The cost of running a dining car will be high, no matter how it's paid for. You can call it trickery if you like, but anybody who gets on a train and expects the operator to provide a good quality of service in a well-equipped dining car without there being significant costs is naïve. I'm suggesting that a portion of the ticket price can offset some of this cost so that the amount paid in the dining car at the time of service is a bit lower, thus encouraging more business so that the dining car can be fully utilized. The money has to come from somewhere, and this is just another way to apportion the revenue so that the costs are covered. Anybody who is "tricked" into thinking he is getting something for nothing is just willfully ignorant.
Tom
ACYWhat I'm suggesting is that the amount of money the passenger spends IN THE DINER does not have to be extremely high if a portion of his ticket price is apportioned to cover the diner's "losses". That way, the "pain" of the high price won't be so evident to him that it scares him away from the idea of eating there at all. The diner doesn't have to necessarily make a profit, but losses can be kept to a minimum with a little creativity in pricing of the tickets and the food.
So you are also saying if the patron were charged the full amount to cover the costs (materials, labor, etc.) of his or her food, they wouldn't want to pay for it? So instead you want to hide the cost and trick them? Whose interest does that serve? Not the patron.
C&NW, CA&E, MILW, CGW and IC fan
How many passengers fill the three sleepers? And how many seats in a deluxe coach? And if they no longer ride the supposedly essential LD trains, then for them the service was not really transportation, just a land cruise.
As I've suggested several times in the "Food Service Losses" section, a diner has to be filled, with several dinner seatings, in order to justify its cost. Auto Train's success has a lot to do with high volume, and the cost of the diners and other amenities ("complimentary" wine & cheese, etc.) is covered by a portion of ticket receipts. The I. G. report says these amenities are given away free to the customers, which is simply not true, and which casts a shadow over their entire report. Whether a long distance train carries sleepers or not, the operating entity has to do something to entice all passengers into the diner in order to justify that diner's presence, and it seems to me that this can be accomplished by increasing coach and sleeper fares sufficiently to cover all, or at least some, of the costs of operating the diner. Reducing service to minimal levels just seems like a good way to drive away business. People don't ride long distance trains with the intention of spending 2 or 3 days eating fast junk food for the entire trip.
What I'm suggesting is that the amount of money the passenger spends IN THE DINER does not have to be extremely high if a portion of his ticket price is apportioned to cover the diner's "losses". That way, the "pain" of the high price won't be so evident to him that it scares him away from the idea of eating there at all. The diner doesn't have to necessarily make a profit, but losses can be kept to a minimum with a little creativity in pricing of the tickets and the food.
schlimm Add deluxe coaches. The current lounge car, diner and baggage cars generate zero revenue. A restaurant car, run along the contemporary lines of a Houlihans or some other middle range chain restaurant, would work fine.
Add deluxe coaches. The current lounge car, diner and baggage cars generate zero revenue. A restaurant car, run along the contemporary lines of a Houlihans or some other middle range chain restaurant, would work fine.
I doubt all the former sleeping car riders who didn't abandon ATK would fill one deluxe coach per train. Even the free lounge car often has unused seats.
I don't know if any standard restaurant model will work with the limited number of patrons available on a passenger train. 3 coaches + 3 sleepers adds up to a maximum of about 350 people to draw from. Not all are going far enough to want to use the diner. On the only Amtrak LD train I am at all familiar with, the California Zephyr, the only time there are close to full passenger loads are the overnights between Chicago & Denver and the afternoons between Reno & Oakland. In between, you're going to have a lot fewer to draw from. And even that many people will only be available during the busy seasons.I wonder, though, if adding the deluxe coach accommodations (i.e., a parlor car) with diner meals included in the fare (as with sleeping cars) might not be the right combination of added comfort/amenity at minimal cost to boost overall revenue?
As I remember, a typical western LD train has about 3 superliner coaches. If you loose the sleepers, lounge car, baggage cars and replace the diner with in-seat-dining, you are left with a 3 car train. How could ATK sustain cross country 3 car trains?
