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Nostalgia & History > Milwaukee Pacific Road Extension QuestionDate: 02/23/21 12:57 Milwaukee Pacific Road Extension Question Author: NYSWSD70M This has been discussed before but maybe not this specifically..
The Milwaukee Road received some good conditions related to the BN merger. It seems like the extension finally had the traffic to make a success of this investment. So what happened? Was the line finally profitable? Was it not profitable enough to make the investment necessary to overcome years of lack of investment? Was the company so determined to get out of railroading that they no longer had any interest even if it was producing a return? I know that Rob L has written some excellent post on this subject but the BB posts have reminded me of what a lost treasure this represents. Date: 02/23/21 13:12 Re: Milwaukee Pacific Road Extension Question Author: fbe A couple of business consultants recommended MILW management abandon the lines to Kansas City and keep the Pacific Coast Extension. The MILW did exactly the opposite and went broke.
Date: 02/23/21 13:24 Re: Milwaukee Pacific Road Extension Question Author: exprail Actually, there wasn't enough on line traffic to support the long run to the coast and the railroad was completely, worn out.
Exprail Date: 02/23/21 14:06 Re: Milwaukee Pacific Road Extension Question Author: Pacific5th From my understanding they took quite a bit of traffic from the BN but the line was already worn out and with the increased traffic it wore out even faster. They just did not keep up on the maintanince or even try to increase it. Another thing i have heard is the GN and NP made a lot of line improvements over the years. from big projects to just curve realignments. The Milw Pacific Extension was pretty much the exact same RR in 1970 as it was in 1915.
Date: 02/23/21 14:22 Re: Milwaukee Pacific Road Extension Question Author: rob_l NYSWSD70M Wrote:
------------------------------------------------------- > This has been discussed before but maybe not this > specifically.. > > The Milwaukee Road received some good conditions > related to the BN merger. It seems like the > extension finally had the traffic to make a > success of this investment. > > So what happened? Was the line finally > profitable? Was it not profitable enough to make > the investment necessary to overcome years of lack > of investment? Was the company so determined to > get out of railroading that they no longer had any > interest even if it was producing a return? > > I know that Rob L has written some excellent post > on this subject but the BB posts have reminded me > of what a lost treasure this represents. Thanks for the kudos. Railroad rates before deregulation were mileage rates. Unless you were a bridge line relying on connecting carriers to do all the origination and termination work, it was only possible to make money on long hauls. This is why railroads in the Northeast failed first (shortest hauls), railroads in the Midwest failed next (next shortest hauls), and railroads in the West suvived to deregulation (longest hauls, but still not enough to save roads like SP). Milwaukee Road derived 50% of its total revenues from traffic originating or terminating on the Washington Division, because that traffic was mostly 2,000-mile hauls. Traffic and revenue indeed grew tremendously 1970-1974 as a result of the Portland gateway and as a result other BN merger conditions to a lesser extent. But it was not enough to make up for losses from Milwaukee's extensive, short-haul, low-density Midwestern network. Deferred maintenance had begun in earnest circa 1957, almost the entire railroad was on borrowed time (like the other Midwestern roads). The Pacific Extension in the early 1970s brought in much needed cash, staving off bankruptcy, but it was not nearly enough to address all the deferred maintenance. Without declaring bankuptcy, it was impossible as a practical matter to restructure. Management hung on as long as they could hoping to get a merger deal (and they came very close), but they could not close a deal before a Preferred Stockholders lawsuit pushed them into bankruptcy in Dec 1977. Submissions to the Bankruptcy Court showed that the Pacific Extension was still profitable in the years 1976, 1977 and 1978 while the overall railroad was racking up huge losses. During the first half of the 1970s, the Pacific Extension was much more profitable than in the aforementioned years, but after 1974, declining car supply (almost all important Washington Division shippers were competitively served), increasing derailments and stretched-out transit times drove the business away. The Pacific Extension was abandoned not because it was unprofitable but because, at a time of extremely high interest rates, it was believed by the Trustee and his men that there was no hope of a return within a reasonable amount of time on the large capital infusion required to recover the track quality and recover a quality fleet of rolling stock. The men behind the New Milw effort thought otherwise but the ICC thought they were too optimistic and rejected the New Milw plan. Best regards, Rob L. Edited 1 time(s). Last edit at 02/23/21 14:24 by rob_l. Date: 02/23/21 14:36 Re: Milwaukee Pacific Road Extension Question Author: rob_l Pacific5th Wrote:
------------------------------------------------------- > From my understanding they took quite a bit of > traffic from the BN but the line was already worn > out and with the increased traffic it wore out > even faster. They just did not keep up on the > maintanince or even try to increase it. Another > thing i have heard is the GN and NP made a lot of > line improvements over the years. from big > projects to just curve realignments. The Milw > Pacific Extension was pretty much the exact same > RR in 1970 as it was in 1915. It is true the Hill Lines had a management orientation favoring engineering, continuing to improve the profile over the years, establishing excellent track standards, and keeping the railroad up to those standards. Milwaukee was pretty good in that department up until the 1950s. For example, the 1956 Loweth line change cut the WB grade in the Belt Mountains from 2% to 1.4%. But that was about the last year the railroad earned enough to have funds to put back into the railroad. A very big problem was that in the reorganization of the 1930s bankruptcy, preferred stockholders were entitled to a $5 dividend every year whether the railroad made any money or not. If the railroad did not pay, the preferred stockholders were entitled to reorganize the company. That pretty much wiped out funds for things like line changes. Even in a good year, you had to hold on to what you made so you could pay off the preferred stockholders in a bad year. Deferred maintenance commenced in earnest in 1957, and the railroad never really recovered from that. Best regards, Rob L. Date: 02/23/21 14:49 Re: Milwaukee Pacific Road Extension Question Author: BRAtkinson Many readers well remember the effects of 'deferred maintenance' on track and locomotives that was a 'way of life' in the east as well as The Milwaukee Road and other lines in the '70s and '80s. I recall riding an Amtrak train to Detroit about 1981 and it was impossible to hold a half full glass of soda without spilling it, even while seated. Pictures I've seen of Milwaukees' lines west weren't in much better shape. Slow orders were in effect for much of the route according to some.
