Passenger Trains > Pearl Harbor Day advisory from Boardman

(some say this advisory was issued in response to the TRAINS Newsline item of Monday, 05 DEC)

special employee advisory
December 07, 2011

> Message From Joe Boardman

> Dear Co-workers,
>
> I know that there is a feeling of uncertainty in the air for some of you, and that many of you have questions. I don’t have all the
> answers that many of you are seeking, but I want to tell you where the company is going — knowing what the plan is will at least help
> reduce some concerns that I have heard expressed.
>
> As you know, our board of directors approved a Strategic Plan in October that sets a new course for our company. I recently asked you
> to read and become familiar with the Strategic Plan — I will ask you again to do so now — because it is in large part the basis upon which
> we are bringing change to Amtrak. As we follow it, our company will become stronger, more customer-focused, and more bottom-line business
> focused. Amtrak can no longer hunker down in survival mode, and we do not need to. We are a critical asset to this nation; we must serve
> our nation and our customers well.
>
> Before I get into the changes that I’m seeking, I want you to know that there are no planned or expected service reductions anywhere.
> Similarly, there are no planned layoffs for agreement-covered employees, other than the normal seasonal adjustments that we go
> through each year. Nothing different there.
>
> As you know, I am seeking to align how we do business with our Strategic Plan. As I’ve communicated before, this realignment of the
> organization will result in a reduction in the number of non-agreement employees across all departments. We are not going to
> reduce any management forces during the coming holidays, other than those who have elected and have been approved for the recent
> Voluntary Separation Incentive Plan. A little more than 150 non-agreement-covered people have chosen to leave the company via the
> VSIP, several of them from the senior ranks of management. On behalf of the company, I am grateful for the contributions that they have
> made through the years. Many of those among the group were close to making a retirement decision, and this program provided the incentive
> they needed to make a positive affirmation that it was time. I saw many struggle with that choice, as so many have done in the past when
> it was time to enter into retirement.
>
> Also, remember that when we released the Strategic Plan, I told you it was developed with significant employee input and that it is a
> living document — it’s not set in stone. A grand plan rolled out all at once does not allow for the creative ideas of those that are out
> there doing the work, or who have been asking questions for years and have nothing but frustrations left. So that’s part of why we don’t
> have all the answers that people are seeking yet.
>
> So far, we have formally rolled out only one part of the Strategic Plan from a Business Line point of view — the Northeast Corridor
> Infrastructure and Investment Development Business Line managed by Stephen Gardner. Stephen Gardner and team he has assembled is hard at
> work to make our vision for very high-speed rail a reality and while doing so improving the infrastructure and its capacity in an
> incremental way. We must increase current Acela capacity, commuter access to NYC and advance the state of good repair of our entire NEC
> infrastructure with a collaborative cross-functional team of Mechanical, Engineering and Transportation effort that is
> goal-oriented and customer-focused. Stephen’s success will be our success, and he must not be alone in the effort.
>
> As we look at Operations outside of the Northeast Corridor, we need to determine how we minimize costs that are not directly connected
> with the actual operation of safe, customer-focused and reliable service. Our operations outside of the NEC do not cover their basic
> operating costs, so the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so that
> cost is lower without hurting the safety, customer service or reliability? Even more importantly, why are we still doing things in
> a way that does not take advantage of all the improvements available today? What should we stop doing?
>
> We don’t have all those answers, and as I said earlier, no one grand plan is going to give those answers to us. But I do have some
> answers. We cannot expect a reliable, on-time, customer-focused railroad to operate if there is not dedicated accountability for
> that. So we will establish a structure that includes a senior-level person who will be held accountable for both cost and revenue, while
> meeting the standards and the budgets that are set by the Chief Engineer, Chief Mechanical Officer and Chief Transportation Officer.
> Each of them will report to the VP of Operations. Accordingly, I have asked the VP of Operations to submit his plan for aligning under this
