Nostalgia & History > Could Coal Have Saved the Milwaukee Road?

As we near the 30-year anniversary of Milwaukee's exit from their Pacific Coast Extension, a thought keeps going through my mind: Could Powder River Basin coal have saved the Milwaukee Road? Or, at least made it more of an attractive acquisition? History might have looked very different had certain events played out.

In the 1970's, as Milwaukee teetered on the edge of bankruptcy, BN was planning and building their PRB coal lines (CNW was offered in on the project, but couldn't make payments). For about five years BN enjoyed this highly profitable traffic all to themselves, until CNW (with UP financial backing) finally opened their own PRB line in 1984.

But what if things had been different? What if Milwaukee, unwanted by BN early on, had demanded inclusion in PRB plans? The Milwaukee's mainline through Montana would have put it within easy each of the PRB. And certainly Milwaukee would have provided easy direct access to Midwestern power plants, and connections in Kansas City to power plants in the South.

It was certainly possible. Milwaukee already handled coal from one Montana mine, and directly served another in North Dakota. This is why the mainline across South Dakota to Miles City later escaped abandonment that claimed most of the rest of the Milwaukee system in the West.

In fact, the Milwaukee did have an opportunity to participate in the PRB – to some extent. Private interests had approached the Milwaukee about building a line south from Miles City to reach new coal mines near the Montana / Wyoming border. But by then the Milwaukee had more to worry about than expansion. (Years later, this same route - now called the "Tongue River Railroad" - was proposed to BN, which liked the idea. However, this project has been held up for years due to cost and contention by local ranchers - and has yet to be built).

Could we have had in 2010 orange and black "Hiawatha" GEVO’s powering PRB coal trains alongside those of BNSF and UP? Interesting food for thought, certainly in the "could have happened" category!

MILW only handled a coule trains a week. Can you think what the track would have looked like after continued pounding by 14,000 ton coal trains coming north out of the Basin using MILW instead of the NP route east? Even if the track could survive the trains, no money to upgrade the trackage for continued use by coal trains.

I know Professor Rob Leachman will give us the straight scoop on whether this could have happened or not.



Edited 2 time(s). Last edit at 01/09/10 09:56 by WAF.

I'm thinking the Milwaukee would have faced the same obstacles as did C&NW with the "Cowboy line". The track was not in condition to handle unit trains of 100 ton coal hoppers. Northwestern solved their problem by building a connector to the UP and letting UP have the line haul east. Then there was the bigger issue of the PRB line itself. C&NW got in the game by contracting with BN to jointly build the line. Milwaukee would have had to do similar negotiations.I suspect that neither BN nor C&NW would have been favorably disposed to that option.BN would certainly not wanted a competitor or partner on the northern end of the PRB line and C&NW would not have wanted one on the southern end.

The incredible irony of the Milw bankruptcy was that, in reality, the Pacific Extension and the connecting main-line portion of the eastern network (St. Paul to Chicago, St. Paul to Kansas City, plus access to a few key branch-line customers like the Janesville autos and the Columbia coal, perhaps also Chicago to Louisville) was quite profitable. The overall eastern network with all its branch lines and low-density lines was much more unprofitable than the Pacific Extension was profitable, and that is what brought the Milwaukee into bankruptcy. In that sense, the wrong railroad was saved in Milwaukee II. Milwaukee II did get rid of a lot of the worst parts of the eastern network, but it did not have any possibility of being really profitable in the pre-de-reg era (when rates were basically mileage-based), if ever.

The rehabilitation and upgrading costs of the Pacific Extension were huge (especially in light of all the 100-ton grain hopper traffic that developed during the 1970s). The Milwaukee reorganization could not spend that kind of money without making the creditors wait for many years, maybe a decade. So it was abandoned. The Trustee's associates were not up front with him about the real economics of the Milwaukee. And the message to the public that the Pacific Extension was not profitable was a blatant lie. When he found out they were abandoning the wrong railroad, he developed a bleeding ulcer and resigned. By the time of the replacement Trustee, it was way too late, and I don't think the new Trustee really got it or cared.