CMStPnPAs long as we are on the subject of undercharging though. Amtrak ticket prices for all coach trains, especially the state subsidized runs are not often adjusted upwards. I used the example of the Chicago-Milwaukee trains as an example. Fares have been largely stagnant in that corridor for like a decade or more, they could bump those up $2.50 each way and not notice much of a ridership impact.
Amtrak no longer uses a fixed fare system but increases set prices as you get closer to your travel date depending on demand. The basic price of a coach ticket between New York and Providence is $49 but on the day of travel it can be $120 or more. And that system is used all over the country on Amtrak service. However, I don't know if state services do the same thing.
Both Google and INRX have some data and might be convinced to part with it for an "advocacy" group's mapping. However, the Bluetooth ID sensors/dataloggers are pretty cheap, I think you could even use an old cell phone with an enhanced battery, and you can save yourself a lot of data sorting as the range is only so far. So just by placing them near interstate exits and mainline roadway weigh in motion stations, you could probably get the data in a relatively useful format. Cambridge Systematics might foot the bill just for the freight data.
Personally I would choose an overnight train schedule, even in coach, over riding or driving continuously from 6 am to 11 pm. I have come to be convinced that 90 mph-ish is indeed a sensible limit for general freight mixed use over here due to higher freight center of gravity and weights, except for the NEC and some Midwest flatlands. I do think there is room for a new build mixed high speed intermodal and passenger line.
I bet all the studies mentioned above assumed the train had to prove itself on a total time savings economic model. My point with a lot of what I have analyzed is that this economic model just doesn't reflect the actual reality of the travel marketplace. It seems when a full financial comparison of roadways to speeded up trains on existing tracks is made the numbers are quite favorable to the rail side, as long as all the infrastructure costs aren't assumed to be all on the passenger side, which is the other reason 90 mph is about the limit, as beyond there the joint benefits to the current freight mix drop off.
V.PayneFor example, Atlanta to Jacksonville would be a great daytime route as would Atlanta to Washington, but Atlanta to NYC is too far.
Another 3 hours? Too far for what? Leave ATL at 6:00 AM. Arrive NYC 11:00 PM. Sure, it would be better if you could squeeze a couple of hours out, but 6AM and 11PM are still normal times people are awake...and pretty similar to the Palmetto's schedule.
NYC to ATL serves larger markets that NYC - Savannah, so, should do even better than the Palmetto.
ATL to Jax has been studied a couple of times. Does pretty well if you can get 110 mph max speed - pretty close to break even on operations. Route south to Macon is available and has been studied to death - just add money. From Macon to Jesup is straight as an arrow and has little freight traffic. Cheap to upgrade, but would require some doing - NS is only okay with 90 mph on shared track. From Jesup south - very busy CSX corridor. Bring lots of money.
Jax is an okay destination, but Orlando is a real prize...and folks in ATL really dislike that drive down I-75...
V.PayneBut consider that nobody actually has this data for intercity travel on the interstate network, it is instead based on population and distance parameters fed into equations.
Oh, my! That would be gold for a planner. I don't know how you can do any sensible network flow planning w/o knowing OD pairs! ** You'd think Amtrak would want such data in the worst way, but that would mean they want to go after the folk who are NOT riding instead of just continuing to serve those who are....which is why we still have all these "1950's businessmen's" schedules.
**I'll bet Google has it - or can do it- from their GPS-based "traffic" data.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Maybe so. But some of the illegal loss is attributable to the onboard service. Running a restaurant and making a profit is hard. Breaking even is less hard, but still difficult. Plenty of owner-run restaurants do so. so do chains, which appear to satisfy many millions more patrons than Amtrak's F&B services. This isn't rocket science, just having the will to do so after 40 years of the same ol same ol. Given the legislative requirements, change will occur.
Perhaps Tom's Auto-Train operation is a cut above others on Amtrak. But the changes will occur. Many of us would like to see fast, frequent, convenient, and reliable passenger rail transportation available to more destinations within the parameters of comptitive rail service. Subsidies and capital monies should be used for that as a priority over subsidizing the rich to ride nostalgia expresses.