> structure in early February, and I expect to have given him enough input along the way that it will begin to be implemented by mid to
> late summer. I expect it to provide fewer levels of management from the top to the bottom, and that will cause an impact to the number of
> non-agreement-covered positions.
>
> Northeast Corridor Operations is another one of the Business Lines in the Strategic Plan. It will operate differently than the off-corridor
> structure. The details on that will not come until after the off-corridor structure is set, although once that is known it will
> help define the boundaries of the Northeast Corridor. So this is an area that will need to wait a while for answers.
>
> There will be one centrally managed Legislative, Government, Policy and Public Affairs function, with a field presence that will keep
> major contact with our state partners and determines what, if any, planning needs to be done for a customer or state partner. This
> function has been split up among too many departments, with a lack of focus and accountability. Some of that change has begun with the
> dissolution of the Policy and Development department. We expect 10 to 15 positions will be eliminated with that change.
>
> In addition, there will be three planning organizations in the company, and they will be relatively small. Facility Planning, which
> will be within Real Estate under the Chief Financial Officer, will become much more active in proper planning for our real estate assets
> including our stations. Operations Planning will be placed under the VP of Operations. Strategic Planning, which will be in the President
> and CEO’s office, and will monitor the Strategic Plan, make adjustments to the plan to keep it current, update the plan or help
> define course corrections early by paying attention to economic and other business trends to keep Amtrak on top of its game.
>
> The Marketing and Product Development department will be less marketing and more sales. Social media will grow along with the use
> of other more up-to-date methods of improving our service to our customer. Field functions will be part of operations, part of
> Legislative, Government, Policy and Public Affairs, or will be a targeted sales function with sales goals or will not exist. The
> distribution function of the commissary will go to Operations but the Menu Development will stay with Marketing. The Call Centers will stay
> with Marketing, and Marketing will pick up accountability for selling our management services to commuter operations, as well as evaluating
> and responding to the solicitations for commuter contracts.
>
> There are other changes that will occur as we respond to the requirements of this new direction. It’s often said that change is
> the only constant that we deal with. We see it in our families and we see it in the world around us.
>
> Amtrak costs continue to climb with additional direct salaries and wages, and while some revenue from ridership is up, other revenue
> like federal operating assistance, is down and that is part of the reason we must make cuts and adjustments to improve our bottom line.
> But frankly, that is not the primary reason. We must operate a more competitive company and it must reflect the realities of the
> competitive environment today. We have global competitors coming into our backyard and convincing members of Congress, state and commuter
> officials and others that they can do a better job than Amtrak. We also are in competition for federal assistance across transportation
> modes — airlines through the Federal Aviation Administration; highways and the intercity buses through the Federal Highway
> Administration; transit, commuter rail and buses through the Federal Transit Administration. We also have to compete with the funding for
> U.S. DOT safety programs, which comes out of the same appropriation funding.
>
> We are making these changes for a stronger future, and yet I know when it affects you directly that high-minded idea gets lost. That’s
> the tougher part of leading change. I’ve tried to mitigate some of this with the VSIP, giving us some room and also allowing those who
> have other opportunities to pursue them without hurting the company or the people. That won’t be enough, and the positions that have been
> vacated won’t be filled immediately and others will not be filled at all. When you see them posted and you qualify for them please apply,
> if your record is good and your skills are the ones that are needed, you will stand in a good position to be competitive.
>
> Please be assured that the steps we are taking are designed to preserve and strengthen the important service we provide to our
> nation. I will keep you updated as we move forward, and thank you for taking the time to read this important message.
>
> Sincerely,
> Joe Boardman
> President and CEO

