Eastern Railroad Discussion > WaPo business article on PSR, layoffs, etc.

https://www.washingtonpost.com/business/economy/railroads-are-slashing-workers-cheered-on-by-wall-street-to-stay-profitable-amid-trumps-trade-war/2020/01/02/dc757ed4-1603-11ea-a659-7d69641c6ff7_story.html#comments-wrapper



Edited 1 time(s). Last edit at 01/03/20 19:56 by MrChew.

It is a good article. Well sourced, looks at both the big picture and the individual employee.

Looking at presentation slides for analyst meetings is a good exercise in understanding the plan.

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Translation:  we only want to operate 1.5 mile long trains, hopefully with one commodity so no switching is involved, hence no yards.  We do not seek out any loose car railroading, and actively drive it away to the trucking industry.  We do not seek to grow our business in any form, unless it can be VERY profitable.  To the customer:  it is our way, or the highway........

and we hope that someday there will be another demand for unit trains (like when coal was our primary source of energy) that will be held captive ONLY to rail transport...........

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This Washington Post dateline Roanoke story showed up in The Roanoke Times today.

https://www.roanoke.com/news/local/railroads-are-slashing-workers-cheered-on-by-wall-street-to/article_c22e87a6-7b15-51e9-b631-46f4cb634ae2.html

There has been speculation about further employee cuts or even possible closing of the NS Roanoke Locomotive Shop or the Shaffers Crossing Locomotive Shop but as of today there is no new news.

One common theme about all the railroads' that have adopted PSR, especially in media reports, is that the changes are needed to make them profitable.  That is BS.  They've all been profitable.  I can't remember in the last 20+ years that the company I work for hasn't crowed about record or near record profits.

It's about the fact that just being profitable isn't enough.  They have to be ultra-profitable and return as much money as possible to a small, vocal, and well heeled group of short term investor groups.  The kind that don't care if the company they have their fingers in is hurt long term.  They'll be gone as soon as the stock price hits their target and they'll dump and run.  Leaving new and the long term investors holding the bag and having to spend money to rebuild the company.

When railroads go to Wall Street and ask investors to buy railroad stocks and bonds, they need a good story. They need to show that they are profitable, and can be a good investment.  After all, they are competing with six thousand other companies for the investor's dollar.

Being just OK isn't good enough anymore. If railroads aren't producing and increasing a competitive rate of return on the share owner's dollar, they won't be able to float new stock and bond offerings.

(Now if they had a great STORY, like Tesla, people might be willing to pour money into a good song and dance routine.  One that could, maybe, someday produce avalanches of profit.  But, there's no chance the rails are going to do that...)

Railroads are capital-intensive, period.

They need to focus on having quality blue-chip stocks for long-term investors, not blue-light-special stocks.