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Chicago and North Western, 70's style

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Posted by MichaelSol on Friday, January 19, 2007 8:47 AM

Notwithstanding the penchant of some to look for heroes and villains, gut and brains, "foresight" and all many of labels that support generally predetermined ideologies, it remains to me an underutilized observation regarding simple luck and even sometimes dumb luck.

Looking back at the "60s" thread -- and yet another capital intensive business -- generally considered well managed:

"Boeing's bad luck continued. The company was hit badly by the 747 crisis, the discontinuation of the supersonic airliner program SST and declining orders.  It was initially planned for the profits of the 707's and 727's  to  keep the 737 and 747 projects afloat.  However,  the board  of directors in Seattle were not able to predict the  impending recession. The result was debts amounting to $1 billion. In 1968 Boeing reduced  its  staff  from  100,000  to 38,000. ...At one point early in  1970,  Boeing  had  some 30 planes parked at its plant that could not be  delivered until Pratt & Whitney had  corrected  the  deficiencies  of its JT-9D engine. It took a year before the  engine  problems were solved. In the meantime,  too little money was coming in, the country  was  experiencing  an  economic recession, and new orders were  drying  up.  The  company almost went broke."

Does anyone seriously think it was a lack of "brains and guts"? Or the luck of the draw of timing and general economic conditions?

It continues with that huge company:

"Cargo plane sales booming as Airbus stalls," Business Week, 12/29/06. "... a confluence of luck ..." for Boeing due to "marred production of Airbus' A380 ...".

"Boeing's troubles were the result of a number of factors; from their arrogance, a tendency to rest on their laurels, taking their customers for granted, combined with a corporate culture enmeshed in politics." Doesn't sound like any railroad I've ever heard of.

"Overall, the story of Boeing vs. Airbus is a never ending and ever changing battle of pure competition, combined with good timing and good luck."

Boeing Versus Airbus: The Inside Story of the Greatest International Competition in Business (Hardcover) by John Newhouse.

Robert Samuelson, Newsweek: "The story of Boeing's distress comes in three parts: bad luck, bad management and bad government policy."

In 2003, Business Week declared that Boeing was "choking on Airbus' fumes," and warned that Boeing's "slip to No. 2 could become permanent." Is Boeing's current success due to brains and guts, or Airbus' "bad luck" and cross-cultural language difficulties?

Superimposing Horatio Alger explanations on complex business events is simply not valid analysis. Sometimes it is just ... luck.

 

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Posted by bobwilcox on Friday, January 19, 2007 9:12 AM
 MP173 wrote:

Lets take a look at the terminal facilities in the Chicago area. 

Proviso Yard and Bensenville Yard seem to be pretty similar yards.  I realize quite a bit of traffic today is run thru.  When did that practice begin?  Both CNW (Proviso) and Milw (B'ville) had a severe disadvantage by being so far north in the Chicago mess.  Both had to get down to the south side to connect with Conrail, NS, or CSX.

Not exactly sure how that worked, with the trackage rights over the IHB or BOCT.  Of course CSX owned BOCT and Milw owned part of IHB (correct me if I am wrong).

Perhaps someone can shed some light on the IHB routing or other routings used thru Chicago.

At the start of the last century the CNW was a Vanderbuilt railroad.  It owned a piece of the IHB along with the NYC and had a direct connection out of the East end of Proviso(Provo Jct.).  When we ran trains with UP and CR between North Platte, NE and Elkhart, IN it was a very clean run through interchange at Fremont, NE and Provo Jct., IL.
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Posted by MichaelSol on Friday, January 19, 2007 9:33 AM
 wjstix wrote:

If there was a big profit in moving freight from Iowa to Oklahoma the Rock probably would have been in great shape!!

How is that different from moving freight from one side of Iowa to the other side of Illinois?

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Posted by Murphy Siding on Friday, January 19, 2007 9:51 AM
 MichaelSol wrote:
 wjstix wrote:

If there was a big profit in moving freight from Iowa to Oklahoma the Rock probably would have been in great shape!!

How is that different from moving freight from one side of Iowa to the other side of Illinois?

   (?)  How is it the same?

Thanks to Chris / CopCarSS for my avatar.

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Posted by MichaelSol on Friday, January 19, 2007 9:59 AM
 Murphy Siding wrote:
 MichaelSol wrote:
 wjstix wrote:

If there was a big profit in moving freight from Iowa to Oklahoma the Rock probably would have been in great shape!!