I'm a little leery of the phrase "Living document." Similar to certain groups who advocate a "Living Constitution." Meaning whatever they want it to mean at the moment.

this plan thing goes on about once every 10 years ... here's the problem ... the strategic plan changes with every new President and CEO ... there is no ONE carry over mission statement from leader to leader where the plan is adopted and the plan is good enough to sustain change in leadership over time for all to follow with tweaking the plan to make immediate adjustments as technology moves forward

Out_Of_Service Wrote:
-------------------------------------------------------
> this plan thing goes on about once every 10 years
> ... here's the problem ... the strategic plan
> changes with every new President and CEO ... there
> is no ONE carry over mission statement from leader
> to leader where the plan is adopted and the plan
> is good enough to sustain change in leadership
> over time for all to follow with tweaking the plan
> to make immediate adjustments as technology moves
> forward

That's partly a result of how CEOs get hired. The hiring committee asks people for their "vision" and buys into the story that makes sense for them. You can see it with Amtrak and Tom Downs, George Warrington, David Gunn, etc.

If the guy's vision is in sync with Congress ("grow our way with mail and express" or "do more with less") he gets hired. When that doesn't work, he moves on, and they repeat the process...

GenePoon Wrote:
> >
> > As we look at Operations outside of the
> Northeast Corridor, we need to determine how we
> minimize costs that are not directly connected
> > with the actual operation of safe,
> customer-focused and reliable service. Our
> operations outside of the NEC do not cover their
> basic
> > operating costs, so the questions we need to ask
> are how can we do a better job to minimize costs,
> what can be done differently so that
> > cost is lower without hurting the safety,
> customer service or reliability? Even more
> importantly, why are we still doing things in
> > a way that does not take advantage of all the
> improvements available today? What should we stop
> doing?
> >
> >

Hmm. He talks of expanding capacity of Acela, but he talks of cutting the national network. What exactly, does he think they can cut? If there are no service reductions, how about running a one car coach train on every Long Distance route? This would cut costs, right?

Ok just what is the plan, and what cuts have to be made and where??

P Wrote:
-------------------------------------------------------

> Hmm. He talks of expanding capacity of Acela, but
> he talks of cutting the national network. What
> exactly, does he think they can cut? If there are
> no service reductions, how about running a one car
> coach train on every Long Distance route? This
> would cut costs, right?

Where did he say anything about cutting the national network? The only thing I noticed is that he said nothing will be cut.

Running a one car train will not cut costs at all or very marginally. I believe he is talking of rooting out other inefficiencies of which I am sure there is some significant amount. Amtrak is not exactly the poster child of efficient operation as it stands.

The bottom line is CASM has to be brought under control while keeping RASM on its upward trend. There no getting away from that if one wants to maintain viability, and you do not increase RASM by cutting the number of seats and chasing all your customers away by raising fares beyond what they are willing and able to pay.

Jishnu Wrote:
-------------------------------------------------------
> Where did he say anything about cutting the
> national network? The only thing I noticed is that
> he said nothing will be cut.

US DOT will make the decision on what to cut. FY2012 appropriations bill specifies that Amtrak has to apply for operating grants for each individual route. Will Amtrak give a realistic request for each route, or will it cut them all back across the board to equal the $466 million total appropriated for the grants?

ts1457 Wrote:
-------------------------------------------------------
> Jishnu Wrote:
> --------------------------------------------------
> -----
> > Where did he say anything about cutting the
> > national network? The only thing I noticed is
> that
> > he said nothing will be cut.
>
> US DOT will make the decision on what to cut.
> FY2012 appropriations bill specifies that Amtrak
> has to apply for operating grants for each
> individual route. Will Amtrak give a realistic
> request for each route, or will it cut them all
> back across the board to equal the $466 million
> total appropriated for the grants?

That could also force Amtrak to break out the allocation of corporate overhead by route. It will be interesting to see how the law department cost is divided, or the government affairs, or the costs of the commissary in Chicago, etc. And, perhaps some of the many staff officers at HQ.

When allocated costs are unbundled, you get to see how much of the headquarters expense is being layered on top of your particular line or product.

Jishnu Wrote:
-------------------------------------------------------
> Running a one car train will not cut costs at all
> or very marginally. I believe he is talking of
> rooting out other inefficiencies of which I am
> sure there is some significant amount. Amtrak is
> not exactly the poster child of efficient
> operation as it stands.

That isn't quite true about coach only trains.

The most complicated equipment Amtrak operates are the sleepers and diners. Given relative maintenance durations and the make up of trains, sleepers and diners require over half the mechanical budget dedicated to long distance cars, and operating them requires an additional engine on most long distance trains which increases the size and fuel consumption of the overall fleet.

In return, they carry about 10% of total riders in the east on single leavel equipment, 15% in the west, 25% on the Capitol Limited, and 40% on Auto Train, and they generate 15-20% of revenue out east and 40-50% of revenue in the west and on Auto Train. The question becomes is that good enough or sustainable, especially out east? And also what can be done if it is not?

Jishnu Wrote:
------------------------------------------------------->
> Where did he say anything about cutting the
> national network?

