QUOTE: Originally posted by n012944 QUOTE: Originally posted by MichaelSol Oh good grief, another pile on by the half-informed. Chemical engineering was my original trade. "Petrochemical" is not a term of art, it is precisely defined as a type and class. I worked with a number of the following petrochemicals, and this would be a typical list of "petrochemicals." ethylene polyethylenes ethylene oxide ethylene glycols polyesters engine coolant glycol ethers ethoxylates vinyl acetate 1,2-dichloroethane trichloroethylene tetrachloroethylene vinyl chloride polyvinyl chloride ethylbenzene styrene polystyrenes synthetic rubbers higher olefins detergent alcohols propylene cumene acetone bisphenol A epoxy resins polycarbonate solvents isopropyl alcohol acrylonitrile polypropylene propylene oxide propylene glycol glycol ethers acrylic acid acrylic polymers allyl chloride epichlorohydrin epoxy resins butadiene synthetic rubbers benzene ethylbenzene styrene polystyrenes synthetic rubbers cumene acetone bisphenol A epoxy resins polycarbonate cyclohexane adipic acid nylons caprolactam nylons nitrobenzene aniline methylene diphenyl diisocyanate (MDI) polyurethanes alkylbenzene detergents chlorobenzene toluene benzene toluene diisocyanate (TDI) polyurethanes benzoic acid caprolactam nylon mixed xylenes ortho-xylene phthalic anhydride para-xylene dimethyl terephthalate polyesters purified terephthalic acid polyesters Many, most, of these are called "specialty" chemcials. For a variety of reasons including purity concerns, most are not shipped by pipeline. I don't know of a specialty petrochemical that is. Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer? Bert
QUOTE: Originally posted by MichaelSol Oh good grief, another pile on by the half-informed. Chemical engineering was my original trade. "Petrochemical" is not a term of art, it is precisely defined as a type and class. I worked with a number of the following petrochemicals, and this would be a typical list of "petrochemicals." ethylene polyethylenes ethylene oxide ethylene glycols polyesters engine coolant glycol ethers ethoxylates vinyl acetate 1,2-dichloroethane trichloroethylene tetrachloroethylene vinyl chloride polyvinyl chloride ethylbenzene styrene polystyrenes synthetic rubbers higher olefins detergent alcohols propylene cumene acetone bisphenol A epoxy resins polycarbonate solvents isopropyl alcohol acrylonitrile polypropylene propylene oxide propylene glycol glycol ethers acrylic acid acrylic polymers allyl chloride epichlorohydrin epoxy resins butadiene synthetic rubbers benzene ethylbenzene styrene polystyrenes synthetic rubbers cumene acetone bisphenol A epoxy resins polycarbonate cyclohexane adipic acid nylons caprolactam nylons nitrobenzene aniline methylene diphenyl diisocyanate (MDI) polyurethanes alkylbenzene detergents chlorobenzene toluene benzene toluene diisocyanate (TDI) polyurethanes benzoic acid caprolactam nylon mixed xylenes ortho-xylene phthalic anhydride para-xylene dimethyl terephthalate polyesters purified terephthalic acid polyesters Many, most, of these are called "specialty" chemcials. For a variety of reasons including purity concerns, most are not shipped by pipeline. I don't know of a specialty petrochemical that is.
23 17 46 11
QUOTE: Originally posted by edblysard Big brother, little brother? Twins seperated at birth?
QUOTE: Originally posted by n012944 QUOTE: Originally posted by futuremodal Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous. I gave you an example of how oil companies have people captive, look it up.
QUOTE: Originally posted by futuremodal Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous.
QUOTE: Originally posted by n012944 QUOTE: Originally posted by futuremodal QUOTE: Originally posted by TomDiehl Originally posted by futuremodal Originally posted by edblysard No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins... So far, he has chickened out every time. Go figure.[:D]Ed Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous. I gave you an example of how oil companies have people captive, look it up. There are no captive customers to oil companies. Get used to it, iggy. Reply Edit MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 8:44 AM I will probably surprise some people here. If the law says 180% of VC, then it should be enforced. But, lets not kid ourselves here...it is kinda like when Major League Baseball locks out the players...this is millionaires squabbling with millionaires, only in this case it is billionaires vs billionaires. Michael and Dave, your example of petrochemical companies is not going to get too many folks concerned, take a look at XOM's earnings the past year. Big agriculture? ADM's stock is just off an all time high. High priced lobbying in Washington by the railroads? Oh my gosh, you dont think the oil patch and agricultural concerns dont have men and women in $2000 suits? Perhaps it is time to revisit the entire Staggers premise. Maybe the 180%VC needs to be further explored. If there is a cap on the top end...should there not be floor on the lower end? Say, 120% of variables? Or perhaps 140%. I love railroads. I am also glad I do not work for one. Also glad I dont have to work with the railroads. Surprizingly Tom Murray's piece (p20-21) didnt get more discussion. I think the two subjects (rates and service) go hand in hand, yet all that seems to be discussed is the rate aspect. Probably the best situation that works today would be Ed's employer in Houston or the IHB/Belt Railway/EJE in Chicago, or the Conrail shared assets. But, I have a customer that complains about the switching charges the IHB assesses. Railroads are an asset rich, cash poor industry. Consider the following comparison of 2005 revenue (not net income) to assets. BNSF - $12,987million revenue $30,304 million assets XOM - $307,680 million revenue $208335 million assets KO - $23,104 million revenue $29,427 million assets MSFT - $39,788 million revenue $48737 million assets All four companies (BNSF, Exxon Mobil, Coca Cola, and Microsoft) can be considered well run companies. Yet the sales to asset ratios vary considerably. BNSF and Coke have the same asset level, yet Coke generates double the revenue. XOM is completely off the charts in this comparison. Railroads must, if they are to survive (they did that in the 80's) and grow (yet to be seen in this decade) generate a rate of return on invested capital that enables them to invest in the future. Growth = intermodal today. Other freight grows at the rate of the GNP, for the most part. All indications are the rails are raising their intermodal rates, based on the leverage they have. Finally consider this...XOM's free cash flow for 2005 of roughly $38 billion dollars exceeded the value of the BNSF's assets. They purchased over $18 billion dollars of their common stock over 50% more than BNSF's revenues. Which billionaire are you going to side