Eastern Railroad Discussion > Norfolk Southern CEO Says Rail Mergers Won't Work

JOSH FUNK AP Business Writer

OMAHA, Neb. (AP) — Norfolk Southern Corp.'s CEO doesn't think railroad mergers are a good idea even if regulators might approve one.

CEO Wick Moorman said Wednesday during a conference call on Norfolk's Southern's quarterly results that he doesn't think railroad mergers "make sense at this time."

Full article at: http://www.memphisdailynews.com/news/2014/oct/23/norfolk-southern-ceo-says-rail-mergers-wont-work/

Wick is smart, it's a terrible idea, CP is a joke

Posted from Android

CP's stockholders would disagree with that statement.

There's been more ' yadda, yadda, yadda" nonsense over this topic...enough already, it's not happening!

JGFuller Wrote:
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> CP's stockholders would disagree with that
> statement.

Ask any CP employee and they will tell you even though the stock price is high, EHH is running the company into the ground and the stock price will soon tank. Henceforth the merger / buyout conversation with CSX....

Russ

Posted from Android

Rail mergers can and do work. I doubt Mr. Moorman regrets having 58% of Conrail in his network. In fact, Southern and N&W have made a happy union for many years.

From what I have read and seen, the lessons to be learned are:

1. Don't go cutting and firing people right out of the gate. Let those people who are near retirement work until they are ready to leave, rather than give them buyouts, or the lost institutional knowledge will cost big money. A 57-year-old superintendent or STO is not going to fight the new system, and those are the people that can solve the inevitable problems quicker.

2. Let duplicate yards and shops stay open until it becomes clear what the new traffic patterns and volumes will be. M&A's like UP-CNW-WP-DRG-SP, BNSF, and the CR split-up produced traffic that did not exist before, huge amounts on some of the major trunk lines, in fact. Closing yards like Strang and Stanley made congestion much worse, and they had to be reopened.

In the case of the possible CP-CSX or CN-NS combos, there are very few parallel facilities outside of Detroit, Toledo, ESL and Chicago, and even those can hardly be thought of as excessive or duplicate.

3. Let each piece of the new system remain autonomous for some time, and make sure plenty of power is available.

4. Have a little faith in CTC. Upgrade the track quickly when new traffic appears, rather than letting the traffic sit in a never ending quagmire for years until you run it off.

Rail mergers, particularly end to end mergers, have and will open new markets. Farmers, manufacturers, importers and exporters will all make more money that way, as will labor. Unfortunately, the legendary meltdowns of the 1990's, and pricing and service issues since then, seem to have resulted in a loss of trust with the public, shippers and Congress, and those folks have a big say in what will be allowed next.

NSTopHat Wrote:
-------------------------------------------------------
> JGFuller Wrote:
> --------------------------------------------------
> -----
> > CP's stockholders would disagree with that
> > statement.
>
> Ask any CP employee and they will tell you even
> though the stock price is high, EHH is running the
> company into the ground and the stock price will
> soon tank. Henceforth the merger / buyout
> conversation with CSX....
>
> Russ
>
> Posted from Android

Really? CN didn't tank after he left and still has one of lowest operating ratios in railroading. He is extremely unpopular for the employees but no one can argue that his ideas make the company more valuable to stock holders which is his primary job like it or not.

Posted from iPhone

JGFuller Wrote:
-------------------------------------------------------
> CP's stockholders would disagree with that
> statement.

If I want want to know something about how to properly run a business, about the LAST person I am going to ask is some stockholder. Their priorities are usually at odds with what is REALLY in the best long term interests of the business.

JGFuller Wrote:
-------------------------------------------------------
> CP's stockholders would disagree with that
> statement.

****The stockholders are just greedy make money off others people anyway, the real important people to the CP are customers, and few of them are happy, even the oil customers are not happy with how they are being treated. Way to much focus is given to stockholders.

CP will begin to return to earth just as the CN's stock did when the CEO was there. He's not the innovator people think he is.

PGR94 Wrote:
-------------------------------------------------------
>
> CP will begin to return to earth just as the CN's
> stock did when the CEO was there. He's not the
> innovator people think he is.


Exactly. The game is to drive up stock prices in the short term by slash and burn, downsizing crews and facilities, selling off real estate, then take the profits and run. The ghost of Patrick McGinnis lives on.

Art House

aehouse Wrote:
-------------------------------------------------------
> PGR94 Wrote:
> --------------------------------------------------
> -----
> >
> > CP will begin to return to earth just as the
> CN's
> > stock did when the CEO was there. He's not
> the
> > innovator people think he is.
>
>
> Exactly. The game is to drive up stock prices in
> the short term by slash and burn, downsizing crews
> and facilities, selling off real estate, then take
> the profits and run. The ghost of Patrick McGinnis
> lives on.
>
> Art House

McGinnis ruined my beloved New Haven.......he is Dick Cheney the first.......

bluesboyst Wrote:
>
> McGinnis ruined my beloved New Haven.......he is
> Dick Cheney the first.......