PRB coal would have made Milwaukee II a lot more profitable. Whether it would have been enough to overcome the economics of the eastern network I guess would have depended on how much they got. More importantly, I wonder where the capital would have come from to upgrade the Milw to handle a lot of coal traffic. Again, it would have meant asking the creditors to wait a long time to get paid. As you may recall, CNW could never find the capital to upgrade their own line, so they did the deal with UP. And BN spent hundreds of millions to upgrade their lines and didn't really make a lot of money off of Coal until the Grinstein era.

Best regards,

Rob L.



Edited 2 time(s). Last edit at 01/09/10 13:09 by rob_l.

I have to wonder if they kept their electric powered trains running another year if lowered operating costs during the 1973 gas crisis would have gave them enough capital to upgrade and compete in later years? Everyone else had huge fuel costs while the Milwaukee could have hung onto lower electrical costs.

Todd Clark
Canyon Country, CA
Trainorders.com

I still believe MILW needed to buddy up to UP better in the late 60's and early 70's when the BN merger was in discussion. I would have thought most states and thus the Feds would have supported that approach vs. MILW being included in the BN merger which would have given BN a monopoly in many areas of the country. UP should have had much interest in what the MILW had to offer route wise than CNW and MILW/UP were already in a partnership with passenger traffic. It does not sound like the MILW had the money to invest in upgrading it's infrastructure on it's own so it simply had to run to cut a deal with someone to rebuild the Pacific Extension and possibly invest in the coal rush of the late 70's and 80's.

I've never heard an explanation why the UP was not more interested in the MILW in the late 60's than they were the CNW (or possibly CRI&P). Was this MILW's fault since they were trying so hard to be included in the BN merger? Was CNW's route across Iowa and Illinois shorter and easier to maintain than MILW's in the 70's? I thought they both were in very bad shape and required great investment in order to turn the CNW into what it is today. If UP got their hands on the northern MILW transcon route, that would take a lot of pressure off the UP's transcon and Blue Mtn routes while giving UP access to much of the country they still do not. It would give UP the shortest route for container traffic from Seattle to Chicago and it would have given UP access to Louisville too.

UP "partnered" with the Milwaukee Road in the late-1950s because CNW no longer wanted to handle the UP passenger trains. You have to remember that in that time frame, passenger business was still considered as the #1 business by most railroads even though they were probably losing their shirts handling pssenger trains. As a result, when the "City" streamliners switched from the CNW to the MILW, the UP followed by routing as much of its freight business as well.

Geographically, in terms of route length, amount and severity of grades and curvature (all of which contribute to operating expenses primarily in fuel consumption), the CNW route was the best, followed by the Milwaukee Road, the Illinois Central via Waterloo and lastly the Rock Island. Rock Island also had an additional rock in it's backpack ... two main river drawbridges instead of one for each of the other "Iowa" roads. The Rock crossed not only the Mississippi (right on top of the busy Rock Island dam-and-lock) but also the Des Plaines River at Joliet. Railroad drawbridges in the US, of course, are operated on a "maritime traffic #1" basis, so the Joliet drawbridge introduced yet another uncontrollable delay factor into the Rock's operating formula.

The 1950s were the time and reason why the CNW single-tracked the otherwise-double track mainline from Missouri Valley east to Denison, IA ... the plan would have carried that across Iowa and probably Illinois. Fortunately, only the Mo Valley-to-Dension section was singled (with two long sidings). The double-track mainline between Mo Valley and Council Bluffs was also single tracked at the same time.

In the 1980s, of course, CNW started aggressively pursuing UP business thru the Fremont connection which resulted in a lot of business never passing through the Omaha-Council Bluffs terminal. All of the other Iowa-Nebraska connections were inside that terminal, so Fremont gave the CNW an advantage.