How is that different from moving freight from one side of Iowa to the other side of Illinois?

   (?)  How is it the same?

? Moving freight from one state to the state two states away is inherently less profitable than moving freight from one state to the state right next door? Oklahoma and Illinois are both states? Is it uphill to Oklahoma but downhill to Illinois? I don't understand the remark.

 

 

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Posted by nanaimo73 on Friday, January 19, 2007 10:11 AM
 MichaelSol wrote:
 Murphy Siding wrote:
 MichaelSol wrote:
 wjstix wrote:

If there was a big profit in moving freight from Iowa to Oklahoma the Rock probably would have been in great shape!!

How is that different from moving freight from one side of Iowa to the other side of Illinois?

   (?)  How is it the same?

? Moving freight from one state to the state two states away is inherently less profitable than moving freight from one state to the state right next door? Oklahoma and Illinois are both states? Is it uphill to Oklahoma but downhill to Illinois? I don't understand the remark.

Michael, 7 lines connected Omaha with Chicago, while the RI was the only line connecting central Iowa with central Oklahoma.

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Posted by Chris30 on Friday, January 19, 2007 10:33 AM

First of all, interesting post.

There seems to be a range of opinion on this post in regards to "superior route". Does anybody want to try to clarify what this means?  Best engineered (route), best maintined, highest profit, fatest speed, etc. The "superior route" is probably just the right combination of many different factors. Luck also might be one of those factors. The CNW line accross Iowa is a very well engineered route. (Rememer the floods of '93? Who kept their tracks above water while everybody else sank in the mud?) Perhaps, having the "superior" engineered route allows for lower maintenance costs.

CC

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Posted by MichaelSol on Friday, January 19, 2007 11:07 AM
 nanaimo73 wrote:
 MichaelSol wrote:
 Murphy Siding wrote:
 MichaelSol wrote:
 wjstix wrote:

If there was a big profit in moving freight from Iowa to Oklahoma the Rock probably would have been in great shape!!

How is that different from moving freight from one side of Iowa to the other side of Illinois?

   (?)  How is it the same?

? Moving freight from one state to the state two states away is inherently less profitable than moving freight from one state to the state right next door? Oklahoma and Illinois are both states? Is it uphill to Oklahoma but downhill to Illinois? I don't understand the remark.

Michael, 7 lines connected Omaha with Chicago, while the RI was the only line connecting central Iowa with central Oklahoma.

But, how did that hurt Rock Island and help C&NW?

 

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Posted by bobwilcox on Friday, January 19, 2007 12:22 PM
 Chris30 wrote:

First of all, interesting post.

There seems to be a range of opinion on this post in regards to "superior route". Does anybody want to try to clarify what this means?  Best engineered (route), best maintined, highest profit, fatest speed, etc. The "superior route" is probably just the right combination of many different factors. Luck also might be one of those factors. The CNW line accross Iowa is a very well engineered route. (Rememer the floods of '93? Who kept their tracks above water while everybody else sank in the mud?) Perhaps, having the "superior" engineered route allows for lower maintenance costs.

CC

Its great to have a very favorable route with fewer curves and lower grades than any of your competitors.  However, your customers don't care.  They only care about your service and price. The Rio Grande between WWII and the BN merger is an example.  They were very succesful on the central transcon corridor.  However their route, compared to the curves and grades on the UP, was much poorer.

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Posted by MP173 on Friday, January 19, 2007 2:51 PM

I have found in most cases there is a correlation between working hard and smart and LUCK.  Just my opinion, but often luck is the final (and important) ingredient. 

We can look at Boeing v Airbus if needed, you wont get many comments from me on it, as I am not much of a airfan.  But, take a look at the corporate structures of both companies and it should be evident which company should be the superior company.  Airbus is made up of a syndicate of a number of companies, some state owned.  To me that would be very cumbersome management.  Too many committees. 

Regarding the Iowa to Oklahoma statement, I read it as meaning Rock would have had a great advantage of handling that freight as it would not have had much competition in that route (ATSF) thru a the southeastern sliver of the state of Iowa.  Rock basically went everywhere that many other carriers went and never had the advantage of superior route and little competition.  It did between Iowa and Oklahoma.  I seriously doubt if there was much traffic moving between the two states other than some farm implements out of the Quad Cities area, hardly enough to justify the duplicity in other routes.

ed

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Posted by bobwilcox on Friday, January 19, 2007 2:57 PM
 MP173 wrote:

I have found in most cases there is a correlation between working hard and smart and LUCK.  Just my opinion, but often luck is the final (and important) ingredient. 