with? Personally, my money is on XOM...and has been for 10 years now. ed Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Monday, June 12, 2006 8:54 AM QUOTE: Originally posted by MP173 I will probably surprise some people here. If the law says 180% of VC, then it should be enforced. There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads. There is a significant amounts of traffic moving at margins over 180 with meaningful levels of competition. Bob Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 8:54 AM UP...very well stated. Intellectual property, be it in the form of pharma, entertainment, or formula (Coca Cola) is a very interesting topic. Microsoft has probably benefitted more from IP than any other company I can think of. I wonder...while a rail line cannot be considered "intellectual property", should it be considered property of value? What is the difference between, say ... Pfizer's Lipitor and the BNSF mainline across Nebraska? ed Reply rrandb Member sinceDecember 2001 From: K.C.,MO. 1,063 posts Posted by rrandb on Monday, June 12, 2006 9:55 AM While Micrsoft custmers could be considered "capive" technically they are not. You can buy an apple computer(more expensive) or use Linux for an operating system. Yea right. They have manipulated a free market into a virtual monopoly on the PC operating system market. Can buyers of their service negotiate by threating to go to another supplier. NO!!! Do they have a defacto monopoly. YES!!! Their answer is if someone even looks threatening you cru***hem or buy them. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 10:56 AM I knew the Microsoft reference would set folks off! That is about as close to captive customer base as one can find. Yet their revenue to asset ratio is not that high. Bob, thanks for the clarification on the 180VC ruling. Is there anything else that you would share with me on this? Or perhaps a reference website for the Staggers rules? ed Reply Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Monday, June 12, 2006 11:01 AM QUOTE: Originally posted by bobwilcox There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads. Bob: Can you explain what this part means? Thanks Thanks to Chris / CopCarSS for my avatar. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:36 AM QUOTE: Originally posted by greyhounds QUOTE: Originally posted by n012944 [Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer? Bert Not to mention "Polyesters" twice within the last three lines. Please remember, Sol once posted the per mile Maintence of Way expenditures for the Milwaukee Road and the Great Northern for each year from 1950 to 1970 - that "data dump" didn't mean anything either. I much enjoyed the crap you tried to post about Gateway conditions, and the lengthy list of things you post that are simply, verifiably, wrong. Really steamed abut those MOW expenditures, huh? Just continues to burn away; imagine, someone having the audacity to post information about two railroads you know nothing about .... In the instances cited above, the repeat is the generic trade name of a product derived from a different precursor, and having a different chemical formula, than the like-named products. Different chemical compounds with the same generic trade name. The first reference to polyesters, for instance, refers to polyesters derived from dimethyl terephthalate, the second reference to polyesters refers to polyesters derived from purified terephthalic acid. The same is true for nylon and synthetic rubber. It was shorthand, and while I would not expect you to have guessed anything like that, you certainly took the time to try and play your usual game of gotcha, and it was, once again, a waste of your time, mine and the forum's. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:40 AM Note that both the US DOJ and the EU have been agressively litigating against Microsoft over a variety of anti-trust issues over the years. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:43 AM QUOTE: Originally posted by Character It certainly seems that ... Mr. Sol both liberally quote and grasp for support that does not in fact support their propositions very well at all... Please be specific. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:57 AM QUOTE: Originally posted by MP173 Michael and Dave, your example of petrochemical companies is not going to get too many folks concerned, take a look at XOM's earnings the past year. My only comment on petrochemicals was directed to the fact that several posters -- including some who claim ominpotent knowledge of this industry without ever actually presenting an honest "fact" -- don't seem to know what "petrochemicals" are, and that overall the substantial bulk of them are carried by rail, not by pipeline. The danger of comparisons with other industries is underscored by a rail forum having little enough understanding of its own industry. You can look at the lengthy list of posts by greyhounds on this thread alone to see an extensive list where his alleged knowledge is simply contrary to established fact. Over and over. Coupled with the tendency of some to get on a thread just to yap, it is difficult enough to generate an accepted set of facts on any discussion topic. But when the discussion looks for analogies outside the industry, the discussion can only deteriorate because of the lack of specialized knowledge about those industries on a thread such as this. I can't talk in detail about the oil industry as a business; some feel they can. But does it really shed any "light" on the captive rail dilemma? Oil flows to the best price received, by however it can get there -- and there are many ways it can get there. But, it's a commodity, not an infrastructure. For oil, by and large the shippers own the infrastructure. The usefulness of any analogies to the rail industry ends there for me. There is virtually zero vertical integration in the rail industry. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Monday, June 12, 2006 12:19 PM Vertical integration usually means a manufacturing business that owns everything in the manufacturing chain from the source of the raw materials to the plant that produces the finished product. Since railroads provide a service rather than a product, I don't see where vertical integration comes into play. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 12:41 PM Exactly my point. Comparing a highly vertically integrated industry such as Oil with railroading is just too much of a stretch, even if we all knew the important details of that industry, but it is hard enough to get one's arms around one industry well enough to begin to understand it, let alone two or three for comparison. Delivering the product is the service component that the oil industry provides -- and is certainly comparable on that component to railroading -- but that is consistent with being vertically integrated. That is, the shippers, by and large, control the infrastructure that provides the service. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 2:13 PM QUOTE: Originally posted by MP173 Big agriculture? ADM's stock is just off an all time high. High priced lobbying in Washington by the railroads? Oh my gosh, you dont think the oil patch and agricultural concerns dont have men and women in $2000 suits? "Big" agriculture refers to manufacturers of end products in most cases. Over the 20 year life of a manufacturing facility, they can move -- and many manufacturers have made the decision to select where competitive rail services exist. Toyota has an advantage over old-line GM and Ford factories and specifically site selects based on competitive rail transportation. Over the long run, that changes the face of manufacturing America. And the railroads lose a substantial chunk of their captive shippers, but by imposing relocation costs on the economy as a whole, as well as favoring new entries over established firms. But, you can't move a farm. ADM pays the farrmer the going rate, minus shipping costs. Cargill pays the going rate, minus shipping costs. The farmer receives only $4.69 a bushel for HRS at the Shelby Elevator. The elevator operator, CHS, Inc., receives the $5.81/bu. at Portland -- most of the difference being transportation costs. Big Ag wins, Railroads win -- for a while, the economy as a whole suffers inefficiencies resulting from inefficient market allocation of resources, and Little Ag always loses. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 2:16 PM The comparison of a company to another company is required and occurs on a minute to minute basis in the equity markets. The business models may differ, but just as oil flows to market, so does capital, both in the form of debt and equity structures. Hence, my comparison. Railroads use a considerable amount of capital, one of the lowest asset turnover rates. Thus, if the turnover rate is low then the margins must compensate. Each piece of business a railroad prices out is part of the overall equation. I liked Murph's comment about certain customers providing 110% of profits. As I have said before, if 180VC is the law, then enforce it, but that places a restrictive cap on earnings potential. What will be done on balance to stablize the disruption of market forces? ed Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 2:23 PM Little ag loses as long as their commodity prices are low. What has little ag done in order to increase those prices? Generally what occurs in commodity type businesses is that capacity is taken out of the market at certain opportunities. In the case of LA, I dont know. Michael you can certainly retrieve the acreage figures better than I can. What has occured, at least in my mind, has been BG(Big Government) has stepped in to support LA. Of course, BG steps in to help a number of industries. Take a look at the ethynol situation right now. ADM has become as much of a play on energy as food processing. The selection of the new CEO confirms that. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 2:25 PM QUOTE: Originally posted by MP173 The comparison of a company to another company is required and occurs on a minute to minute basis in the equity markets. The business models may differ, but just as oil flows to market, so does capital, both in the form of debt and equity structures. Hence, my comparison. Railroads use a considerable amount of capital, one of the lowest asset turnover rates. Thus, if the turnover rate is low then the margins must compensate. Each piece of business a railroad prices out is part of the overall equation. I liked Murph's comment about certain customers providing 110% of profits. As I have said before, if 180VC is the law, then enforce it, but that places a restrictive cap on earnings potential. What will be done on balance to stablize the disruption of market forces? Well, railroads will probably never be comparable with something like Microsoft, in terms of assets, income, margin, debt, or equity. Never. And "risk" is a key distinguishing factor between such business models. Netscape yesterday is not Netscape today. Note what happened though when Microsoft got essentially market control in its key product areas: browser, word processor, OS. Innovation literally ceased. Fifty per cent profit margins, and development of important business productivity software came to a screeching halt. Where's the Captive Market profits money going? Games. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, June 12, 2006 2:32 PM Ok. This thread has degenerated into a mud slinging match...A couple of companies in the UK have put their toes into the vertical integration water, National Power did it before selling up to EWS (as a way to force prices down methinks) and British Nuclear Fuels (BNFL)are VI to an extent as well. The extent is that they did not/ Do Not own the track. BNFL does control some of its own siding infrastructure, but they have their own locomotives, wagons and crews. A lot of it is to have control of a very sensitive supply. However, just two large flies in the OA ointment. Though the shippers have a choice of freight operators the track provider is basically drowning in debt and is looking to differentiate the price of track access which could see some traffic lost to rail whether Red train Co, Blue Train Co or Green Train Co operates it. They are very very price conscious and price elastic so it seems. Secondly the amount of bureaucracy involved is somewhat mind boggling. If you want a certain amount of Intramodal comp then the US will have to move to basically a scheduled railway system I would think. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 3:28 PM Well, ever since the Sherman Act, BG has had a mandate to step in to protect "the little" guy, and, pursuant to sound economic theory, to avoid monopoly situations. That mandate didn't change under the Staggers Act. In the case of Montana in 1984, the ICC concluded that BN had market dominance of the type that establishes captive shippers. The R/VC rate charged to wheat shippers was found to be 300%. Damages were awarded. That was under a straightforward implementation of the Staggers guidelines, by the agency charged with interpreting them. Commodity prices have nothing to do with the rate argument. The analogy would be that it's OK to hold up rich people, but not poor people; perhaps more apropo, to hold up poor people, but not rich people. The law needs to be applied no matter what. In this instance, a Montana grower will still be uncompetitive to his peers, even though he has the best product and excellent positioning to the primary market. If he earns 10%, and his counterparts earn 20%, because of artificial transportation cost differentials, his counterparts ultimately have greater access to capital, to resources, the value of the land is worth more, everything changes if there is a substantial differential, no matter what the commodity market is doing in general. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 3:31 PM QUOTE: Originally posted by cogload Ok. This thread has degenerated into a mud slinging match.. It always does when three key gentlemen make their inevitable appearance. Reply TomDiehl Member sinceFebruary 2001 From: Poconos, PA 3,948 posts Posted by TomDiehl on Monday, June 12, 2006 4:17 PM QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by cogload Ok. This thread has degenerated into a mud slinging match.. It always does when three key gentlemen make their inevitable appearance. To be truly accurate in a statement like this, you need to see where the "mud" first is slung and by who. Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown Reply rrandb Member sinceDecember 2001 From: K.C.,MO. 1,063 posts Posted by rrandb on Monday, June 12, 2006 4:35 PM Not all railroads are in the same boat. I now of one where all traffic is terminated with no run thru. All cars are either loaded or unloaded. Every shipper is captive. I am not talking about a terminal road but one of the larger class 2's with over 400 miles of main and 250 miles of concrete ties.. Unfair rates have to be looked at on a case by case basis. Me thinks only congress and the courts can fix the mess they created. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 4:46 PM But, we dont know what the VC ratio is today. Once upon a time it occurred. Is it happening today? Perhaps. If so and it is the law...then go after them. My foundation still remains. Cap earnings on the top, then a company (or individual) is limited in their earnings potential. Michael, what do you suggest about handling that? We went round and around on the wheat issue on the Montana thread and I will not pursue it further. Revenues didnt increase over 30+ years. There is a capacity issue in the wheat market which hasnt been addressed. Too much wheat. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 5:36 PM QUOTE: Originally posted by MP173 But, we dont know what the VC ratio is today. Once upon a time it occurred. Is it happening today? Perhaps. If so and it is the law...then go after them. The STB utilizes a program based on railroad-supplied data that generates a R/VC ratio. Like all data-based analytical systems, it is of course bound by the reporting parameters necessary to compile, deliver, and upload the data -- so it's never quite current -- data rarely is. However, the program does allow an interested person to enter such current data as may be available. for a given shipment on a given railroad a given distance. While I wouldn't rely on it for great precision, it provides a useful ballpark that is pretty close to the mark compared to the detail studies I have seen. Today, Shelby wheat is probably around 240-250%, R/VC. My version of the STB program is loaded at home, not here, so I'm working from memory as well as interpolating a recent rate increase. QUOTE: Cap earnings on the top, then a company (or individual) is limited in their earnings potential. Michael, what do you suggest about handling that? Well, not even Microsoft has a margin higher than 50%. BNSF has the lowest average competitive R/VC of any of the four largest Class I railroads, at 100.6% R/VC. Although I suspect it has dropped considerably just in the past few years, when initially conceived the FC/VC ratio varied within a range of 45-50%. In either case, it's clear that BNSF has been buying market share somewhere with regards to its competitive customers. On the other hand, BNSF has the lowest percentage of captive shippers at 21.9%, but it receives nearly the highest R/VC at 238.1% for the average captive shipper. The system average, for which BNSF seems to currently be earning a pretty good average rate of return, is 130.7% R/VC. But, you can see where the leverage for profit is. That 78.1% of shippers who are averaging only 100.6% of their R/VC. Overall, the 180% R/VC seems to have been intended to build in a pretty good profit margin overall. The alternative? The alternative for the railroads was to continue to be required to offer physical competitive service at every possible reasonable location. The rate threshold was a trade-off, no doubt, but one designed to benefit the railroads through expedited abandonments. Well, the railroads got that. The problem was, they got into a rate war on competitive traffic, which was ridiculous because the lanes were full for that traffic -- what was going to happen if they raised rates? The other guy couldn't carry it. But instead of raising rates, they engaged on enormously costly physical plant upgrades ... to increase capacity ... raising their operating costs .... so that they couldn't raise rates because by now the other guy had capacity coming on line that meant he could carry the traffic if anybody made the first move and raised rates. This is an example where money from captive shippers enable railroads to make irrational investment decisions -- high cost investments to perpetuate cut throat competition. Certain shippers get a below cost service. Certain shippers are handed an enormously useful competitive advantage over their competitors -- subsidized transportation costs. Transportation costs are not the only cost for sure, but they are the deciding cost when they differ significantly because of location, and the manufacturer can't just charge more for the product. Just like wheat. Very few businesses get the luxury, as railroads do with fuel prices, of simply passing the costs directly through as a surcharge. The margin is, say, 5% on the transportation cost of an item imported (or more fortuitously located) instead of manufactured in Ohio where the marginal cost of transporation is 2.5 times the cost to the competitor, and the manufacturer pays 12.5%. The manufacturers make, say, 5%. The numbers say the manufacturer shuts down his plant in Ohio and relocates. He has to. The wheat farmer? Well, I'm not sure what he does. Just goes a little farther in the hole every year and then sells out to Ted Turner for a Buffalo farm. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 10:01 PM So, the STBprogram is based on system averages? That is a bit antiquated for determining costs for specific movements. If I were a pricing manager, my decisions would be based on specific data for each customer. That, of course involves very propriatary information, which i would be extremely reluctant to share. ed Reply « First«45678910»Last » Join our Community! Our community is FREE to join. To participate you must either login or register for an account. Login » Register » Search the Community Newsletter Sign-Up By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy More great sites from Kalmbach Media Terms Of Use | Privacy Policy | Copyright Policy