Is the 1950s "passenger business is #1" argument valid? Consider this: Back in the 1950s, CNW actually did preliminary surveys and planning for an extension of the line between Lander and Green River, Wyoming by way of South Pass (where US Steel also had its Wyoming iron ore line situated), with a connection to the UP at Green River. The extension would have enabled the UP passenger trains to continue operating over Sherman Hill via Cheyenne and rerouting the UP freight traffic over the new connection and then east from Lander through Chadron and across the Nebraska sand hills to Fremont. This was at least 15 years before Southern Powder River Basin coal ever surfaced as a market commodity. The Green River-Lander extension would have involved several long tunnels.

Going back to the "SPRB coal over the Milwaukee" discussion ... Two thirds of the coal from the Basin was "southern" traffic, headed for power plants south of Kansas City. Moving that business north from the Basin and then east over the MILW would have been extremely circuitous except for coal destined to perhaps Minnesota and Wisconsin.

webmaster Wrote:
-------------------------------------------------------
> I have to wonder if they kept their electric
> powered trains running another year if lowered
> operating costs during the 1973 gas crisis would
> have gave them enough capital to upgrade and
> compete in later years? Everyone else had huge
> fuel costs while the Milwaukee could have hung
> onto lower electrical costs.

In 1972 GE offered Milwaukee an incredible deal: Electrification of the Gap, revamping of the existing electrified districts (new automated ignitron rectifier substations to replace existing substations in the level districts and shifting the replaced MG sets to boost power and regeneration capabilities at the substations in the graded districts), and enough new electric locomotives to totally electrify main line operations Harlowton - Tacoma. All for ZERO capital outlay by the Milwaukee, the entire package paid for out of operating savings as they were realized. At the time, the Pacific Extension was up to an all-time high of four through freight trains each way, so this was a sizable locomotive fleet. I believe GE's motiviation was that the Arab Oil Embargo offerred new impetus to electrify western RR main lines, and GE wanted to use the Milwaukee as a showcase to convince BN, UP, ATSF and/or others of the substantial benefits of electrified operations.

But Chicago Milwaukee Corp. secretly had already given up on the RR. The losses on the Lines East branch line network were much greater than the profits on the Pacific Extension. Regardless how profitable the Pacific Extension was, they were not about to put a lot of money into improving the Pacific Extension track when the whole RR was such a losing proposition. Chairman Quinn's marching orders were to find someone to take the entire RR off their hands. In 1973 (same time as GE's offer) Quinn reached a secret deal with BN to transfer the entire Milwaukee Road to BN for no cash, only the assumption of the Milw's outstanding debt. Quinn turned GE's offer down, as he felt (probably correctly) that the GE deal would jeopardize the BN deal (BN probably wanted to integrate portions of the Milw main line with the existing BN main lines). Milw's public press release at the time the electrification was abandoned, talking about the existing electification as worn out and obsolete, and about how its economics were hopeless, was a blatant lie and cover-up for what was really going on.

But the whole thing backfired. It turned out that legally Milw Land Co. could not be separated from the RR, so BN had to take the Land Co. too, which had huge timber holdings in Montana, Idaho and Washington. The Chicago Milwaukee Board asked for $50MM cash for the Land Co.

BN's consultant told them the trees were not worth $50MM, so in 1974 BN walked away from the deal.

There was no Plan B. A division-level initiative to improve the track over the Bitterroots backfired, because the breaks in grade introduced at the tunnel portals caused the loaded 100-ton grain hoppers to porpoise off the tracks. As the track got worse, the Pacific Extension lost all of its traffic gains. Milw went bankrupt and the Pacific Extension was abandoned.

After the bankruptcy, the timber holdings of Milwaukee Land Company were sold to Potlatch for $125 million.

You couldn't make this stuff up.

Best regards,

Rob L.



Edited 4 time(s). Last edit at 01/16/10 00:02 by rob_l.

Milwaukee Wrote:
-------------------------------------------------------
> I still believe MILW needed to buddy up to UP
> better in the late 60's and early 70's when the BN
> merger was in discussion. I would have thought
> most states and thus the Feds would have supported
> that approach vs. MILW being included in the BN
> merger which would have given BN a monopoly in
> many areas of the country. UP should have had
> much interest in what the MILW had to offer route
> wise than CNW and MILW/UP were already in a
> partnership with passenger traffic.