We can look at Boeing v Airbus if needed, you wont get many comments from me on it, as I am not much of a airfan.  But, take a look at the corporate structures of both companies and it should be evident which company should be the superior company.  Airbus is made up of a syndicate of a number of companies, some state owned.  To me that would be very cumbersome management.  Too many committees. 

Regarding the Iowa to Oklahoma statement, I read it as meaning Rock would have had a great advantage of handling that freight as it would not have had much competition in that route (ATSF) thru a the southeastern sliver of the state of Iowa.  Rock basically went everywhere that many other carriers went and never had the advantage of superior route and little competition.  It did between Iowa and Oklahoma.  I seriously doubt if there was much traffic moving between the two states other than some farm implements out of the Quad Cities area, hardly enough to justify the duplicity in other routes.

ed

 

You are right about luck but a lot of well run railroads made their own luck. 

Bob
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Posted by MP173 on Friday, January 19, 2007 2:58 PM

Bob:

Re Rio Grande...were they protected somehow at the Ogden gateway?  Or was it a way for Southern Pacific to route freight for St. Louis that they couldnt take all the way to Texas before heading back north?

How much of the lumber traffic from Pacific Northwest actually headed down to SoCal then east thru the desert to connect with the Cotton Belt?  During regulation no doubt there was quite a bit of that moving that way.  De-reg would have squeezed SP/Cotton Belt out of the picture.

Also Bob, did most of the CNW to Conrail trains run via the IHB? or did some move east to Western Ave, down to Ashland Yard and then east?  Any idea of what the Harbor charged (charges now) for moving a train?

ed

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Posted by MP173 on Friday, January 19, 2007 3:01 PM

On a related note of Chicago interchange...did the PRR and MILW interchange a freight train on a daily basis at Union Station?  I seem to recall reading there was a train which ran thru the station...might be wrong on this one.

Imagine seeing that!

ed

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Posted by MichaelSol on Friday, January 19, 2007 3:23 PM
 MP173 wrote:

I have found in most cases there is a correlation between working hard and smart and LUCK.  Just my opinion, but often luck is the final (and important) ingredient. 

Then you haven't witnessed first hand the indvidual, the company, the railroad ... that had all the brains and hard work in the world, and still didn't make it.

 You've been lucky.

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Posted by gabe on Friday, January 19, 2007 3:28 PM
 MichaelSol wrote:
 MP173 wrote:

I have found in most cases there is a correlation between working hard and smart and LUCK.  Just my opinion, but often luck is the final (and important) ingredient. 

Then you haven't witnessed first hand the indvidual, the company, the railroad ... that had all the brains and hard work in the world, and still didn't make it.

 You've been lucky.

I will agree with you insofar as I would certainly rather be lucky than good.

Gabe

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Posted by bobwilcox on Friday, January 19, 2007 3:29 PM
 MP173 wrote:

Bob:

Re Rio Grande...were they protected somehow at the Ogden gateway?  Or was it a way for Southern Pacific to route freight for St. Louis that they couldnt take all the way to Texas before heading back north?

How much of the lumber traffic from Pacific Northwest actually headed down to SoCal then east thru the desert to connect with the Cotton Belt?  During regulation no doubt there was quite a bit of that moving that way.  De-reg would have squeezed SP/Cotton Belt out of the picture.

Also Bob, did most of the CNW to Conrail trains run via the IHB? or did some move east to Western Ave, down to Ashland Yard and then east?  Any idea of what the Harbor charged (charges now) for moving a train?

ed

If anything the DRGW was handicapped at Ogden because the UP would not give them routes into the PNW.  The SP's postion changed at Ogden with the UP buying the WP.  However, while all of this was going on PNW lumber was being forced out of eastern markets by southern pine. When I started in 1982 I think the SP still prefered the ESTL gateway from OR to the Northeast  but they were struggling with other demons that impacted on making business decisions.

As I recall all of the CNW/CR run throughs at Chicago went through the IHB.  I may be wrong since Chicago is a very complex place and Ed Burkhardt was allways coming up with something new as the joint facility guy. I don't know what the Harbor charged or which carrier they charged. 