QUOTE: Originally posted by futuremodal QUOTE: Originally posted by TomDiehl Originally posted by futuremodal Originally posted by edblysard No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins... So far, he has chickened out every time. Go figure.[:D]Ed Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous. I gave you an example of how oil companies have people captive, look it up. There are no captive customers to oil companies. Get used to it, iggy. Reply Edit MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 8:44 AM I will probably surprise some people here. If the law says 180% of VC, then it should be enforced. But, lets not kid ourselves here...it is kinda like when Major League Baseball locks out the players...this is millionaires squabbling with millionaires, only in this case it is billionaires vs billionaires. Michael and Dave, your example of petrochemical companies is not going to get too many folks concerned, take a look at XOM's earnings the past year. Big agriculture? ADM's stock is just off an all time high. High priced lobbying in Washington by the railroads? Oh my gosh, you dont think the oil patch and agricultural concerns dont have men and women in $2000 suits? Perhaps it is time to revisit the entire Staggers premise. Maybe the 180%VC needs to be further explored. If there is a cap on the top end...should there not be floor on the lower end? Say, 120% of variables? Or perhaps 140%. I love railroads. I am also glad I do not work for one. Also glad I dont have to work with the railroads. Surprizingly Tom Murray's piece (p20-21) didnt get more discussion. I think the two subjects (rates and service) go hand in hand, yet all that seems to be discussed is the rate aspect. Probably the best situation that works today would be Ed's employer in Houston or the IHB/Belt Railway/EJE in Chicago, or the Conrail shared assets. But, I have a customer that complains about the switching charges the IHB assesses. Railroads are an asset rich, cash poor industry. Consider the following comparison of 2005 revenue (not net income) to assets. BNSF - $12,987million revenue $30,304 million assets XOM - $307,680 million revenue $208335 million assets KO - $23,104 million revenue $29,427 million assets MSFT - $39,788 million revenue $48737 million assets All four companies (BNSF, Exxon Mobil, Coca Cola, and Microsoft) can be considered well run companies. Yet the sales to asset ratios vary considerably. BNSF and Coke have the same asset level, yet Coke generates double the revenue. XOM is completely off the charts in this comparison. Railroads must, if they are to survive (they did that in the 80's) and grow (yet to be seen in this decade) generate a rate of return on invested capital that enables them to invest in the future. Growth = intermodal today. Other freight grows at the rate of the GNP, for the most part. All indications are the rails are raising their intermodal rates, based on the leverage they have. Finally consider this...XOM's free cash flow for 2005 of roughly $38 billion dollars exceeded the value of the BNSF's assets. They purchased over $18 billion dollars of their common stock over 50% more than BNSF's revenues. Which billionaire are you going to side with? Personally, my money is on XOM...and has been for 10 years now. ed Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Monday, June 12, 2006 8:54 AM QUOTE: Originally posted by MP173 I will probably surprise some people here. If the law says 180% of VC, then it should be enforced. There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads. There is a significant amounts of traffic moving at margins over 180 with meaningful levels of competition. Bob Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 8:54 AM UP...very well stated. Intellectual property, be it in the form of pharma, entertainment, or formula (Coca Cola) is a very interesting topic. Microsoft has probably benefitted more from IP than any other company I can think of. I wonder...while a rail line cannot be considered "intellectual property", should it be considered property of value? What is the difference between, say ... Pfizer's Lipitor and the BNSF mainline across Nebraska? ed Reply rrandb Member sinceDecember 2001 From: K.C.,MO. 1,063 posts Posted by rrandb on Monday, June 12, 2006 9:55 AM While Micrsoft custmers could be considered "capive" technically they are not. You can buy an apple computer(more expensive) or use Linux for an operating system. Yea right. They have manipulated a free market into a virtual monopoly on the PC operating system market. Can buyers of their service negotiate by threating to go to another supplier. NO!!! Do they have a defacto monopoly. YES!!! Their answer is if someone even looks threatening you cru***hem or buy them. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 10:56 AM I knew the Microsoft reference would set folks off! That is about as close to captive customer base as one can find. Yet their revenue to asset ratio is not that high. Bob, thanks for the clarification on the 180VC ruling. Is there anything else that you would share with me on this? Or perhaps a reference website for the Staggers rules? ed Reply Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Monday, June 12, 2006 11:01 AM QUOTE: Originally posted by bobwilcox There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads. Bob: Can you explain what this part means? Thanks Thanks to Chris / CopCarSS for my avatar. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:36 AM QUOTE: Originally posted by greyhounds QUOTE: Originally posted by n012944 [Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer? Bert Not to mention "Polyesters" twice within the last three lines. Please remember, Sol once posted the per mile Maintence of Way expenditures for the Milwaukee Road and the Great Northern for each year from 1950 to 1970 - that "data dump" didn't mean anything either. I much enjoyed the crap you tried to post about Gateway conditions, and the lengthy list of things you post that are simply, verifiably, wrong. Really steamed abut those MOW expenditures, huh? Just continues to burn away; imagine, someone having the audacity to post information about two railroads you know nothing about .... In the instances cited above, the repeat is the generic trade name of a product derived from a different precursor, and having a different chemical formula, than the like-named products. Different chemical compounds with the same generic trade name. The first reference to polyesters, for instance, refers to polyesters derived from dimethyl terephthalate, the second reference to polyesters refers to polyesters derived from purified terephthalic acid. The same is true for nylon and synthetic rubber. It was shorthand, and while I would not expect you to have guessed anything like that, you certainly took the time to try and play your usual game of gotcha, and it was, once again, a waste of your time, mine and the forum's. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:40 AM Note that both the US DOJ and the EU have been agressively litigating against Microsoft over a variety of anti-trust issues over the years. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:43 AM QUOTE: Originally posted by Character It certainly seems that ... Mr. Sol both liberally quote and grasp for support that does not in fact support their propositions very well at all... Please be specific. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 11:57 AM QUOTE: Originally posted by MP173 Michael and Dave, your example of petrochemical companies is not going to get too many folks concerned, take a look at XOM's earnings the past year. My only comment on petrochemicals was directed to the fact that several posters -- including some who claim ominpotent knowledge of this industry without ever actually presenting an honest "fact" -- don't seem to know what "petrochemicals" are, and that overall the substantial bulk of them are carried by rail, not by pipeline. The danger of comparisons with other industries is underscored by a rail forum having little enough understanding of its own industry. You can look at the lengthy list of posts by greyhounds on this thread alone to see an extensive list where his alleged knowledge is simply contrary to established fact. Over and over. Coupled with the tendency of some to get on a thread just to yap, it is difficult enough to generate an accepted set of facts on any discussion topic. But when the discussion looks for analogies outside the industry, the discussion can only deteriorate because of the lack of specialized knowledge about those industries on a thread such as this. I can't talk in detail about the oil industry as a business; some feel they can. But does it really shed any "light" on the captive rail dilemma? Oil flows to the best price received, by however it can get there -- and there are many ways it can get there. But, it's a commodity, not an infrastructure. For oil, by and large the shippers own the infrastructure. The usefulness of any analogies to the rail industry ends there for me. There is virtually zero vertical integration in the rail industry. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Monday, June 12, 2006 12:19 PM Vertical integration usually means a manufacturing business that owns everything in the manufacturing chain from the source of the raw materials to the plant that produces the finished product. Since railroads provide a service rather than a product, I don't see where vertical integration comes into play. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 12:41 PM Exactly my point. Comparing a highly vertically integrated industry such as Oil with railroading is just too much of a stretch, even if we all knew the important details of that industry, but it is hard enough to get one's arms around one industry well enough to begin to understand it, let alone two or three for comparison. Delivering the product is the service component that the oil industry provides -- and is certainly comparable on that component to railroading -- but that is consistent with being vertically integrated. That is, the shippers, by and large, control the infrastructure that provides the service. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 2:13 PM QUOTE: Originally posted by MP173 Big agriculture? ADM's stock is just off an all time high. High priced lobbying in Washington by the railroads? Oh my gosh, you dont think the oil patch and agricultural concerns dont have men and women in $2000 suits? "Big" agriculture refers to manufacturers of end products in most cases. Over the 20 year life of a manufacturing facility, they can move -- and many manufacturers have made the decision to select where competitive rail services exist. Toyota has an advantage over old-line GM and Ford factories and specifically site selects based on competitive rail transportation. Over the long run, that changes the face of manufacturing America. And the railroads lose a substantial chunk of their captive shippers, but by imposing relocation costs on the economy as a whole, as well as favoring new entries over established firms. But, you can't move a farm. ADM pays the farrmer the going rate, minus shipping costs. Cargill pays the going rate, minus shipping costs. The farmer receives only $4.69 a bushel for HRS at the Shelby Elevator. The elevator operator, CHS, Inc., receives the $5.81/bu. at Portland -- most of the difference being transportation costs. Big Ag wins, Railroads win -- for a while, the economy as a whole suffers inefficiencies resulting from inefficient market allocation of resources, and Little Ag always loses. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 2:16 PM The comparison of a company to another company is required and occurs on a minute to minute basis in the equity markets. The business models may differ, but just as oil flows to market, so does capital, both in the form of debt and equity structures. Hence, my comparison. Railroads use a considerable amount of capital, one of the lowest asset turnover rates. Thus, if the turnover rate is low then the margins must compensate. Each piece of business a railroad prices out is part of the overall equation. I liked Murph's comment about certain customers providing 110% of profits. As I have said before, if 180VC is the law, then enforce it, but that places a restrictive cap on earnings potential. What will be done on balance to stablize the disruption of market forces? ed Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 2:23 PM Little ag loses as long as their commodity prices are low. What has little ag done in order to increase those prices? Generally what occurs in commodity type businesses is that capacity is taken out of the market at certain opportunities. In the case of LA, I dont know. Michael you can certainly retrieve the acreage figures better than I can. What has occured, at least in my mind, has been BG(Big Government) has stepped in to support LA. Of course, BG steps in to help a number of industries. Take a look at the ethynol situation right now. ADM has become as much of a play on energy as food processing. The selection of the new CEO confirms that. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 2:25 PM QUOTE: Originally posted by MP173 The comparison of a company to another company is required and occurs on a minute to minute basis in the equity markets. The business models may differ, but just as oil flows to market, so does capital, both in the form of debt and equity structures. Hence, my comparison. Railroads use a considerable amount of capital, one of the lowest asset turnover rates. Thus, if the turnover rate is low then the margins must compensate. Each piece of business a railroad prices out is part of the overall equation. I liked Murph's comment about certain customers providing 110% of profits. As I have said before, if 180VC is the law, then enforce it, but that places a restrictive cap on earnings potential. What will be done on balance to stablize the disruption of market forces? Well, railroads will probably never be comparable with something like Microsoft, in terms of assets, income, margin, debt, or equity. Never. And "risk" is a key distinguishing factor between such business models. Netscape yesterday is not Netscape today. Note what happened though when Microsoft got essentially market control in its key product areas: browser, word processor, OS. Innovation literally ceased. Fifty per cent profit margins, and development of important business productivity software came to a screeching halt. Where's the Captive Market profits money going? Games. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, June 12, 2006 2:32 PM Ok. This thread has degenerated into a mud slinging match...A couple of companies in the UK have put their toes into the vertical integration water, National Power did it before selling up to EWS (as a way to force prices down methinks) and British Nuclear Fuels (BNFL)are VI to an extent as well. The extent is that they did not/ Do Not own the track. BNFL does control some of its own siding infrastructure, but they have their own locomotives, wagons and crews. A lot of it is to have control of a very sensitive supply. However, just two large flies in the OA ointment. Though the shippers have a choice of freight operators the track provider is basically drowning in debt and is looking to differentiate the price of track access which could see some traffic lost to rail whether Red train Co, Blue Train Co or Green Train Co operates it. They are very very price conscious and price elastic so it seems. Secondly the amount of bureaucracy involved is somewhat mind boggling. If you want a certain amount of Intramodal comp then the US will have to move to basically a scheduled railway system I would think. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 3:28 PM Well, ever since the Sherman Act, BG has had a mandate to step in to protect "the little" guy, and, pursuant to sound economic theory, to avoid monopoly situations. That mandate didn't change under the Staggers Act. In the case of Montana in 1984, the ICC concluded that BN had market dominance of the type that establishes captive shippers. The R/VC rate charged to wheat shippers was found to be 300%. Damages were awarded. That was under a straightforward implementation of the Staggers guidelines, by the agency charged with interpreting them. Commodity prices have nothing to do with the rate argument. The analogy would be that it's OK to hold up rich people, but not poor people; perhaps more apropo, to hold up poor people, but not rich people. The law needs to be applied no matter what. In this instance, a Montana grower will still be uncompetitive to his peers, even though he has the best product and excellent positioning to the primary market. If he earns 10%, and his counterparts earn 20%, because of artificial transportation cost differentials, his counterparts ultimately have greater access to capital, to resources, the value of the land is worth more, everything changes if there is a substantial differential, no matter what the commodity market is doing in general. Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 3:31 PM QUOTE: Originally posted by cogload Ok. This thread has degenerated into a mud slinging match.. It always does when three key gentlemen make their inevitable appearance. Reply TomDiehl Member sinceFebruary 2001 From: Poconos, PA 3,948 posts Posted by TomDiehl on Monday, June 12, 2006 4:17 PM QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by cogload Ok. This thread has degenerated into a mud slinging match.. It always does when three key gentlemen make their inevitable appearance. To be truly accurate in a statement like this, you need to see where the "mud" first is slung and by who. Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown Reply rrandb Member sinceDecember 2001 From: K.C.,MO. 1,063 posts Posted by rrandb on Monday, June 12, 2006 4:35 PM Not all railroads are in the same boat. I now of one where all traffic is terminated with no run thru. All cars are either loaded or unloaded. Every shipper is captive. I am not talking about a terminal road but one of the larger class 2's with over 400 miles of main and 250 miles of concrete ties.. Unfair rates have to be looked at on a case by case basis. Me thinks only congress and the courts can fix the mess they created. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 4:46 PM But, we dont know what the VC ratio is today. Once upon a time it occurred. Is it happening today? Perhaps. If so and it is the law...then go after them. My foundation still remains. Cap earnings on the top, then a company (or individual) is limited in their earnings potential. Michael, what do you suggest about handling that? We went round and around on the wheat issue on the Montana thread and I will not pursue it further. Revenues didnt increase over 30+ years. There is a capacity issue in the wheat market which hasnt been addressed. Too much wheat. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 12, 2006 5:36 PM QUOTE: Originally posted by MP173 But, we dont know what the VC ratio is today. Once upon a time it occurred. Is it happening today? Perhaps. If so and it is the law...then go after them. The STB utilizes a program based on railroad-supplied data that generates a R/VC ratio. Like all data-based analytical systems, it is of course bound by the reporting parameters necessary to compile, deliver, and upload the data -- so it's never quite current -- data rarely is. However, the program does allow an interested person to enter such current data as may be available. for a given shipment on a given railroad a given distance. While I wouldn't rely on it for great precision, it provides a useful ballpark that is pretty close to the mark compared to the detail studies I have seen. Today, Shelby wheat is probably around 240-250%, R/VC. My version of the STB program is loaded at home, not here, so I'm working from memory as well as interpolating a recent rate increase. QUOTE: Cap earnings on the top, then a company (or individual) is limited in their earnings potential. Michael, what do you suggest about handling that? Well, not even Microsoft has a margin higher than 50%. BNSF has the lowest average competitive R/VC of any of the four largest Class I railroads, at 100.6% R/VC. Although I suspect it has dropped considerably just in the past few years, when initially conceived the FC/VC ratio varied within a range of 45-50%. In either case, it's clear that BNSF has been buying market share somewhere with regards to its competitive customers. On the other hand, BNSF has the lowest percentage of captive