No. I can assure you that back in the 60s and 70s UP had little or no interest in Milw's network. In general, the men in Omaha were ignorant of RRs east of Council Bluffs and were not at all strategic thinkers. The UP Board in New York came up with the initiative for the merger with the Rock Island. The management in Omaha had nothing to do with it and was pretty frightened by it.

> It does not
> sound like the MILW had the money to invest in
> upgrading it's infrastructure on it's own so it
> simply had to run to cut a deal with someone to
> rebuild the Pacific Extension and possibly invest
> in the coal rush of the late 70's and 80's.

Yes.

>
> I've never heard an explanation why the UP was not
> more interested in the MILW in the late 60's than
> they were the CNW (or possibly CRI&P).

The UP Omaha management of the 60s and 70s was always very careful to be neutral towards the Iowa Lines. But the UP middle management did not like the Milw because they were competitors to the PNW, and Milw was a notorious rate-cutter. The UP middle management did not like the BN for the same PNW-competitor reason, and also because the BN wanted to long-haul to Denver-DRGW the N. California traffic and long-haul to Kansas City - CRIP or ATSF the S. California traffic. The Denver-DRGW routing efforts of CRIP also caused friction between UP middle management and the Rock Island. But the UP middle management and the CNW got along a lot better. The only irritation was that CNW hauled out to Crawford-BN interchange the PNW autos and a little bit of other traffic.

> Was this
> MILW's fault since they were trying so hard to be
> included in the BN merger? Was CNW's route across
> Iowa and Illinois shorter and easier to maintain
> than MILW's in the 70's? I thought they both were
> in very bad shape and required great investment in
> order to turn the CNW into what it is today.

The CNW was double track. The CNW had a lot more traffic and traffic potential than the Milw did. For example, all the Com Ed and Wis Ed coal. And its management was much more willing to work with the UP.

> If
> UP got their hands on the northern MILW transcon
> route, that would take a lot of pressure off the
> UP's transcon and Blue Mtn routes while giving UP
> access to much of the country they still do not.

This was not on the radar of the UP men in the 1970s. There was excess capacity on the UP system, and pre-de-reg grain was not the profit center that it is today.

> It would give UP the shortest route for container
> traffic from Seattle to Chicago and it would have
> given UP access to Louisville too.

Hindsight is 20-20.

Best regards,

Rob L.



Edited 1 time(s). Last edit at 01/09/10 13:00 by rob_l.

greendot Wrote:
-------------------------------------------------------
> UP "partnered" with the Milwaukee Road in the
> late-1950s because CNW no longer wanted to handle
> the UP passenger trains. You have to remember that
> in that time frame, passenger business was still
> considered as the #1 business by most railroads
> even though they were probably losing their shirts
> handling pssenger trains.

CNW wanted a bigger division of passenger rates to pay for their Chicago terminal expenses. UP disagreed. UP put out feelers to the other Iowa Lines. Milw bit.

> As a result, when the
> "City" streamliners switched from the CNW to the
> MILW, the UP followed by routing as much of its
> freight business as well.

This is very false. UP did NOT have any control over the routing of transcon frieght via Iowa Lines. It was entirely up to the shipper. It was ILLEGAL for UP to solicit routing via any particular Iowa Line, and UP was very careful to not do this.

Milwaukee management assumed they would get a larger share of UP freight interchange by taking over the UP passenger trains, and that was the reason they did the deal. But actually the Milw share of UP freight interchange went up hardly at all, maybe none at all. In the minds of lumber and perishable shippers on the West Coast, "the Overland Route" was still UP-CNW, even though the passenger trains shifted to run via Milw. All of the Iowa Lines had traffic salesmen on the West Coast soliciting traffic. They were all successful to some extent. The service was not that much different (UP made run-through blocks at North Platte for all of them), nobody had a better product to offer. But the CNW share rose during the late 60s and through the 70s, and that volume offered the potential for a lot of service improvements, which were indeed made. And then CNW had an advantage.