Bob
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Posted by MP173 on Friday, January 19, 2007 4:10 PM

Bob:

I have a feeling the CNW people worked harder and smarter, particularly when given the incentives of stock ownership. 

ed

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Posted by bobwilcox on Friday, January 19, 2007 6:10 PM

I beleve there is a password with people that worked for the CNW when we went employee owned.  The question is "Did you buy enough"? The answer is "no".  Employees from those days automatically know you are talking about the stock.  I to did not buy enough but what I did buy paid off the loans from the Univ. of Tenn., made the downpayment on my first house and furnished that house. The market for the stock was rather informal.  Bill Alsop's chief clerk keep tab on things and put you in touch with someone interested in making a deal.  I sold my stock to my boss.  We did the deal in one of the men's rooms at 400 W. Madison and then went over to Northern Trust at lunch to finish the paperwork.

There was also a difference in the enviroment at work.  A significant number of us became financially independent or at least had enough cash on hand to cover expenses if we needed to find a new job.  That security did make a difference in people being willing to accept more personal risk when asked for their opinions. 

Bob
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Posted by greyhounds on Friday, January 19, 2007 9:20 PM

Bob,

Did you know Jim Snodgrass, Wayne Borg or Sandy Dearden?

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Anonymous on Friday, January 19, 2007 9:44 PM
 MichaelSol wrote:

Then you haven't witnessed first hand the indvidual, the company, the railroad ... that had all the brains and hard work in the world, and still didn't make it.

 You've been lucky.

Ok I give up Sol. What railroad failure were you a first-hand "witness" to, that had so many brilliant and infallible executives and managers at the top.  I would like to know.

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Posted by MP173 on Friday, January 19, 2007 10:34 PM

Perhaps I have been "lucky". 

You know, come to think of it...I am lucky.

ed

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Posted by MichaelSol on Friday, January 19, 2007 10:56 PM
 tiskilwa wrote:
 MichaelSol wrote:

Then you haven't witnessed first hand the indvidual, the company, the railroad ... that had all the brains and hard work in the world, and still didn't make it.

 You've been lucky.

Ok I give up Sol. What railroad failure were you a first-hand "witness" to, that had so many brilliant and infallible executives and managers at the top.  I would like to know.

I'll bet you would! When you acquire some manners, I'll let you know ...

 

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Posted by MichaelSol on Friday, January 19, 2007 11:06 PM
 MP173 wrote:

Perhaps I have been "lucky".  Lucky enough to make it in a career in which less than 5% who attempt it, succeed.

Lucky enough to have the alarm clock go off at 430am when I needed to drive 6 hours to see a customer.  Lucky enough to have made one more phone call.  Lucky enough to keep in contact with a prospect for 8 years and hear the word "no" yet be there when they said "yes" and watch them turn into a multi million dollar account. 

Lucky enough to have recognized a dead end career 17 years ago.  Lucky enough to have married quite well once.

I can go on and on, but wont.  My girlfriend once called me "Lucky" as a nickname.  After a few months she quit...dont know why, perhaps she saw something that changed her mind.

ed

OK, my comment was not intended to incite speeches of personal heroism. Some people work like hell and do everything right, and the cards just don't fall into place. Some people work like hell, everything works, and they make a buck. Some people have rich dads too. It's in the assertion that luck doesn't play a role that you should know better.

There are many reasons for "success."

There are many reasons for failure.

Luck and bad luck can be a component of either -- in business, science, and everyone's personal life as well.

My point is, good luck doesn 't necessarily mean the recipient should be elevated to genius; nor does bad luck imply bad management.

I am saying the world is a little more complex than these brains and guts stories and a thorough analysis sometimes is more appropriate to discovering the full story than relying on simplistic notions borrowed second hand from Poor Rchard's as an analytical tool.

 

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Posted by MP173 on Friday, January 19, 2007 11:32 PM

Personal heroism?  Never been a hero, probably never will be, but if you insist....well it must be true!  Never read Poor Richards, so cant quite comment on that statement.  But, since the post seems to have been a bit self serving, I will refrain from discussing my personal achievements and failures.

I think most successful people (BTW, exactly how do you define success, Michael?), have had a number of failures in their lives.  It is the nature of risk taking.  I personally believe most success stories involve a level of luck with a whole lot of hard work and persistance.

 ed

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Posted by MichaelSol on Friday, January 19, 2007 11:51 PM
 MP173 wrote:

Personal heroism?  Never been a hero, probably never will be, but if you insist....well it must be true!  Never read Poor Richards, so cant quite comment on that statement.  But, since the post seems to have been a bit self serving, I will refrain from discussing my personal achievements and failures.

