemson University and author of The Corn Belt Route: A History of the Chicago Great Western Railroad Company (Northern Illinois University Press, 1984).
As Roger explains, Deramus could seem brutal. “As I point in my CGW book, he fired Rosalie O’Hara, a receptionist and switchboard operator, because she didn’t have a big smile on her face.
“But he really made a name for himself at the Katy. Yes, he sought to upgrade and modernize the railroad, but he took draconian steps. Employment was slashed to the bone. All ‘frills’ ended, including the Katy’s monthly employee magazine and abolishment of its public relations department.”
Roger recalls one infamous incident at Missouri-Kansas-Texas. “In March 1957, without notice to Katy employees, Bill ordered the closing of offices in St. Louis and Parsons, Kans. Under the cover of darkness, records and equipment were placed in moving vans and hauled off to Texas. Needless to say, office morale sank. There was this memorable response: the St. Louis Chamber of Commerce expelled the Katy from its membership. Its executive committee unanimously made this unprecedented decision.”
And Deramus wasn’t finished. In 1961, he succeeded his father as president of KCS and stayed for 12 years. “He was not especially popular on that road either,” says Roger.
I don't think I'd like to go drinking with Bill Deramus, but he kept his railroads afloat and operational at a time of great change in railroading.
So count yer blessings with PSR
Parasites from every direction feeding off the host until the host succumbs. Then it's off to find another host.
charlie hebdoWell of course it is. The discussion was about marketing and seeking new revenue streams.
But those activities cost money. Can't be doing that. I want that money in my pocket, not used to pay some marketing flack...
We here would certainly like to see the railroads seek new markets, but past accounts of railroad activity don't seem to support that concept.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
MidlandMike Euclid What would happen if the railroad industry just went forward with the correct amount of capital investment? Then if the short term “casino” investors do not like that, they can leave. ... Activist investors (at least the predatory ones) like railroads because they have often exclusive franchise and are asset rich. They have exclusive franchise where they are the only rail in town, which gives them great pricing power; and if PSR concentrates on only the most profitable business, then they can monetize the idle assets to create investor wealth. If you mean by "casino" investor as retail investors, they often don't pay that much attention. The real big players are the institutional investors, like pension funds, that used to seem to be in it for the long haul, but lately seem to follow along with the activists crowd.
Euclid What would happen if the railroad industry just went forward with the correct amount of capital investment? Then if the short term “casino” investors do not like that, they can leave. ...
Activist investors (at least the predatory ones) like railroads because they have often exclusive franchise and are asset rich. They have exclusive franchise where they are the only rail in town, which gives them great pricing power; and if PSR concentrates on only the most profitable business, then they can monetize the idle assets to create investor wealth. If you mean by "casino" investor as retail investors, they often don't pay that much attention. The real big players are the institutional investors, like pension funds, that used to seem to be in it for the long haul, but lately seem to follow along with the activists crowd.
The Childrens Fund was a 'activist investor' and seized control of CSX for a short period of time just prior to the 'Credit Default Swap' financial collapse that enveloped the financial world in the 2007-2008 period. What TCF out was their investments in CSX and a number of other companies they had 'attacked' were done with shares that had been obtained on Margin and other financial ledger domaine. When the financial markets collapsed there were Margin Calls and TCF found itself being required to sell off a number of their 'activist positions' in many of their acquisitions including CSX. While TCF did get control of CSX, they did not have control for a sufficient period of time to loot the treasury and sell off capital assets.
Never too old to have a happy childhood!
tree68 charlie hebdo Possible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues. I believe PSR is all about minimizing expenses, not revenue.
charlie hebdo Possible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues.
I believe PSR is all about minimizing expenses, not revenue.
Well of course it is. The discussion was about marketing and seeking new revenue streams.
EuclidWhat is wrong with minimizing expenses?
To a point, nothing. Eventually, though, you run out of expenses to cut without having untoward consequences.
Think of it this way - if you're trying to cut household expenses, at what point do you say to yourself, OK, i've cut all I can. Now, cut some more...
You only get one piece of TP. Per day. Use it well.
What is wrong with minimizing expenses?
charlie hebdoPossible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues.
While EHH claimed to originate PSR, that's not entirely correct. Some tennants of it were long practiced before him. He just kind of "refined" it to be just a cost cutting program.
I don't think PSR brought in the activist investors and hedge funds. I think it was the other way around. The activists and funds demanded PSR. At least at CP, CSX, NS and UP. UP was flirting with a PSR-lite form of it. Until the BlackRock group started getting into UP stock. They are the ones that pushed UP to full blown PSR.
Sometime ago, BlackRock reduced it's holdings of UP. They aren't out of it entirely as I understand. Supposedly, Vanguard is now the big player and at the time it was said that they wanted some changes to dial back the cuts and actually try to grow. Nothing really has changed. They have gone after some large contracts, mostly intermodal and some easy (read cheap to handle) business, but cutting still seems to be the name of the game.