shippers at 21.9%, but it receives nearly the highest R/VC at 238.1% for the average captive shipper. The system average, for which BNSF seems to currently be earning a pretty good average rate of return, is 130.7% R/VC. But, you can see where the leverage for profit is. That 78.1% of shippers who are averaging only 100.6% of their R/VC. Overall, the 180% R/VC seems to have been intended to build in a pretty good profit margin overall. The alternative? The alternative for the railroads was to continue to be required to offer physical competitive service at every possible reasonable location. The rate threshold was a trade-off, no doubt, but one designed to benefit the railroads through expedited abandonments. Well, the railroads got that. The problem was, they got into a rate war on competitive traffic, which was ridiculous because the lanes were full for that traffic -- what was going to happen if they raised rates? The other guy couldn't carry it. But instead of raising rates, they engaged on enormously costly physical plant upgrades ... to increase capacity ... raising their operating costs .... so that they couldn't raise rates because by now the other guy had capacity coming on line that meant he could carry the traffic if anybody made the first move and raised rates. This is an example where money from captive shippers enable railroads to make irrational investment decisions -- high cost investments to perpetuate cut throat competition. Certain shippers get a below cost service. Certain shippers are handed an enormously useful competitive advantage over their competitors -- subsidized transportation costs. Transportation costs are not the only cost for sure, but they are the deciding cost when they differ significantly because of location, and the manufacturer can't just charge more for the product. Just like wheat. Very few businesses get the luxury, as railroads do with fuel prices, of simply passing the costs directly through as a surcharge. The margin is, say, 5% on the transportation cost of an item imported (or more fortuitously located) instead of manufactured in Ohio where the marginal cost of transporation is 2.5 times the cost to the competitor, and the manufacturer pays 12.5%. The manufacturers make, say, 5%. The numbers say the manufacturer shuts down his plant in Ohio and relocates. He has to. The wheat farmer? Well, I'm not sure what he does. Just goes a little farther in the hole every year and then sells out to Ted Turner for a Buffalo farm. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Monday, June 12, 2006 10:01 PM So, the STBprogram is based on system averages? That is a bit antiquated for determining costs for specific movements. If I were a pricing manager, my decisions would be based on specific data for each customer. That, of course involves very propriatary information, which i would be extremely reluctant to share. ed Reply « First«45678910»Last » Join our Community! Our community is FREE to join. To participate you must either login or register for an account. Login » Register » Search the Community Newsletter Sign-Up By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy More great sites from Kalmbach Media Terms Of Use | Privacy Policy | Copyright Policy
QUOTE: Originally posted by TomDiehl Originally posted by futuremodal Originally posted by edblysard No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins... So far, he has chickened out every time. Go figure.[:D]Ed Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous. I gave you an example of how oil companies have people captive, look it up.
Originally posted by futuremodal Originally posted by edblysard No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins... So far, he has chickened out every time. Go figure.[:D]Ed Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous.
Originally posted by edblysard No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins... So far, he has chickened out every time. Go figure.[:D]Ed
QUOTE: Originally posted by MP173 I will probably surprise some people here. If the law says 180% of VC, then it should be enforced.
QUOTE: Originally posted by bobwilcox There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads.
Thanks to Chris / CopCarSS for my avatar.
QUOTE: Originally posted by greyhounds QUOTE: Originally posted by n012944 [Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer? Bert Not to mention "Polyesters" twice within the last three lines. Please remember, Sol once posted the per mile Maintence of Way expenditures for the Milwaukee Road and the Great Northern for each year from 1950 to 1970 - that "data dump" didn't mean anything either.
QUOTE: Originally posted by n012944 [Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer? Bert
QUOTE: Originally posted by Character It certainly seems that ... Mr. Sol both liberally quote and grasp for support that does not in fact support their propositions very well at all...
QUOTE: Originally posted by MP173 Michael and Dave, your example of petrochemical companies is not going to get too many folks concerned, take a look at XOM's earnings the past year.
QUOTE: Originally posted by MP173 Big agriculture? ADM's stock is just off an all time high. High priced lobbying in Washington by the railroads? Oh my gosh, you dont think the oil patch and agricultural concerns dont have men and women in $2000 suits?
QUOTE: Originally posted by MP173 The comparison of a company to another company is required and occurs on a minute to minute basis in the equity markets. The business models may differ, but just as oil flows to market, so does capital, both in the form of debt and equity structures. Hence, my comparison. Railroads use a considerable amount of capital, one of the lowest asset turnover rates. Thus, if the turnover rate is low then the margins must compensate. Each piece of business a railroad prices out is part of the overall equation. I liked Murph's comment about certain customers providing 110% of profits. As I have said before, if 180VC is the law, then enforce it, but that places a restrictive cap on earnings potential. What will be done on balance to stablize the disruption of market forces?
QUOTE: Originally posted by cogload Ok. This thread has degenerated into a mud slinging match..
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by cogload Ok. This thread has degenerated into a mud slinging match.. It always does when three key gentlemen make their inevitable appearance.
QUOTE: Originally posted by MP173 But, we dont know what the VC ratio is today. Once upon a time it occurred. Is it happening today? Perhaps. If so and it is the law...then go after them.
QUOTE: Cap earnings on the top, then a company (or individual) is limited in their earnings potential. Michael, what do you suggest about handling that?
Our community is FREE to join. To participate you must either login or register for an account.