ACY Thanks, Dakguy. That's pretty much what I suspected. In fairness, I don't think I've ever posted anything that got sent looking the same as it started out. So I certainly can't object to somebody else modifying their message in the course of composing it. As for the issue at hand, I have said that it is unfair to take that financial loss and divide it by the number of employees in Amtrak's food & beverage service and claim each of us is costing Amtrak that amount of money. For one thing, I don't know who is being identified as a food service worker. In onboard service, particularly on the Auto Train, there is a lot of overlap between crafts. The money loss can be attributed to a lot of other factors: possible poor decision-making on the part of purchasers; wastage, such as sending us dairy products that are about to go out of date; the profit margin that Aramark gets; administrative costs; etc. To dump all the blame on onboard workers is just plain wrong. Maybe Schlimm & I will never be able to reconcile our differing opinions. That's kind of sad. Tom
Thanks, Dakguy. That's pretty much what I suspected. In fairness, I don't think I've ever posted anything that got sent looking the same as it started out. So I certainly can't object to somebody else modifying their message in the course of composing it.
As for the issue at hand, I have said that it is unfair to take that financial loss and divide it by the number of employees in Amtrak's food & beverage service and claim each of us is costing Amtrak that amount of money. For one thing, I don't know who is being identified as a food service worker. In onboard service, particularly on the Auto Train, there is a lot of overlap between crafts. The money loss can be attributed to a lot of other factors: possible poor decision-making on the part of purchasers; wastage, such as sending us dairy products that are about to go out of date; the profit margin that Aramark gets; administrative costs; etc. To dump all the blame on onboard workers is just plain wrong.
Maybe Schlimm & I will never be able to reconcile our differing opinions. That's kind of sad.
I suspect the majority of the loss is related to (in order largest contributors to smallest):
1. Commissaries obviously.
2. Waste, fraud, and abuse of the current system. Electronic order taking and processing of payment I think will fix this.
3. Limited menu, not much ability to up sell items.
4. Onboard service staffing and food delivery process (repetitive workflows at delivering food in the dining car.) Amtrak needs to decide here which is more important. Bottom line or attempting nostalgia. Dining Car badly in need of Work Process Flow re-engineering to bring it into the 21st Century. Just sit back and watch the servers on your next LD trip and count the unnecessary trips back and forth between tables. Count as a unnecessary trip as bringing just one salad to the table or one item back. I know space is limited but perhaps more counter space in the Diner's second floor or get the Chef on the first floor to send a group of items at a time to a specific table up the dummy waiter?
Sorry if you could not follow the change/addition I made to my comment. Although it seems obvious, I will indicate if any comment has been altered in the future or make a separate posting.
If I did not realize that Aramark runs the concessionaries until then, so what? Neither did several other posters. And the point is that the loss from F&B service is large and requires a dubious subsidy that could be better used for transportation, in my opinion, not providing a subsidy that amounts to $64K [edited] per employee who works on the dining and snack cars..
Tom, what has happened when you see a different version of a comment here vs what you got by email is that the poster originally wrote the version you have in your email, but subsequently he decided to modify it to the version that is now posted in the forum.
On occasion I've edited something I said -- usually to correct sloppy language. If the correction changes the meaning of the post, I think the fair play is to indicate that you have edited it.
BTW, your participation in these discussions is valuable as it gives us insider input to matters the rest of us only know about from a distance.
Hello again everybody ---
I've spent my working life in the field & now that I'm approaching retirement I'm trying to learn about these computers. I tried to reread Schlimm's message of 11/18/13 at 4:49 PM, because I was trying to make sense of it. I got pretty confused when I discovered that one version of his first paragraph was showing up here on the site, and another version was showing up in my emails. Beginning with the 3rd sentence, the paragraphs are quite different. In the version that shows up here on the site, he says "As the commissaries are already operated by a contractor.....", but in the version that shows up in my emails he says "....elimination of the company-run dispensaries (I think he meant commissaries) and contracting......." As I said, I don't understand why two contradictory versions of the same message would be carried along in the ether out there.