Throw in that they never 'closed the gap' on electrification and the electrical system as well as the motors were all well beyond their normal life expectancy. I remember reading an article online (I doubt I could find it now) that indicated they had offers of 'free replacement' of the electrical system from GE or wherever but that would have forced them to replace locomotives and upgrade trackage. So, they shut down the electrification and 'made money' from scrapping all that copper wire. That didn't slow down the 'deferred maintenance' it the line was down to 1 train per day each way as I recently read somewhere. It simply wasn't possible to keep that line any longer. Seeing no other alternative, it had to be abandoned. As a Milwaukee resident for most of my life - I've been in New England for the past 25 years - As a 'juice fan', I was pained when they turned off the power, and 'hurt' when they cut off the west. But the real stab in the back was seeing Soo Line buy what was left, and converting their locomotives to 'bandits' with black paint. I don't know if they ever repainted any to Soo Line colors. But then, the locomotives were in rough shape as well. Soo Line, a subsidiary of Canadian Pacific (CP), then sold their original line to Wisconsin Central which went to Canadian National (CN), which now runs circles around CP with it's 'through route' around Chicago to and from Canada. Date: 02/23/21 18:57 Re: Milwaukee Pacific Road Extension Question Author: RuleG I lived in Milwaukee from Nov 80 - Nov 81. I will never forget the time I watched a Milwaukee Road freight somewhere on its main line and seeing the cars sway on the tracks. Somewhat scary actually.
Date: 02/23/21 19:19 Re: Milwaukee Pacific Road Extension Question Author: goneon66 outstanding info rob. much appreciated..........
66 Date: 02/23/21 22:17 Re: Milwaukee Pacific Road Extension Question Author: roustabout rob_l Wrote:
>Management hung on as long as they > could hoping to get a merger deal (and they came > very close), but they could not close a deal > before a Preferred Stockholders lawsuit pushed > them into bankruptcy in Dec 1977. Who would have been the merger partner? Date: 02/24/21 07:33 Re: Milwaukee Pacific Road Extension Question Author: rob_l roustabout Wrote:
------------------------------------------------------- > rob_l Wrote: > >Management hung on as long as they > > could hoping to get a merger deal (and they > came > > very close), but they could not close a deal > > before a Preferred Stockholders lawsuit pushed > > them into bankruptcy in Dec 1977. > > Who would have been the merger partner? This changed over the years. Management's principal requirement was that Milwaukee Road NOT be the surviving carrier. First up, Milw Rd got a deal for CNW to take them over, approval of stockhholders from both roads, and ICC Examiner approval, when in late 1968 the price of Northwest Industries stock went south and Heineman killed the deal. Subsequently, Heineman offered CNW to Milw Rd management for cheap and Milw Rd management said no. During the CNW effort, as part of the Rock Island case, Milw Rd's position was that either UP or SP should be forced to absorb Milw Rd. Next, in 1970 Quinn tried to get UP to buy the railroad west of Butte. UP said no. Next, Quinn worked on BN, noting that under the BN merger conditions, Milw Rd had the right to reopen the merger case and ask to be included if Mllw Rd found it could not compete with BN. Quinn got a tentative confidential deal for BN to take over Milw Rd but the deal blew up over a disagreement on the value of Milwaukee Land Company, a subsidiary of the railroad. So Milw Rd applied to the ICC to force BN to take over Milw Rd. This was still under consideration when Milw went bankrupt. Best regards, Rob L. Date: 02/24/21 08:43 Re: Milwaukee Pacific Road Extension Question Author: NYSWSD70M rob_l Wrote:
------------------------------------------------------- > roustabout Wrote: > -------------------------------------------------- > ----- > > rob_l Wrote: > > >Management hung on as long as they > > > could hoping to get a merger deal (and they > > came > > > very close), but they could not close a deal > > > before a Preferred Stockholders lawsuit > pushed > > > them into bankruptcy in Dec 1977. > > > > Who would have been the merger partner? > > This changed over the years. Management's > principal requirement was that Milwaukee Road NOT > be the surviving carrier. First up, Milw Rd got a > deal for CNW to take them over, approval of > stockhholders from both roads, and ICC Examiner > approval, when in late 1968 the price of > Northwest Industries stock went south and Heineman > killed the deal. Subsequently, Heineman offered > CNW to Milw Rd management for cheap and Milw Rd > management said no. During the CNW effort, as part > of the Rock Island case, Milw Rd's position was > that either UP or SP should be forced to absorb > Milw Rd. Next, in 1970 Quinn tried to get UP to > buy the railroad west of Butte. UP said no. Next, > Quinn worked on BN, noting that under the BN > merger conditions, Milw Rd had the right to reopen > the merger case and ask to be included if Mllw Rd > found it could not compete with BN. Quinn got a > tentative confidential deal for BN to take over > Milw Rd but the deal blew up over a disagreement > on the value of Milwaukee Land Company, a > subsidiary of the railroad. So Milw Rd applied to > the ICC to force BN to take over Milw Rd. This was > still under consideration when Milw went > bankrupt. > > Best regards, > > Rob L. Thank you to everyone for all the responses. A truly trajic situation to be sure! Edited 1 time(s). Last edit at 02/24/21 08:52 by NYSWSD70M. |