Right here:

As we look at Operations outside of the Northeast Corridor, we need to determine how we minimize costs that are not directly connected
> with the actual operation of safe, customer-focused and reliable service. Our operations outside of the NEC do not cover their basic
> operating costs, so the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so that
> cost is lower without hurting the safety, customer service or reliability? Even more importantly, why are we still doing things in
> a way that does not take advantage of all the improvements available today? What should we stop doing?

I think you are confusing route cuts with cuts. He is clearly stating in this speech that they need to expand the NEC and cut the LD network. He says no routes are planned to be dropped, but he wants to make cuts to the LD network. This implies services on the LD trains, i.e. sleepers, meals, baggage.... Who knows. There isn't much to be cut from the LD trains without seriously hurting the marketability of the trains, thus starving them. This is a very bad omen, and as others have stated, many think Amtrak should only serve certain states - including its CEO.

abyler Wrote:
-------------------------------------------------------

> The most complicated equipment Amtrak operates are the sleepers and diners.... they carry about 10% of total riders in
> the east on single leavel equipment, 15% in the west, 25% on the Capitol Limited, and 40% on Auto
> Train, and they generate 15-20% of revenue out east and 40-50% of revenue in the west and on Auto
> Train. The question becomes is that good enough or sustainable, especially out east? And also
> what can be done if it is not?

====================================================================

Why "especially out east?" What is so special about "out east?" Isn't Amtrak supposed to be a national passenger railroad?

If not, ditch the "America's Railroad" charade and admit that the only segment they want to run is the NEC. And when that happens,
watch the rest of the country pull the plug on it and let the NEC sink.



Edited 1 time(s). Last edit at 12/08/11 15:39 by GenePoon.

GenePoon Wrote:
-------------------------------------------------------
> abyler Wrote:
> --------------------------------------------------
> -----
>
> > The most complicated equipment Amtrak operates
> are the sleepers and diners.... they carry about
> 10% of total riders in
> > the east on single leavel equipment, 15% in the
> west, 25% on the Capitol Limited, and 40% on Auto
> > Train, and they generate 15-20% of revenue out
> east and 40-50% of revenue in the west and on
> Auto
> > Train. The question becomes is that good enough
> or sustainable, especially out east? And also
> > what can be done if it is not?
>
> ==================================================
> ==================
>
> Why "especially out east?" What is so special
> about "out east?" Isn't Amtrak supposed to be a
> national passenger railroad?
>
> If not, ditch the "America's Railroad" charade and
> admit that the only segment they want to run is
> the NEC. And when that happens,
> watch the rest of the country pull the plug on it
> and let the NEC sink.

Mr B pretty much said exactly the same thing himself

excerpt taken from above in his statement

"As we look at Operations outside of the Northeast Corridor, we need to determine how we minimize costs that are not directly connected with the actual operation of safe, customer-focused and reliable service. Our operations outside of the NEC do not cover their basic operating costs,so the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so thatso the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so that cost is lower without hurting the safety, customer service or reliability? Even more importantly, why are we still doing things in a way that does not take advantage of all the improvements available today? What should we stop doing? "

>>Our operations outside of the NEC do not cover their basic operating costs,so the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so thatso the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so that cost is lower without hurting the safety, customer service or reliability?<<

Although Boardman has said before that the NEC subsidizes the long distance trains, the assumption was always that the state supported trains covered their over the rail costs.

Given the ferocious push back from labor when Subway vendors replaced dining and food service cars on the Empire route, it will be interesting to see what improvements or cost minimizing emerges.

Boardman said, "The marketing and product development department will be less marketing and more sales." What marketing? Apparently, I don't live on the right planet, as I can't recall the last time I saw any Amtrak marketing. How do you cut something that doesn't exist?

abyler Wrote:

> That isn't quite true about coach only trains.
>
> The most complicated equipment Amtrak operates are
> the sleepers and diners. Given relative
> maintenance durations and the make up of trains,
> sleepers and diners require over half the
> mechanical budget dedicated to long distance cars,
> and operating them requires an additional engine
> on most long distance trains which increases the
> size and fuel consumption of the overall fleet.
>
> In return, they carry about 10% of total riders in
> the east on single leavel equipment, 15% in the
> west, 25% on the Capitol Limited, and 40% on Auto
> Train, and they generate 15-20% of revenue out
> east and 40-50% of revenue in the west and on Auto
> Train. The question becomes is that good enough
> or sustainable, especially out east? And also
> what can be done if it is not?