Schlimm, did you write one thing, start to post it, then change it, or what? As I said, I don't really understand these infernal things. But at any rate, I'm confused. After all this time on this thread, plus the several weeks or so we've been on the food service thread, did you not know until 8 hours ago that Aramark already operates Amtrak's commissaries and has for several years? One version says that's the way it's run and the other says that's not the way it's run, but it should be.
If you didn't understand the actual situation until 8 hours ago, I simply have no idea what to say.
Schlimm ---
First, let's get Food & Beverage back where it belongs: in the "Amtrak to end food service losses" area. No point covering it twice at the same time. Next, as to your comments 11/18/13 at 4:49 pm, my comments on that thread 11/17/13 4:51 pm and 11:38 pm address much of what you say, so I'm not going to beat that horse here again. I think it's already dead.
If there is a $68,000 subsidy being tossed to the wind, it sure isn't blowing my way. Look first at the suppliers, contractors, and management. I wonder about the efficacy of some of our product choices too. Don't forget, onboard service employees are not the only ones here who see a paycheck, so it doesn't make any sense to make us the sole whipping boy.
BaltACD, thanks for reminding us that contracting out is not a universal miracle cure for all ailments.
Yikes!
I do really strive to take a position that is backed up by source documents. The FRA references I cited where those that stemmed from the PRIIA legislation and are still in effect. They are generating somewhat current reports on the PRIIA outside of Amtrak. I believe the FRA was set up to oversee Amtrak reporting of the PRIIA metrics in the legislation if I recall correctly. I haven't talked to anyone in Amtrak. First, it would probably get them in trouble which I suppose is why a journalist might not release sources, and secondly I don't sense that everyone in Amtrak agrees on the answer or has even fully considered it. Ultimately, the analysis I do is my own, but again I strive to have source documents to back the position up going back into the 1930's, as is required for my engineering license in a public statement.
To the all deluxe-coach train idea for the rest of this post...
Sure, I think it has some merit, paticularly in the East on a daytime run, which limits the route to 750 miles 8 AM to 10 PM or so.
But can anyone demonstrate that it would actually require less subsidy (An audited report would be great)? Remember the DOT IG report made a lot of assumptions about stable coach revenue that are not accepted in consumer markets, namely no loss of revenue when service standards are dropped.
For example, Atlanta to Jacksonville would be a great daytime route as would Atlanta to Washington, but Atlanta to NYC is too far. I think the loss of connectivity through Washington in this example lowers the utility to travelers to the point where the financial returns drop to a greater degree. I wholeheartadly support two levels of coach service on all trains, one with 2-2 seating at about a 32" pitch and the other with 2-1 seating at a 38" seat pitch (sell guaranteed single seats at a premium). Same carbody and lounge arrangement, but perhaps the more expensive level (really just current expensive pricing) would have its own endpoint departure lounge. The lower level of service would be 10% above motorcoach.
I also still don't know if a daytime only train would fit travel patterns. At the very least you need three frequencies a day, my pantseat tells me. If I need to get somewhere in the 200 mile trip range, it is typically early in the morning or late in the evening. These time periods are when the non-holiday travel by time of day peaks on the interstates from known data. Honestly, I have been asking my ITS guy to do a bluetooth ID survey of travel patterns to see where people actually travel. The surveys are not that much, a few tens of thousans of dollars, but would yield some really interesting data for planning purposes. But consider that nobody actually has this data for intercity travel on the interstate network, it is instead based on population and distance parameters fed into equations. But motorcoaches still run through the night as well as the day and they have a lot more flexibility in changing their schedule with their infrastructure provider. Also remember the orignal coach only trains like the City of Miami eventually just morphed into combined sleeper/coach trains (two classes of service for volume generation).