>
> The 1950s were the time and reason why the CNW
> single-tracked the otherwise-double track mainline
> from Missouri Valley east to Denison, IA ...

No. Ben Heineman pulled up the double track from West Denison to Council Bluffs in 1965. At that time, west of Denison, the CNW was down to five trains each way. The UP was pursuing merger with the Rock Island. It looked hopeless to Heineman. He turned out to be very wrong.

> the
> plan would have carried that across Iowa and
> probably Illinois. Fortunately, only the Mo
> Valley-to-Dension section was singled (with two
> long sidings). The double-track mainline between
> Mo Valley and Council Bluffs was also single
> tracked at the same time.
>
> In the 1980s, of course, CNW started aggressively
> pursuing UP business thru the Fremont connection
> which resulted in a lot of business never passing
> through the Omaha-Council Bluffs terminal. All of
> the other Iowa-Nebraska connections were inside
> that terminal, so Fremont gave the CNW an
> advantage.

The Fremont interchange of run-through trains dates back to the 1960s. CNW under Ed Burkhardt developed many excellent service initiatives with UP in the 1970s. In my mind, the 1970s was really the turning point, the other Iowa Lines ultimately were killed off by what CNW did jointly with UP in the 1970s.

Best regards,

Rob L.



Edited 1 time(s). Last edit at 01/09/10 14:32 by rob_l.

Rob, thanks for sharing all this. Very interesting stuff.

Hear, Hear!!!

I would like to request this be RLC #1 -- with a lot more to follow.
SZ

I am of the opinion that a merger of certain "Alphabet Route" railroads, the Milwaukee Road and the Lehigh and New England would have created the first viable Transcontinental Railroad. This railroad could easily have monopolized on not only PRB coal throughout the Northeast but also monopolized the land bridge stack traffic.
It's my bag of rocks for brains speaking but wouldn't be cool to see a big white "LNE" painted on the side of a black GEVO? Wait! That sounds an awful lot like "NS" on a GEVO?
Gonut

Fascinating info Rob; thanks!

Ok, what about the planned MILW/CNW merger that made it all the way thru the ICC merger proceedings, only to have the ICC nix the merger on the grounds that the stock swap (whatever number of shares of CNW = 1 share of MILW) was no longer feasible due to a CNW share price plunge when the merger was approved? Also, again, hindsight is 20/20, then Heineman offers ALL of CNW (minus the parent corporation and other CNW holdings, of course) to MILW, and MILW management says no. Why? As to the Milwaukee Land Co. timber holdings, it looks like BN was just trying to lowball on the price of the timber holdings to get a sweet deal. BN was VERY good at being a VERY "shiesty" or "shady" competitor when it came to MILW, not to mention the fact of the protracted time it took for BN to finally turnover the trackage rights that were granted to the MILW for access to Portland, Oregon, or for continually being "shady" when it came to the new "Gateway" interchanges. BN played their hand well against a weak foe, but the MILW and their management were pathetic AT BEST on keeping their own RR profitable and fighting and scrapping, in proud MILW tradition, against the Hill lines, their merger, and any BN shenanigans. MILW management seemed to enjoy feasting on BN's crumbs rather than doing what they SHOULD have done:

1) Put ALL Milwaukee Land Company's timber and land holdings in escrow/loan security for the necessary funding to acquire CNW, and to put a LARGE (maybe 40%) percentage of the CNW acquisition into physical plant rehab and facility consolidation. This acquisition could have been done this way, and using the already agreed to terms from the failed merger proceedings beforehand from the Unions and ALL connecting roads. Yes, the MILW was a weak transcon on its own, but once CNW's bridge and forwarder traffic both to/from UP is under MILW's banner, MILW would have become a force to contend with/consider in ANY future western RR consolidation planning, and to the point, this would not be a "Penn Central Redux", as MILW went to a fair number of additional places that CNW didn't. Facilty consolidation would have, and did, happen as any merger inevitably causes. Maybe 3 to 4,000 duplicate route miles could have been wiped off the merged roads map at the outset, again, using the merger terms the Unions agreed to before.

