QUOTE: Originally posted by idhull QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by jeaton [br I will add to my original point. Of all the track abandoned, what was the split of branch line and trunk line, and then just how much of the abandoned trunk line would now be useful. But, branchlines are just not a capacity issue. The closing of a phosphate mine on some branch has little to do with discussions of capacity, which is a through route or mainline issue and even at that, the discussion is tempered by management of existing mainlines as much as broad discussions of mainline abandonment. You are quite right with respect to lines that are served only by one or two significant customers. But there are many examples of where main routes whether sections of multiple track or whole complete lines have been abandoned or removed for short term gain. In the past the railroads have been guilty of making the capacity meet the traffic level rather than going out and marketing their services so that the traffic level meets the capacity. Obviously technology also plays a role in their decision to replace multi-track routes with signalled single track routes but in my opinion signals do not replace track. It is one thing to downgrade a triple track route to double track but to downgrade a double track route to single is part of the reason why we are where we are today. Railroads have been guilty of abandoning routes that while not being high density routes do have enough volume to remain open but choose to re-route the traffic via alternate routes to save money. The problem is that they assume the traffic will follow their plan in spite of longer transit times due to indirect routings. This means the cost increases in the long term. The other thing people forget about is the impact of passenger train service on rail density. Although gross ton miles may have increased on many routes the actual number of trains has declined due to the withdrawal of passenger service. If the government or somebody had supported more passenger service much of the infrastructure would have been maintained. It is not just tonnage that makes a rail line viable. Passenger train service tends to keep the trackage and signal system at a higher level which also benefits freight. The question has always been how much of the costs should be borne by the freight and passenger components.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by jeaton [br I will add to my original point. Of all the track abandoned, what was the split of branch line and trunk line, and then just how much of the abandoned trunk line would now be useful. But, branchlines are just not a capacity issue. The closing of a phosphate mine on some branch has little to do with discussions of capacity, which is a through route or mainline issue and even at that, the discussion is tempered by management of existing mainlines as much as broad discussions of mainline abandonment.
QUOTE: Originally posted by jeaton [br I will add to my original point. Of all the track abandoned, what was the split of branch line and trunk line, and then just how much of the abandoned trunk line would now be useful.
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QUOTE: Originally posted by jeaton Short term, long term or intermediate term, even if there is no direct expense to hold on to an idle asset (not true with rail lines), there is an oppurtunity cost. That is to say that the salvage or scrap value is converted to ca***o put in the bank to earn interest or invested into something makes money. Top do otherwise is the same as putting your money in a coffee can to bury in the back yard.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by jeaton Short term, long term or intermediate term, even if there is no direct expense to hold on to an idle asset (not true with rail lines), there is an oppurtunity cost. That is to say that the salvage or scrap value is converted to ca***o put in the bank to earn interest or invested into something makes money. Top do otherwise is the same as putting your money in a coffee can to bury in the back yard. A touch of real world here. Which is the better investment? Well, that's where long range planning comes in and yet, the intrinsic appreciated value of the real property alone can equal or exceed the opportunity cost gained by scrapping and sale, let alone the value of the property to the railroad for railroad purposes.
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QUOTE: Originally posted by MichaelSol The cash in the Coffee Can does not appreciate. Real property usually does. Railroads were not going to go broke sitting on valuable, appreciating real property assets. The Land Grant roads did just fine followng exactly that philosophy. Indeed, in general real estate over the time period being discussed typically appreciated faster than the ordinary rate of return. If there was an "opportunity cost" it was probably incurred by selling off the assets. Discussing scrap value. If it generally cost about $1 million to get a line in shape from scratch, but $100,000 could be recovered in scrap, here's the opportunity cost. By maintaining the ROW, if the value of that ROW at the end of 20 years was a $1 million per mile to the railroad, the Present Value of that exceeds the Present Value of the opportunity cost gained by selling the scrap and reinvesting it, over that same 20 year period at 9%. Which is the better investment? Well, that's where long range planning comes in and yet, the intrinsic appreciated value of the real property alone can equal or exceed the opportunity cost gained by scrapping and sale, let alone the value of the property to the railroad for railroad purposes. Yes, there is an "opportunity cost" to anything. Simply saying it doesn't mean anything however unless you actually know what it is.