I think most successful people (BTW, exactly how do you define success, Michael?), have had a number of failures in their lives.  It is the nature of risk taking.  I personally believe most success stories involve a level of luck with a whole lot of hard work and persistance.

 ed

And sometimes "a whole lot of hard work and persistance" isn't enough either. If you disagree, and think it is enough, we disagree.

If you agree, then we agree and I don't see where you are trying to go with this.

Let's get back to C&NW.

 

 

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Posted by MichaelSol on Saturday, January 20, 2007 12:03 AM
 MP173 wrote:

Bob:

I have a feeling the CNW people worked harder and smarter, particularly when given the incentives of stock ownership. 

ed

And, notwithstanding working harder and smarter, United Airlines plunged into bankruptcy and its employees lost everything.

But, in general, ESOP companies do perform better than non-esop companies; perhaps that made all the difference at CNW -- certainly ironic compared to the outcome at Northwest Industries. And that brings an interesting contrast to the hugely successful outcome at CMC.

 

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Posted by CNW 6000 on Saturday, January 20, 2007 1:26 AM
So this failure you witnessed was what? 

Dan

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Posted by bobwilcox on Saturday, January 20, 2007 4:37 AM
 greyhounds wrote:

Bob,

Did you know Jim Snodgrass, Wayne Borg or Sandy Dearden?

I didn't get to know Wayne untill my time at the UP when we worked together on some projects for Exxon.  I knew Sandra very well and took her on her first business trip.  She got unlucky with the UP+CNW merger but a lot of good CNW people had her experience. 

Bob
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Posted by MP173 on Saturday, January 20, 2007 7:36 AM

We cannot quantify luck into the equation.  It is there and we know it is, but to what degree? Regarding UAL, it has been well documented that they created a number of their problems.  It was a pretty militant group of "owners", particularly the pilots.  Bad luck?  Sure plenty.  But I am not here to compare UAL to LUV.

I agree with you...lets get back to the CNW.

Perhaps this has been previously stated, but here is my take on the CNW's 70's situation:

1. The ICC's handling of the Rock merger case gave CNW an opportunity.

2. Their Fremont/California Jct routing became the superior method of interchanging freight from UP to a Chicago connection.

3.  CNW got the employees on board in the 70's with the stock program.

4.  Their management had laser focus to concentrate on the Chicago - UP route.

5.  The Cowboy line, for whatever reason was not abandoned, which gave them an option for greatness.

6.  They understood the risks involved in doing what DME is trying today and took the sure bet, aligning with UP on the movement of the PRB coal.

I am sure there are things being left out or being minimized, but that is what I see.

Now, specifically, when did the Fremont routing gain importance?  Was UP interchange always done there?  Was that always a mainline or was there considerable upgrading done?

Did the CNW want to abandon the Cowboy line in the 70's or were they aware (and when did they become aware) of the coal in Wyoming?

Thanks,

ed

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Posted by jeffhergert on Saturday, January 20, 2007 9:08 AM

 Bob-Fryml wrote:
I seem to recall reading in Trains Magazine, sometime during the mid-1970s, that the Federal Government passed a series of legislative acts - the so called "3R" (Railroad Rehabilitation) and "4R" (Railroad Rehabilitation and Revitalization) Acts - that made taxpayer financed, low interest loans available to financially strapped railroads for infrastructure maintenance and upgrades.  The Milwaukee Road and the Chicago & North Western were able to take advantage of this program, but for some reason the Rock Island wasn't.  The transfusion of federal money into the C.& N.W. plant coupled with the ongoing abandonments of little used branchlines was enough to keep this railroad going until they were able to tap into the coal-rich Powder River Basin cash cow. 

  I was once told that the CNW had some of the best lobbyists of any railroad at that time.  The Rock Island on the other hand had John Ingram, a former FRA administrator.  I think it was a Trains article that once said Ingram was hired because of his connections in Washington.  It turned out however, that he seemed to have more enemies there than friends.

  I don't know how true that is.  From the surface, it would appear to have some truth.  Of course, appearances can be misleading.  In any case, it never hurts to have friends in Washington.

 Jeff   

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