2) Allowing GE to "have their way" on totally rebuilding the existing electrification, and the biggest hindrance to overall efficiencies in the electrification, CLOSING THE GAP. Since there was NO MILW out-of-pocket funding for this ongoing project, only GEs, this is a no-brainer. DUUUUUUHH!!!

3) Importing Heineman and his crew to run the merged MILW/CNW, as his policies, and his successors, allowed the CNW to become the 500 pound gorilla it became in the late 70s and 80s in the Upper Midwest "Corn Belt"/granger territory.

4) Where would UP go with its eastbound traffic once CNW was removed as its one-time partner for Omaha-Chicago traffic? Maybe UP didn't have much, if any, say in where it's eastbound traffic went once east of Omaha, but does anybody REALLY think that a merged MILW/CNW would STILL turnover PNW-bound traffic from back east to UP at Omaha, or would it eventually be routed on a merged all-MILW routing to the PNW? As service levels continued to deteriorate on RI, and BN is a sworn, unfriendly connection, who are the others that UP could try to "coax" to take on the flood of traffic they have eastbound at CB, or is looking for on the westbound side of the coin? ICG? N&W? MoPac? Who? UP would have had no other place to go except to MILW/CNW, and initially, the traffic would become just overflow as they would've tried, unsuccessfully, to shove all of that eastbound tonnage flood on RI, but RI would have been beat to death quicker than it already was. Would UP push for all its worth to help RI, its wannabe merger partner, at least initially? You bet it would have. Eventually though, they would have cut their losses, "laid down their hand" for a poker term, and gone BACK to MILW/CNW.

Maybe I'm an idiot, or am missing something, but wasn't SP putting A LOT of eastbound traffic on the MILW from Portland? Was SP not one of the single biggest contributors to the, albeit shortlived, traffic explosion in the early and mid-70s on the PCE? Maybe I'm wrong and it was the vaunted "New Gateways" after the BN merger that caused this? Just wanting to know this, as I'm sure about $20 or $30 million (1970s dollars) ,from the merger funding, would have ended many a slow order on the main stem of the RR, Chicago-Tacoma.

The overall key I see, again I have no access to actual funding and end-of-year performance reports for MILW at that time, would have been 1,2, and 3. Again, this takes into account if a GOOD MANAGEMENT TEAM was in place with a desire to make their RR strong and competitive and take advantage of opportunities when they arise, not to lay down and slowly let their RR wither away, whatever the reasoning, or the regulatory environment, in place at the time.

Just my .02 cents,

B&Oblades

BandOblades, you're getting at the heart of the issues shaping the decline and elimination of the Milwaukee Road. The sad truth is that even though Milwaukee had some great middle management, Milwaukee had horrid executive leadership from the 1960s onward and the Chicago Milwaukee Corp. Board had a death wish for the RR from the late 60s onward. Let me try and respond to your points below.

BandOblades Wrote:
-------------------------------------------------------
> Ok, what about the planned MILW/CNW merger that
> made it all the way thru the ICC merger
> proceedings, only to have the ICC nix the merger
> on the grounds that the stock swap (whatever
> number of shares of CNW = 1 share of MILW) was no
> longer feasible due to a CNW share price plunge
> when the merger was approved?

The irony of this is that Milw exec management took a lot of steps during the 1960s in the way of deferred maintenance to make their property look better than it was and justify the stock exchange they had negotiated for the CNW merger. This blew up in their faces. They got what they deserved.


> Also, again,
> hindsight is 20/20, then Heineman offers ALL of
> CNW (minus the parent corporation and other CNW
> holdings, of course) to MILW, and MILW management
> says no. Why?