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QUOTE: Originally posted by MichaelSol Here's a reference, reprinted from another thread, from a friend of mine, a retired BN dispatcher, about track management on an existing mainline, which might show up on a "map" as a "route" without showing that it, too, had been constricted by policies aimed at reducing even capacity on existing routes. "Tearing out "redundant" trackage was one of the few things they were good at. "The one that comes to mind immediately is Easton to Martin, 11 miles, on former NP . Of course just a couple years after that they shut the whole *** line down. "They were looking long and hard at Seattle to Portland also- made several studies about single tracking it. About that time, along came Grinstein and the Frisco Reign of Terror was over. "They loved to take out sidings too. One notable one I remember: On the CTC main line there was a siding near Everett WA extending westward from Lowell station past a crossover at next station called PA Jct, and then extending another half mile to the entrance to the Everett tunnel, where it re joined the main track. At PA Jct the line to Vancouver Canada branched off. Trains coming off the Vancouver line headed toward Everett tunnel and Seattle were on an upgrade at this junction and couldnt be stopped at the junction point (in the case of a more important train using the mainline) or they would stall, so instead of making them wait at the crossover at that point, we always headed them into the siding extension at PA Jct and once they passed that point they would be on level siding track and could pull their train to the west switch at the mouth of the tunnel, and from that point they could easily stop and start again if necessary. Saved a lot of delay. "One day Pisser Bill Thompson and some dumb Frisco car toad who had recently been appointed Trainmaster although he was from (where else?) Sprang-field Mo, and knew nothing of the territory, were in their hy rail vehicle, and they wanted to use this siding extension but instead of calling it "The siding between PA Jct and Everett Jct" as they should have, they told the dispatcher they wanted to use the "Siding at Lowell." So the dispatcher blocked out the portion from Lowell to PA Jct and gave them a written permit betweeen those stations. They then proceeded to hyrail into the little short extension, even though it was outside their territory. The dispatcher then ran a train from Vancouver into this short siding to meet an eastbound train for SPokane coming thru the Everett Tunnel. Well guess what -- the Vancouver train barely got stopped in time before running into the hy rail. Of course the fur flew and the Frisco dinks were getting ready to fire a dispatcher, but then they discovered whose mistake it actually was and the whole thing got dropped. - Until the following month, that is, when a crane showed up and completely removed the siding extension. The Frisco dinks felt it needed to be removed because it was "too confusing" to have a siding divided between three stations. After that, all the Vancouver trains waited a mile away at the bottom of the hill if we couldnt take them onto the main track at PA Jct immediately. "These are the same rocket scientists who closed up Minot Hump Yard, Wenatchee yard, Wishram yard, took out or discontinued the hump at Pasco, and were seriously considering closing the Flat/Hump yard at Interbay (Seattle). They closed Stampede Pass, sold the Milw Snoqualmie pass to the State, shut down Bayside Yard at Everett, etc. After they were gone some of these facilities were in part restored." " I figure at their peak they cost us at least one fourth of our rail handling capacity due to their shutting down of facilities and other things that kept the railroad fluid." "If you extrapolate this little bit of info I gave you re the NW Corner of the RR, into the whole BN you can maybe see why railroads like BN and UP are having problems taking care of business. Every time they have just the slightest downturn they went looking for track to tear up, and now it is costing them ."
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by jeaton Short term, long term or intermediate term, even if there is no direct expense to hold on to an idle asset (not true with rail lines), there is an oppurtunity cost. That is to say that the salvage or scrap value is converted to ca***o put in the bank to earn interest or invested into something makes money. Top do otherwise is the same as putting your money in a coffee can to bury in the back yard. The cash in the Coffee Can does not appreciate. Real property usually does. Railroads were not going to go broke sitting on valuable, appreciating real property assets. The Land Grant roads did just fine followng exactly that philosophy. Indeed, in general real estate over the time period being discussed typically appreciated faster than the ordinary rate of return. If there was an "opportunity cost" it was probably incurred by selling off the assets. Discussing scrap value. If it generally cost about $1 million to get a line in shape from scratch, but $100,000 could be recovered in scrap, here's the opportunity cost. By maintaining the ROW, if the value of that ROW at the end of 20 years was a $1 million per mile to the railroad, the Present Value of that exceeds the Present Value of the opportunity cost gained by selling the scrap and reinvesting it, over that same 20 year period at 9%. Which is the better investment? Well, that's where long range planning comes in and yet, the intrinsic appreciated value of the real property alone can equal or exceed the opportunity cost gained by scrapping and sale, let alone the value of the property to the railroad for railroad purposes. Yes, there is an "opportunity cost" to anything. Simply saying it doesn't mean anything however unless you actually know what it is.