Here is my rough proposal for what a new service would look like to fit the modern traveler. The train starts 30 miles outside a major metro area at 3:00 PM. Runs to the city center stoping at select commuter rail stops, then runs to another major metro making a few stops before arriving at 5:30 PM, it adds a large load of long-distance commuters and starts off with limited stops, arriving ultimately at about 9 PM at another large metro area. There a complement of commuter cars is dropped and it picks up intermodal dry freight vans, from this point on it makes few stops with texts used to alert passengers when exactly in a 30 minute window to expect the train. It then interchanges cars with another crossing train in the middle of the night (the crews are reversed back to origin). This interchange arrangement adds many more origin and destinatin pairs and revenue density. It arrives in another metro area at about 5:30 AM, drops the intermodal dry freight vans, and picks up setout commuter cars before heading to a 9 AM arrival in large metro area, before finally continuing to another final stop at about 11:30 AM.
One thing I have observed about railroads outsourcing (contracting) a part of their operations. They do get a lowball contract amount from the vendor. Once the vendor takes over the contracted operation, their service comes nowhere near what the carrier though they had contracted for (Carrier expectations 24/7/365 - Vendor delivers 8-5 M-F and don't call on weekends). Once the carrier fully understands what they have contracted for, the legal dept. gets the order to find a way out of the contract and HR gets the order to see what can be done to get the employees who previously performed the functions back on the company payroll.
What railroads expect for service and what contractors expect to provide for service and two different things.
Never too old to have a happy childhood!
Returning to the original topic, my point is that deluxe coach services seem like they could be a fine replacement for sleeper cars but if some sort of sleepers are required on the two-night LD trains, why not a modern equivalent of the Slumbercoach? Along with charging fares sufficient to break even on the costs directly attributed to running the train (labor, fuel, repairs & maintenance, benefits and depreciation) and requiring patrons of the food service to pay the full cost of their meals. As the commissaries are already operated by a contracter and as labor cost as a percentage of total costs (56.8%) and absolutely ($117.0 mil.), it is time to franchise out the staffing as well. Amtrak has the legislative right to contract out the entire food and beverage service:
"Amtrak Reform and Accountability Act of 1997 repealed prior restrictions on contracting out various functions of Amtrak (49 U.S.C. 24312(b»), and devolved all such issues to the collective bargaining process, with the exception of work related to food and beverage service. The 1997 legislation made specifically clear in section 121 (d) that: "The amendment made by subsection (a)(1) is without prejudice to the power of Amtrak to contract out the provision of food and beverage services on board Amtrak trains "
"Section 209 of PRIIA directs the Amtrak Board, in consultation with the Secretary of the Transportation, to develop and implement a single methodology for allocating operating and capital costs among States and Amtrak for the 27 Amtrak routes for which States provide financial support, i.e., state-supported routes. The Section 209 cost-allocation methodology goes into effect on October l, 2013. It will require States to reimburse Amtrak for the operational costs of providing the service, including food and beverage service, on those routes. As States take on the full financial responsibility for these routes, they will also have the flexibility to determine who should provide the food and beverage service on those routes. Some States, namely Maine and North Carolina, already provide food and beverage services on their O\Vll. While North Carolina's Piedmont service provides vending serviccs, the Maine's Downeaster contracts food and beverage services out. The Committce will hear from Maine regarding its experience having food and beverage serviccs provided by a private company."
"The food and beverage service has 1,234 employees and lost $84 million last year [2011]. If you do the math, it comes out to a taxpayer subsidy for every Amtrak food and beverage employee of more than $68,000."
In think it is high time Amtrak do what it legally is supposed to do.