Jeff
EuclidWhat would happen if the railroad industry just went forward with the correct amount of capital investment? Then if the short term “casino” investors do not like that, they can leave. ...
BaltACD tree68 It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization. For all we know, said marketing people may not be allowed to do what we think should be done... Marketing people? They were let go the day PSR was adopted by the various carriers.
tree68 It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization. For all we know, said marketing people may not be allowed to do what we think should be done...
For all we know, said marketing people may not be allowed to do what we think should be done...
Marketing people? They were let go the day PSR was adopted by the various carriers.
tree68It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization. For all we know, said marketing people may not be allowed to do what we think should be done...
Murphy Siding charlie hebdo tree68 It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization. For all we know, said marketing people may not be allowed to do what we think should be done... Possible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues. I'm onto what Tree is saying. In my mind, it's probably more of a business culture thing. Perhaps the marketing people are told to do things a certain way because "that's the way we do it in this industry". I don't know about railroads but I deal with some industries that take that approach.
charlie hebdo tree68 It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization. For all we know, said marketing people may not be allowed to do what we think should be done... Possible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues.
It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization.
Possible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues.
I'm onto what Tree is saying. In my mind, it's probably more of a business culture thing. Perhaps the marketing people are told to do things a certain way because "that's the way we do it in this industry". I don't know about railroads but I deal with some industries that take that approach.
Yes, duck and cover until retirement...CYA...that's the "culture".
Thanks to Chris / CopCarSS for my avatar.
charlie hebdo tree68 It's also not absurd to think that there are policies, written or unwritten, that prevent them from acting in ways that an outside observer would consider beneficial to the organization. For all we know, said marketing people may not be allowed to do what we think should be done... Possible, but not probable, unless you think there is vast collusion among management at the class ones to minimize revenues. As to fees for stock trading, I haven't paid a cent for a trade in years
As to fees for stock trading, I haven't paid a cent for a trade in years
It's not about minimizing revenues, it's a fear of raising the Operating Ratio and/or some other specific metric that is favored.
I don't agree with Greyhound on some things. However, the UP over the years and before PSR have passed up many business opprotunities because the net profit was only $5 to $10 million a year. Almost all would not have required more employees or more trains being run. Any short line or regional would've jumped at the prospects. (It's why I think the long term future is for class ones to dump all but their major routes and become strictly line haul companies. Let short lines/regionals do the first/last mile work on the spun off secondary and branch lines. They would probably even add business to the industry that it currently doesn't have.) The current climate at class ones, and that includes BNSF even though it only answers to Berkshire Hathaway, is to cut costs to the bone. And sometimes beyond.
Since PSR is about running a balanced system, X number of trains west/south and X number of trains east/north every day, with only Y number of engines and Z number of employees, too much additional business will throw that out of whack. Eventually you reach a limit on train lengths. Once met, additional business will require another train added. If there isn't enough traffic for a counterpart in the opposite direction, you're "wasting" assets for a deadhead movement of equipment and people.
As long as they can wring out more pennies out of the dollars they have, they won't go looking for more dollars. Everytime it seems like they've reached that point, they seem to find some more to cut.
Now, they do actually get new business. The UP crows about it to it's employees on the website all the time. You can believe that the new business is easy business to handle. Mostly intermodal and/or a large enough volume so that there is no or minimal cost. It's also something that they can point to and say, "See, we're growing the business."
PS. Actually, all this is probably moot when UP has told customers to cut their business with them by 20%. I guess the new slogan should be "We Can't Handle It."
Euclid What would happen if the railroad industry just went forward with the correct amount of capital investment? Then if the short term “casino” investors do not like that, they can leave. Otherwise this corrosive short term investment will eventually destroy the railroads. Doesn’t anyone outside of this forum realize this great peril?
The issue isn't about the correct amount of investment. It's about investor churn.. absentee ownership.. "owners" who don't care and in most cases don't even know what they own. Some mistakenly point to the activist investor as the issue.. I don't think that's it.. as misguided as their ideas may sometimes be. The real issue is owner/shareholder apathy.. "I have some of this stock in my portfolio, and if its sunny tomorrow I might sell and buy something else".. Imagine a smaller business run the same way: Three guys own a gas station.. none are interested in it apart from the quarterly profits it brings, and none of them even know its a gas station. Add to that.. the three owners change every couple of months.. today it's Bill, Jill and Sam.. next month it's Gurvinder, Bob, and Sally. Scale that up a thousand times and you've got the "ownership structure" of a public Fortune 100. And then there's a cost to the churn.. every time a stock changes hands the broker and his/her employer on that transaction gets a cut.. multiply that a few thousand times in the run of a month, and that's alot of money gone for nothing that at some point had to be earned through real productive output.
zugmann Eventually? I think we're long past eventually. It's going to take years to clean up this mess. Between deferred maintance, selling off power, loss of insitutional knowledge, etc.