QUOTE: Originally posted by Murphy Siding QUOTE: Originally posted by futuremodal Murphy, I think you will understand this: The decommissioned power plants were replaced by newer power plants. The abandoned rail lines were not replaced by newer rail lines. Comprende muchacho? Similar to how the traffic from unprofitable rail lines was replaced by traffic on other lines, and gasp! highways? I see the similarities, even if you don't.
QUOTE: Originally posted by futuremodal Murphy, I think you will understand this: The decommissioned power plants were replaced by newer power plants. The abandoned rail lines were not replaced by newer rail lines. Comprende muchacho?
QUOTE: QUOTE: And I never said all abandoned rail lines should have been saved. We talked about that before, not to long ago. You have either a very poor memory, or a very disingenuous tact for trying to denegrate folks such as I. Which is it? [(-D][(-D][(-D] It must be poor memory, or trying to hit a moving target. As far as the disingenuous tract,well, I don't think so. I did have chilie for dinner last night, though, so maybe that's part of the problem?[;)] I did go back and look. Sure enough, you did provide info on two current rail lines. As you keep refering back to past abandonments that you think railroads made in error, I keep thinking that they did what made sense at the time. So what abandonded lines, (other than the Milwaukee Road, I'll give you that one, as we all know the feelings of everybody on that one)are you talking about?
QUOTE: And I never said all abandoned rail lines should have been saved. We talked about that before, not to long ago. You have either a very poor memory, or a very disingenuous tact for trying to denegrate folks such as I. Which is it?
QUOTE: Originally posted by jeaton Your example works for 20 years, but $100,000 at 9% for 27 years goes over a $million. But let us not forget the risk. It does cut both ways, but if at the time of decision to bank or scrap the estimate is that the track will never have a productive purpose, then the decision to scrap would seem to be appropriate. To be fair, I only suggested the existance the ongoing cost to keep the property which might be just the property tax and while it would likely be well below the $1 million per mile to rebuild, after a couple of decades sitting idle, there is going to be an expense to put the track back in shape. You might also remember that under the betterment accounting system, the track was not depreciated. Tearing it up converts the book value to a current expense, which can become a nice non-cash deduction from taxable income. All of the above goes into the decision making process to dispose of unneeded or unused assets. As I have said before, I don't know of very many business that will keep unused production assets that will have no use in the foreseeable future.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by jeaton Your example works for 20 years, but $100,000 at 9% for 27 years goes over a $million. But let us not forget the risk. It does cut both ways, but if at the time of decision to bank or scrap the estimate is that the track will never have a productive purpose, then the decision to scrap would seem to be appropriate. To be fair, I only suggested the existance the ongoing cost to keep the property which might be just the property tax and while it would likely be well below the $1 million per mile to rebuild, after a couple of decades sitting idle, there is going to be an expense to put the track back in shape. You might also remember that under the betterment accounting system, the track was not depreciated. Tearing it up converts the book value to a current expense, which can become a nice non-cash deduction from taxable income. All of the above goes into the decision making process to dispose of unneeded or unused assets. As I have said before, I don't know of very many business that will keep unused production assets that will have no use in the foreseeable future. Railroads attacked their own capacity to carry freight. Had they simply looked at growth, 1960-1980, and assumed that was a minimum, then they knew -- they had to know -- they were going to have a capacity crisis on mainlines. Most "production assets" don't appreciate over time. Again, this confuses a manufacturing model with a real estate model, where such assumptions are just about the opposite. Even with a manufacturing model, Boeing is designing planes that they hope will begin to pay off eight, ten, twelve years from now. Everything up till then is sunk investment. Yet, they do it because 1) they believe in the enterprise, and 2) they have the courage to take the risk. Railroads have an even longer event horizon than aircraft builders. Railbanking is low risk compared to building new facilities -- because of appreciation, it can even be seen as an investment.
QUOTE: Originally posted by MichaelSol The Boeing example is not an R&D cost. Aircraft such as the A-380 require 250 sales to break even, before the company begins to make money (Airbus). The plane was designed in 2003 and 2004. That will probably be in 2013-2014, if at all. The planning is extraordinarily long term. Production capacity is planned out 10, 15, 20 years in advance with the idea that profit might occur in the 12, 14th year, maybe later.