Sam1 CMStPnP schlimm sam1 was a corporate accountant. What are your credentials to stand in judgement? And BTW, it is pseudo+whatever. There is nothing wrong with offering that insight. Nothing wrong with the counterpoints either. However, we have to be careful not to exclude others from the discussion when we delve to far into the numbers game. I have for one stated before, I understand her background but most Senior management types are from Sales not Accounting #1, #2 CPA license does not establish a competence or honesty with numbers, exhibit A: Enron collapse.........saw part of that first hand, myself. #3 very rare a high level Executive asks for the accounting numbers unless it is a problem they do not fully understand, most manage by the seat of their pants. Jack Smith of GM, perfect example. That's been my experience as a Business Consultant. I know that breaks Sam1's heart but seriously that's how large firms in the U.S. are predominantly managed. TXU might have been different but I would not rate TXU as a well managed firm or one that seizes opportunity when it appears.........they are not a whole lot different than Amtrak in many respects.............watching the world pass by and occasionally sticking their neck out to see what the other guy is doing and then trying to catch up with them. There were several large electric and gas energy companies headquartered in Dallas whilst I was employed there. You have no idea who I worked for. The officers of the company are part of the executive team. Senior managers and directors are the next level or two down. You probably have no idea how electric utilities are managed. Especially TXU! In fact, most of the executives were engineers, accountants, finance officers, etc. That changed after deregulation. What type of a business consultant are you? What is your discipline? Other than having been associated with GM, one of the largest business failures ever in American business history, what are your credentials? Lifting up an exception, i.e. Enron, and generalizing it to the population as a logical fallacy. Accounting is an discipline that is governed by a robust set of standards. Having said that, is contains a fair amount of wiggle room, i.e. use of estimates for depreciation, reserves, etc. Thus, it is important when reading financial statements to understand their strengths and weaknesses. Every number that I have presented, with one long ago exception, is taken from Amtrak's published records, i.e. Annual Report, Monthly Operating Reports, IG reports.
CMStPnP schlimm sam1 was a corporate accountant. What are your credentials to stand in judgement? And BTW, it is pseudo+whatever. There is nothing wrong with offering that insight. Nothing wrong with the counterpoints either. However, we have to be careful not to exclude others from the discussion when we delve to far into the numbers game. I have for one stated before, I understand her background but most Senior management types are from Sales not Accounting #1, #2 CPA license does not establish a competence or honesty with numbers, exhibit A: Enron collapse.........saw part of that first hand, myself. #3 very rare a high level Executive asks for the accounting numbers unless it is a problem they do not fully understand, most manage by the seat of their pants. Jack Smith of GM, perfect example. That's been my experience as a Business Consultant. I know that breaks Sam1's heart but seriously that's how large firms in the U.S. are predominantly managed. TXU might have been different but I would not rate TXU as a well managed firm or one that seizes opportunity when it appears.........they are not a whole lot different than Amtrak in many respects.............watching the world pass by and occasionally sticking their neck out to see what the other guy is doing and then trying to catch up with them.
schlimm sam1 was a corporate accountant. What are your credentials to stand in judgement? And BTW, it is pseudo+whatever.
sam1 was a corporate accountant. What are your credentials to stand in judgement? And BTW, it is pseudo+whatever.
There is nothing wrong with offering that insight. Nothing wrong with the counterpoints either.
However, we have to be careful not to exclude others from the discussion when we delve to far into the numbers game. I have for one stated before, I understand her background but most Senior management types are from Sales not Accounting #1, #2 CPA license does not establish a competence or honesty with numbers, exhibit A: Enron collapse.........saw part of that first hand, myself. #3 very rare a high level Executive asks for the accounting numbers unless it is a problem they do not fully understand, most manage by the seat of their pants. Jack Smith of GM, perfect example.
That's been my experience as a Business Consultant. I know that breaks Sam1's heart but seriously that's how large firms in the U.S. are predominantly managed. TXU might have been different but I would not rate TXU as a well managed firm or one that seizes opportunity when it appears.........they are not a whole lot different than Amtrak in many respects.............watching the world pass by and occasionally sticking their neck out to see what the other guy is doing and then trying to catch up with them.
There were several large electric and gas energy companies headquartered in Dallas whilst I was employed there. You have no idea who I worked for.
The officers of the company are part of the executive team. Senior managers and directors are the next level or two down.
You probably have no idea how electric utilities are managed. Especially TXU! In fact, most of the executives were engineers, accountants, finance officers, etc. That changed after deregulation.
What type of a business consultant are you? What is your discipline? Other than having been associated with GM, one of the largest business failures ever in American business history, what are your credentials?
Lifting up an exception, i.e. Enron, and generalizing it to the population as a logical fallacy. Accounting is an discipline that is governed by a robust set of standards. Having said that, is contains a fair amount of wiggle room, i.e. use of estimates for depreciation, reserves, etc. Thus, it is important when reading financial statements to understand their strengths and weaknesses.