You seem confused. UP is doing quite well.

> Exactly. The game is to drive up stock prices in
> the short term by slash and burn, downsizing crews
> and facilities, selling off real estate, then take
> the profits and run.

Yes, this is capitalism.

NYC6001 Wrote:
-------------------------------------------------------
> Rail mergers can and do work. I doubt Mr. Moorman
> regrets having 58% of Conrail in his network. In
> fact, Southern and N&W have made a happy union for
> many years.
>
> From what I have read and seen, the lessons to be
> learned are:
>
> 1. Don't go cutting and firing people right out of
> the gate. Let those people who are near retirement
> work until they are ready to leave, rather than
> give them buyouts, or the lost institutional
> knowledge will cost big money. A 57-year-old
> superintendent or STO is not going to fight the
> new system, and those are the people that can
> solve the inevitable problems quicker.
>
> 2. Let duplicate yards and shops stay open until
> it becomes clear what the new traffic patterns and
> volumes will be. M&A's like UP-CNW-WP-DRG-SP,
> BNSF, and the CR split-up produced traffic that
> did not exist before, huge amounts on some of the
> major trunk lines, in fact. Closing yards like
> Strang and Stanley made congestion much worse, and
> they had to be reopened.
>
> In the case of the possible CP-CSX or CN-NS
> combos, there are very few parallel facilities
> outside of Detroit, Toledo, ESL and Chicago, and
> even those can hardly be thought of as excessive
> or duplicate.
>
> 3. Let each piece of the new system remain
> autonomous for some time, and make sure plenty of
> power is available.
>
> 4. Have a little faith in CTC. Upgrade the track
> quickly when new traffic appears, rather than
> letting the traffic sit in a never ending quagmire
> for years until you run it off.
>
> Rail mergers, particularly end to end mergers,
> have and will open new markets. Farmers,
> manufacturers, importers and exporters will all
> make more money that way, as will labor.
> Unfortunately, the legendary meltdowns of the
> 1990's, and pricing and service issues since then,
> seem to have resulted in a loss of trust with the
> public, shippers and Congress, and those folks
> have a big say in what will be allowed next.


Very sensible and well thought out.

I can tell EHH is still obsessed with cost cutting to "unlock shareholder value". But there isn't much left to cut, especially in the states, now that it appears the D&H is going to NS. Interestingly his early ambivalence toward oil by rail has changed...he embraces it now.

No railroad should be considering cutting secondary lines unless they are absolutely sure there will be no long term ill effects. The creation of MRL is a classic early example of something looking good on paper but was a true failure (of BN management) to see anything long term.



Allen

ctillnc Wrote:
-------------------------------------------------------
> > Exactly. The game is to drive up stock prices
> in
> > the short term by slash and burn, downsizing
> crews
> > and facilities, selling off real estate, then
> take
> > the profits and run.
>
> Yes, this is capitalism.


A better way to put it: the dark side of capitalism.



Allen

Capitalism is fine, and I have a bit of stock in all the big RR's. I thought of getting more CP when the stock went up but did not, and I am now glad when EHH's economy measures require conductors to ride the last car of a train (whatever it is) on a backup move three miles in near downtown Chicago, in bad weather and thru a bad neighborhood, with no police escort and no supervision, just to save a few trackage rights dollars to pay UP. It is no more efficient. And UP could eat CP if it wanted too and maybe could legally get away with it.

Sometimes capitalism works and sometimes not, for a shareholders value. But capitalism also works when one man or entity can own a railroad with no shareholder interest. Witness a privately held large shortline in NE Pennsylvania that provides it's employees good pay and benefits in a tough operating environment and guarantees shippers a two hour delivery of carload shipments and meets it almost all of the time. Then another privately owned New England railroad that has almost eliminated any meaningful way a railroad can compete in Northern New England. There again, it works both ways.

bradleymckay Wrote:
-------------------------------------------------------
> ctillnc Wrote:
> --------------------------------------------------
> -----
> > > Exactly. The game is to drive up stock prices
> > in
> > > the short term by slash and burn, downsizing
> > crews
> > > and facilities, selling off real estate, then
> > take
> > > the profits and run.
> >
> > Yes, this is capitalism.
>
>
> A better way to put it: the dark side of
> capitalism.
>
>
>
> Allen

Or better yet, the short-sided version of capitalism.

However, from most accounts CP had grown rather fat, or more politely, bloated with the highest operating ratio of the big six North American railroads. The party can not last forever, so the pendulum has to swing the other way. This is never easy, but is necessary for the long term survival of the company. Eventually an equilibrium will be reached between the two extremes.

Jay