QUOTE: Originally posted by MichaelSol The idea that you can't assume "anything" about the future pretty much puts planning departments out of business. In fact, businesses survive or fail based on their long range planning. Executive are hired and fired based on successful strategic planning.
QUOTE: Originally posted by TomDiehl QUOTE: Originally posted by MichaelSol The idea that you can't assume "anything" about the future pretty much puts planning departments out of business. In fact, businesses survive or fail based on their long range planning. Executive are hired and fired based on successful strategic planning. "Assume" is exactly what planning departments do, just as I said in the post quoted here: "Looking at growth and assuming ANYTHING about it is just that, "assuming." Even as far as assuming that the "growth" won't turn to "shrinkage" or "disappear" in the future." I never said they couldn't do it. My quote says the same thing as your second sentence. With those executives you mention, at least the company doing the hiring has a track record to go by, and they have to hope the record isn't just dumb luck.
QUOTE: Originally posted by MichaelSol Railroads, of course, are insulated to some degree from failure by captive shipper income, and so success and failure in the industry to make appropriate investment decisions for the long term are more difficult to ascertain. So, the industry plods along its same old path -- mistakes don't need to be fixed because its all "hindsight" and the captive shippers will pay for any mistakes anyway. The financial accountabilty is lost. The capacity issue is a good example of that.
QUOTE: Originally posted by MichaelSol When Boeing built its giant Everett plant in the mid-60s to build the 747 -- didn't look like R&D.It still took about 9 years to begin making a profit. R&D is peanuts compared to the production costs -- and those all come ahead, years ahead, of actually making a profit.
QUOTE: Originally posted by MichaelSol But if it goes far enough, that skews the investment decision making process regardless because the bottom line is not accountable to the decisions made.
QUOTE: Originally posted by TomDiehl QUOTE: Originally posted by MichaelSol When Boeing built its giant Everett plant in the mid-60s to build the 747 -- didn't look like R&D.It still took about 9 years to begin making a profit. R&D is peanuts compared to the production costs -- and those all come ahead, years ahead, of actually making a profit. Building a plant isn't R&D, I never said it was. Plus, although the Everett plant was built to build the 747 models, it was also designed to build other aircraft after the 747's completed production. Boeing knew they weren't going to make this model forever.
QUOTE: Even with a manufacturing model, Boeing is designing planes that they hope will begin to pay off eight, ten, twelve years from now. Everything up till then is sunk investment. Yet, they do it because 1) they believe in the enterprise, and 2) they have the courage to take the risk.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by TomDiehl QUOTE: Originally posted by MichaelSol When Boeing built its giant Everett plant in the mid-60s to build the 747 -- didn't look like R&D.It still took about 9 years to begin making a profit. R&D is peanuts compared to the production costs -- and those all come ahead, years ahead, of actually making a profit. Building a plant isn't R&D, I never said it was. Plus, although the Everett plant was built to build the 747 models, it was also designed to build other aircraft after the 747's completed production. Boeing knew they weren't going to make this model forever. What I said was this: QUOTE: Even with a manufacturing model, Boeing is designing planes that they hope will begin to pay off eight, ten, twelve years from now. Everything up till then is sunk investment. Yet, they do it because 1) they believe in the enterprise, and 2) they have the courage to take the risk. "Everything up 'till then" in the statement -- up until the point the begin making a profit -- includes the entire cost of the production facility, long, long before a profit can be declared, if ever, on the investment. It's all or nothing. Railroads have the advantage of incremental investment not available to an aircraft manufacturer, yet Boeing has been held out as an example of "Built to Last" as a business philosophy ["Successful Habits of Visionary Companies" by Jim Collins and Jerry Porras] notwithstanding Boeing's risk is much higher, and its payout much farther down the road, on investment in facilities. Railbanking is pocket change by comparison.
QUOTE: Originally posted by TomDiehl QUOTE: Originally posted by MichaelSol But if it goes far enough, that skews the investment decision making process regardless because the bottom line is not accountable to the decisions made. In a publically held company, as all railroads are in this country, the bottom line is always accountable to, if noone else, the stockholders. Decisions made by the company executives can always be questioned by them.
QUOTE: Originally posted by TomDiehl It still sounds like we're saying the same thing.
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