Every number that I have presented, with one long ago exception, is taken from Amtrak's published records, i.e. Annual Report, Monthly Operating Reports, IG reports.
Was referring to utilities in general as a sector. Generally they are highly risk averse and preservers of the status quo.......even after deregulation. It's a fact and most CPA's will agree with that assessment.
Anyways, I am not at all defensive about GM because I am not an Executive of GM and left GM in 1993-94. I will say that my observation of GM was that it's Senior Executives did not want to cut with the knife as deep as they should have in the early 1990's. Too much hestitation because they thought GM would stage a dramatic comeback and again be the Alfred Sloan era company it was before.
Example: EMD originally was to be spun off in 1991-1992. BN's large order of locomotives for hauling coal caused GM to hesitate and hang-on to the company longer as a potential cash cow, while still denying EMD the investment it needed in R&D for the future. Again, seat of the pants management won out vs looking at financial reports.
GM wanted to dump Saturn in 1993 because Chevrolet was arguing Saturn was canibalizing their small car sales within the larger GM family. Again, GM hesitated because Chevy sucked so bad in comparison on quality reports and Saturn was able to argue it was the better brand or the "keeper". Sport Utility sales took off which preserved Chevy as a cash cow. Saturn tried to one up by entering the larger sedan and SUV market at the same time with bad results. Saturn lost but look how many years later Saturn lost when the original decision should have remained in 1993. Again, seat of the pants management preserved both companies until almost two decades later. The head of Chevrolet pushed hard for Saturn's demise, it wasn't necessarily the numbers alone although I bet you thought it was.
I can go on and on in regards to other decisions in other companies. Few folks look at the financial reports when making decisions like these. GM was not running abnormally to other American companies at the time.
schlimm I may be completely wrong, but it has always seemed to me that accounting is most useful for giving us a snapshot of where we have been and maybe inferentially why. Perhaps less useful at formulating a vision or roadmap of where we are going and which road is best.
I may be completely wrong, but it has always seemed to me that accounting is most useful for giving us a snapshot of where we have been and maybe inferentially why. Perhaps less useful at formulating a vision or roadmap of where we are going and which road is best.
Sam1 What type of a business consultant are you? What is your discipline? Other than having been associated with GM, one of the largest business failures ever in American business history, what are your credentials?
I was trying to "wrap my head" around the concept of "economic life" of a capital asset. David Wardale was writing about the economic life of the different "classes" (i.e. models or types) of locomotive on the South Africa Railway, and I am trying to apply it on whether to keep an old automobile going.
In my research-engineering rough-round numbers, a new automobile costs 20,000 dollars. A greatly, greatly simplified accounting model, after Wardale's discussion, has "the car" costing a full 20,000 dollars, or maybe 20,000 minus whatever I can sell it for, if I keep it one year. If I keep it 4 years, forgetting resale, it costs 5000 dollars/year. If I keep it 10 years, 2000 dollars/year, if I keep it 20 years, 1000 dollars/year (and I can forget about selling it for much at that point), and yes, I have a car at 18 years, and my wife and my nephew each have functioning cars at 20 years.
Maintenance, yes, maintenance. I think I "dropped" over $1500 dollars into the 18-year old car -- I had to replace the rear brakes, and I had to replace worn joints and links of the front suspension, and that all adds up.
What I should really do is have some kind of "model" of the maintenance cost as a function of time for this make and model of car. Maybe I should register for the car Web site True Delta and they have that data? The "ownership" cost according to the Wardale model drops over time by an inverse relationship whereas the repair costs increase over time as parts reach their mileage/age limits and start to break or rust out. If at 10 years, the ownership cost is $2000/year and I am spending, on average, $2000/year on repairs, the "cost" of the car is $4000 a year. If at 20 years, the ownership is down to $1000/year, but if I am spending $3500/year on repairs, the "cost" is $4500/year, and I have kept this car beyond its "economic lifetime."