Heineman had this to say about Bill Quinn: "He was by nature indecisive. He failed the ultimate test for his company." He was referring to Quinn's failure to take Heineman's offer. What Heineman did not know is that Quinn had marching orders from the Chicago Milwaukee Board to get rid of the RR, not to take on another RR to try and make a merged property profitable. Heineman was shocked that Quinn would not take such a great deal. Quinn could not admit what he was up to, thet he was trying to get out of the RR business just as hard as Heineman was trying. Quinn was not the guy to try and lead a merged property to profitability, and he was not the guy to try and convince the Chicago Milwaukee Board to change direction. Heineman was right in the sense that when Milwaukee had a great opportunity, when it really needed a great leader, it had none.


> As to the Milwaukee Land Co.
> timber holdings, it looks like BN was just trying
> to lowball on the price of the timber holdings to
> get a sweet deal.

No. Retired Exec VP Bob Downing told me they were genuinely ignorant of what trees were worth. (Given how much timber NP owned, that is incredible. And sad.) They walked away from the deal because their consultant told them the trees were not worth $50 million. Downing told me recently "That was our mistake. The Milwaukee Trustee later sold those trees to Potlatch for $125 million."

> BN was VERY good at being a
> VERY "shiesty" or "shady" competitor when it came
> to MILW,

This is way over-hyped. BN was not all that good at it. The sad truth is that Milw had no executive leadership on the matter, and middle managers in way over their heads were left to fend for themselves. The merger conditions were drafted by the Milw Legal Dept. with basically zero input from Operations and close to zero input from Traffic. Shocking.

> not to mention the fact of the protracted
> time it took for BN to finally turnover the
> trackage rights that were granted to the MILW for
> access to Portland, Oregon, or for continually
> being "shady" when it came to the new "Gateway"
> interchanges.

Portland was held up by the UP, which correctly said it was going to suffer because of conditions granted to Milw to help it cope with the BN merger.


> BN played their hand well against a
> weak foe, but the MILW and their management were
> pathetic AT BEST on keeping their own RR
> profitable and fighting and scrapping, in proud
> MILW tradition, against the Hill lines, their
> merger, and any BN shenanigans.

I totally disagree. BN was in bad disarray after the merger. Milw middle management was on the ball. Despite zero support and direction from top management, they more than doubled the PCE traffic in 2-3 years. Milw had almost all the autos to Spokane and Seattle and some of the Portland autos, it had 70% of the Port of Seattle traffic, it had by far the largest share of the Weyerhaeuser traffic, it even got the import Toyotas. Considering their huge handicap of zero capital investment and zero strategic direction from top management, Milw middle management was anything but pathetic. What they did was nothing short of miraculous. They never got praise for what they did, only the humiliation of watching their property collapse. And that is incredibly tragic in my mind.

BN should have had much more traffic than they got. Even after the Milw collapsed, the big winner was UP, not BN. They don't earn any credit in my book.

> MILW management
> seemed to enjoy feasting on BN's crumbs

Milw top management was begging BN to take over its RR. Milw middle management was working brilliantly to compete against BN under impossible odds.


> rather
> than doing what they SHOULD have done:
>
> 1) Put ALL Milwaukee Land Company's timber and
> land holdings in escrow/loan security for the
> necessary funding to acquire CNW, and to put a
> LARGE (maybe 40%) percentage of the CNW
> acquisition into physical plant rehab and facility
> consolidation. This acquisition could have been
> done this way, and using the already agreed to
> terms from the failed merger proceedings
> beforehand from the Unions and ALL connecting
> roads. Yes, the MILW was a weak transcon on its
> own, but once CNW's bridge and forwarder traffic
> both to/from UP is under MILW's banner, MILW would
> have become a force to contend with/consider in
> ANY future western RR consolidation planning, and
> to the point, this would not be a "Penn Central
> Redux", as MILW went to a fair number of
> additional places that CNW didn't. Facilty
> consolidation would have, and did, happen as any
> merger inevitably causes. Maybe 3 to 4,000
> duplicate route miles could have been wiped off
> the merged roads map at the outset, again, using
> the merger terms the Unions agreed to before.

I think the Milw Board's plan all along was to get out of the RR business, to get good money for CNW to take over their property. When Heineman offered it ot be the other way around, they balked. Actually, I think a CNW-Milw with Ed Burkhardt calling the shots and a generous supply of capital (not sure where it could come from, maybe liquidation of unwanted lines) would have been a force to reckon with.