Eventually?
I think we're long past eventually. It's going to take years to clean up this mess. Between deferred maintance, selling off power, loss of insitutional knowledge, etc.
I think you could take every single class-1 employee (from CEO on down) that likes PSR and they'd fit comfortably in a phone booth.
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
SD70Dude Euclid What would happen if the railroad industry just went forward with the correct amount of capital investment? Then if the short term “casino” investors do not like that, they can leave. Otherwise this corrosive short term investment will eventually destroy the railroads. Doesn’t anyone outside of this forum realize this great peril? The short term investors would take action to try to remove and replace upper management they didn't like. Look at what TCI tried at both CSX and CN, or what Ackman's Pershing Square did much more successfully at CP (and then his protege Paul Hilal did the same at CSX). The STB hearings of recent months indicate that certain people and agencies in Washington, DC are starting to realize that they cannot completely ignore this anymore. Remember what Matt Rose used to say about PSR and re-regulation.........
The short term investors would take action to try to remove and replace upper management they didn't like. Look at what TCI tried at both CSX and CN, or what Ackman's Pershing Square did much more successfully at CP (and then his protege Paul Hilal did the same at CSX).
The STB hearings of recent months indicate that certain people and agencies in Washington, DC are starting to realize that they cannot completely ignore this anymore.
Remember what Matt Rose used to say about PSR and re-regulation.........
Chairman Oberman mentioned during the hearings that some of the class one CEOs have privately told him they don't like what they are having to do to please their major investors. He did not say which ones. I've heard Lance Fritz did not want to go down the PSR path, at least as hard as they have. We tend to forget that the CEOs are employees, too. If they don't deliver they can, and will, be replaced by someone who will.
Greetings from Alberta
-an Articulate Malcontent
EuclidWhat would happen if the railroad industry just went forward with the correct amount of capital investment? Then if the short term “casino” investors do not like that, they can leave. Otherwise this corrosive short term investment will eventually destroy the railroads. Doesn’t anyone outside of this forum realize this great peril?
The Casino Mentality is fully installed in most all of the financial industry. Getting rich quick mentality is a powerful bait when we have had years of financial 'Wild West' in play to suck in the marks. The current 'best and brightest' have been working overtime in creating financial 'products' with which to get the marks to bet on. Products analogous to the infamous 'Credit Default Swaps' that occasioned the world wide financial collapse of 2007-2008.
jeffhergert Euclid Of course the investors are interested in a good bottom line. But why can’t the bottom line be increased for the investors? I don’t see why every new idea is doomed to fail just because it requires some new investment. You need investment to make money. So why would investors object to more investment if it makes more money for them? Because the investors, at least the vast majority, have no idea how the companies they invest in make their money. Most are interested in returns, often quick returns. If the quickest way to make the most money is to drive a company into the ground, they probably wouldn't know any different. Some wouldn't care even if they knew better. Jeff
Euclid Of course the investors are interested in a good bottom line. But why can’t the bottom line be increased for the investors? I don’t see why every new idea is doomed to fail just because it requires some new investment. You need investment to make money. So why would investors object to more investment if it makes more money for them?
Because the investors, at least the vast majority, have no idea how the companies they invest in make their money. Most are interested in returns, often quick returns. If the quickest way to make the most money is to drive a company into the ground, they probably wouldn't know any different.
Some wouldn't care even if they knew better.
Preferrably all investors would be well informed and give their investments the same level of thought and care they would give when purchasing a car or a home. But the system is far from perfect..investors aren't for the most part educated.. they are encouraged to trade in and out of stocks daily and to treat the stock market like a casino. This is encouraged by the investment industry which in large part makes its living on fees charged for trading. And then there are people who simply want to own a piece of the action for the long term.. like the businesses they invest in and care about their long term prospects.. The casino element is a huge drag on all publicly traded businesses as those seven figure fund manager salaries are generated by those businesses and by the hard working people who do the heavy lifting every day. Things would be so much better for all concerned if all investors conducted themselves with the care and diligence of true owners and if the investment industry encouraged people to think like longterm owners.
greyhoundsHey look, gaining an understanding of freight movements and figuring a way for a railroad to haul the freight, and make money doing so, is interesting and enjoyable for me. I once did that for a living. If you don’t like what I write, don’t read it.
If you can't tolerate even a reasonable level of skepticism or questioning of your posts, maybe you should stop posting.
My point is that the UP and BNSF are large, ongoing businesses with large professional staffs. It is not absurd to think they might know s bit more than someone who once worked for an EHH railroad years ago and who always complained about that railroad's marketing, operations and accounting departments.
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