But there are all kinds of complications. Suppose I learn how to replace brakes and suspension parts for the cost of mail-order parts instead of going to a repair shop? How to I value my time? My risk to my life of working underneath a car, even though I use jacks stands and proper precautions?
Suppose I replace my car with a hybrid that gets better gas mileage? Will that hybrid "hold up" or will it face expensive repairs -- battery pack, inverter -- at high mileage? Will replacement battery packs come down in price with the "learning curve" going on in battery manufacture?
Suppose a new car has safety features such as side air bags and stability control? How much do I value my life/medical expenses/suffering and impairment from an accident? How careful of a driver am I, really, as to what my risk is? Do these safety gadgets actually make me any safer? If I keep the new car for 5, 10, 20 years, am I "locking in" the level of tech, or if I hang on to my older car for, what, another 5 years, will they come out with a car that automatically applies the brakes to avoid a crash?
Are my "ownership" costs meaningful? What about the cost of car loan payments? But if by keeping a car forever, I am able to save the money for the next car instead of getting a loan? I can earn money by interest on my savings, but not very much? Suppose I purchased a Ford Fiesta worth of Ford stock back in Summer 2009 -- by now, I could purchase a Lincoln with that money, but what about capital gains when I cash in the stock?
What I am saying, the difference between professional accounting and professional engineering is that accounting people follow "GAAPP" because that is what they are supposed to do whereas engineers need to take into account of miriad of interacting "design trades" in order to give value to their customers. Accounting is a useful tool, but it is far from knowing everything you need to know to run a business.
GM is offered as an example. I am sure the accountants at GM practiced their profession to the best of their ability, but an enterprise like GM has so many variables. GM has a UAW contract whereas the American Honda and Toyota operations have more youthful non-union workforces for reasons that are largely out of GM's control. GM could like like Ford and assemble Mazda designs in Mexico for cheap, but Consumer Reports is indicating the new Ford Fusion has "build quality" concerns.
That in 2008, Russia fought a war with its Georgian neighbor and oil prices shot through the roof, which squeezed the ability of US home owners to pay their mortgages, which lead to the Global Economic Crisis that was the "horse shoe nail" that brought down GM, how to you plan for that by rigorous application of accounting principles?
There are a lot of people around here that would wish the numbers to be better for Amtrak and hate to hear the bad news about passenger train economics. But on the other hand, accounting is not the be all and end all of the overall economics of many ventures and enterprises, and persons in accounting need to have a little bit of humility about that, much as I attempt to indoctrinate humility in my students regarding the challenges, difficulties, and limits to engineering practice.
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
CMStPnP schlimm sam1 was a corporate accountant. What are your credentials to stand in judgement? And BTW, it is pseudo+whatever. There is nothing wrong with offering that insight. Nothing wrong with the counterpoints either. However, we have to be careful not to exclude others from the discussion when we delve to far into the numbers game.
However, we have to be careful not to exclude others from the discussion when we delve to far into the numbers game.
I was commenting on BaltACD's snide post, not attempting to exclude anyone from the discusssion.
CMStPnP now back to Amtrak fares.............they seem to giveaway to everyone, I have yet to figure out their structure or yield management approach.
Compared to airlines (and hotels) yield management systems, Amtrak's appears to be more crude-not unsophisticated as much as much less nuanced. While there are a range of fares on most LD trains, I don't think you'll find the array of differing prices, terms, and/or conditions that bewilder so many airline passengers. As late comer to this game and as a function of its passenger rail LD monopoly I think Amtrak and its passengers have been spared much frustration. I think that the airlines would be more than glad to get off this tiger if they could, too. In the discretionary leisure travel market, even a small degree of uncertainty or confusion can have a disproportionally negative effect on business (witness the experiment with trimming train days of operations some years back).I agree that there is probably room for improvement-you have mentioned several good ideas. For the LD trains I think they need to be relatively few in number and need to avoid the effect of people feeling nickel and dimed to death.
Anyways, back on topic. I do think there is a place for long distance coach trains. I would think they would need a little more in the way of amenities vs a corridor train but I think they can probably make a go of it in some markets.
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