>
> 2) Allowing GE to "have their way" on totally
> rebuilding the existing electrification, and the
> biggest hindrance to overall efficiencies in the
> electrification, CLOSING THE GAP. Since there was
> NO MILW out-of-pocket funding for this ongoing
> project, only GEs, this is a no-brainer.
> DUUUUUUHH!!!

As I wrote, the executive plan was to dump the RR on BN, not make a go of railroading. So "No" was the only answer they could give to GE.
If they were really interested in making a go of railroading, it would have been a wonderful episode to watch.

>
> 3) Importing Heineman and his crew to run the
> merged MILW/CNW, as his policies, and his
> successors, allowed the CNW to become the 500
> pound gorilla it became in the late 70s and 80s in
> the Upper Midwest "Corn Belt"/granger territory.

By the late 60s or early 70s, Heineman wanted out, but, yes, his management crew would have been a very good thing for Milw. Especially Burkhardt.

>
> 4) Where would UP go with its eastbound traffic
> once CNW was removed as its one-time partner for
> Omaha-Chicago traffic? Maybe UP didn't have much,
> if any, say in where it's eastbound traffic went
> once east of Omaha, but does anybody REALLY think
> that a merged MILW/CNW would STILL turnover
> PNW-bound traffic from back east to UP at Omaha,
> or would it eventually be routed on a merged
> all-MILW routing to the PNW? As service levels
> continued to deteriorate on RI, and BN is a sworn,
> unfriendly connection, who are the others that UP
> could try to "coax" to take on the flood of
> traffic they have eastbound at CB, or is looking
> for on the westbound side of the coin? ICG? N&W?
> MoPac? Who? UP would have had no other place to
> go except to MILW/CNW, and initially, the traffic
> would become just overflow as they would've tried,
> unsuccessfully, to shove all of that eastbound
> tonnage flood on RI, but RI would have been beat
> to death quicker than it already was. Would UP
> push for all its worth to help RI, its wannabe
> merger partner, at least initially? You bet it
> would have. Eventually though, they would have
> cut their losses, "laid down their hand" for a
> poker term, and gone BACK to MILW/CNW.

The UP Board had set the direction to merge with the RI. That was the reality Heineman faced in the late 60s. (The UP men in Omaha thought what their Board was doing was crazy, and they were terrified.)

>
> Maybe I'm an idiot, or am missing something, but
> wasn't SP putting A LOT of eastbound traffic on
> the MILW from Portland? Was SP not one of the
> single biggest contributors to the, albeit
> shortlived, traffic explosion in the early and
> mid-70s on the PCE? Maybe I'm wrong and it was
> the vaunted "New Gateways" after the BN merger
> that caused this? Just wanting to know this, as
> I'm sure about $20 or $30 million (1970s dollars)
> ,from the merger funding, would have ended many a
> slow order on the main stem of the RR,
> Chicago-Tacoma.

SP put a lot of short-haul EB traffic on the Milw, e.g., autos from California to Seattle, Spokane and Montana. But the new WB Milw traffic terminating at points south of Longview to Portland plus interchange to SP at Portland was a very big deal for Milw. The Portland interchange was a bonanza for Milw. Little money went into the PCE track. Because the plan was to dump the RR.

>
> The overall key I see, again I have no access to
> actual funding and end-of-year performance reports
> for MILW at that time, would have been 1,2, and 3.
> Again, this takes into account if a GOOD
> MANAGEMENT TEAM was in place with a desire to make
> their RR strong and competitive and take advantage
> of opportunities when they arise, not to lay down
> and slowly let their RR wither away, whatever the
> reasoning, or the regulatory environment, in place
> at the time.
>
> Just my .02 cents.
>

Your .02 cents is basically right on. The sad truth was that the Milw was already gone, top management gave up sometime in the 1960s.

Best regards,

Rob L.



Edited 1 time(s). Last edit at 01/12/10 13:50 by rob_l.