Not sure where your numbers came from or what is meant by "mechanical budget". Anyway, lets assume, out west as you say the sleepers bring in half the revenue for a train. So a LDT like the CZ has two sleepers bringing in as much revenue as three or four coaches. The sleeper "mechanical costs" would include the crew/transition car I assume, which further dilutes the cost/sleeper. And these two sleepers have also covered the cost of the diner! Sounds to me like the way to cut costs and increase revenue is to dump the coaches and run all sleeper trains. At least out west. I think the sleeper to coach ratio is much lower back east and assuming they account for 50% of any cost would be a streach.

>"Our operations outside of the NEC do not cover their basic
> operating costs, so the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so that..." from Mr. B's letter

What Mr. B is implying of course is the NEC does cover its basic operating costs--"The longer and more often you tell a lie the more likely it is to become accepted as the truth". Don't blame Mr. B, he's just the next guy in line following the drill. Ignore the fact the NEC needs half the operating subsidy, consumes huge amounts of federal cash funneled directly to Amtrak (thus doesn't show up on "the books") to cover below the rail costs. The LDT's on the other hand are tagged with every dime of costs, above and below the rail. The LDT's do provide very important services to Amtrak, as media "whipping boy" and a means to deceive congress and the public.

"We must increase current Acela capacity, commuter access to NYC and advance the state of good repair of our entire NEC
> infrastructure with a collaborative cross-functional team of Mechanical, Engineering and Transportation effort that is
> goal-oriented and customer-focused. Stephen’s success will be our success, and he must not be alone in the effort.".....from Mr. B's letter
>
Since Acela is the big profit center, should be able to walk into any bank, show them the books and get a loan for all the new train sets needed. Simple- return-on-investment, pay off the loan, reap the profits. The banks will line up for this one--don't need no stink'n govment money. Rest of above sentence is some kind of double-talk about needing to pump more cash into the NEC infrastructure...I think.

P Wrote:
-------------------------------------------------------
> Jishnu Wrote:
> --------------------------------------------------
> ----->
> > Where did he say anything about cutting the
> > national network?
>
> Right here:
>
> As we look at Operations outside of the Northeast
> Corridor, we need to determine how we minimize
> costs that are not directly connected
> > with the actual operation of safe,
> customer-focused and reliable service. Our
> operations outside of the NEC do not cover their
> basic
> > operating costs, so the questions we need to ask
> are how can we do a better job to minimize costs,
> what can be done differently so that
> > cost is lower without hurting the safety,
> customer service or reliability? Even more
> importantly, why are we still doing things in
> > a way that does not take advantage of all the
> improvements available today? What should we stop
> doing?
>
> I think you are confusing route cuts with cuts.
> He is clearly stating in this speech that they
> need to expand the NEC and cut the LD network.
> He says no routes are planned to be dropped, but
> he wants to make cuts to the LD network. This
> implies services on the LD trains, i.e. sleepers,
> meals, baggage.... Who knows. There isn't much to
> be cut from the LD trains without seriously
> hurting the marketability of the trains, thus
> starving them. This is a very bad omen, and as
> others have stated, many think Amtrak should only
> serve certain states - including its CEO.

So he has mentioned "cuts" and not mentioned "route cuts". Where is the confusion? Where in that article has he said that he wants to make cuts to the LD network? Are you interpreting the phrase "what should we stop doing" to include the very notion of "running trains" as something they should be stop doing?

Sorry I don't read what you read in the paragraph that you quoted. He has not said anything about "cutting the LD network" in that paragraph. Another valid interpretation of the same paragraph is that he is looking for cost reduction and containment without cutting any routes. Of course if one starts with a presumption that LD routes will be cut then no matter what, one could read that from that paragraph too. :)

At the end of the day though, it won't be upto Boardman to make that determination by himself. He will have to ask for funding of operating subsidy on a route by route basis and DoT will get to decide which ones they will approve and which ones they'll reject.

Jishnu Wrote:
-------------------------------------------------------

> Another valid interpretation of the same paragraph
> is that he is looking for cost reduction and
> containment without cutting any routes.

Mr Jishnu, I think you have answered your own question.

Cost reduction = cuts.

This is exactly what he is saying. Nothing implying cutting routes, just cutting expenses.