Eastern Railroad Discussion > Ancora Outlines Plans for NS if it Takes Over

 Ancora Holdings on Tuesday outlined its plans to reduce Norfolk Southern’s operating ratio if it takes control of the company.
The plans include closing hump yards, cutting the work force through attrition, reducing other costs and focusing on the most profitable merchandise traffic.
Within three years Ancora expects the plan to reduce the operating ratio to 57 percent. The OR is the percentage of revenue devoted to operating expenses.

Ancora has nominated seven new members to the NS board of directors and proposed replacing NS CEO Alan Shaw with former United Parcel Service executive James Barber Jr.
Jamie Boychuk, a former CSX chief operating officer, would assume that position at NS.
The Ancora plan was outlined in a letter to NS shareholders who will vote on May 9 for board of director positions.

If Ancora can reduce the OR to 57 percent that would be a 10.4-point reduction from what it was for 2023.
The Ancora plan envisions redesigning the current NS operating plan in September and then introducing a precision scheduled railroading operating plan over the following two months. Although NS moved to the PSR operating model in 2019 Ancora argues that NS does not have a true PSR operation.
There would be fewer trains, but those that do run would need to run on time and provide more reliable service, Ancora said.

The plan calls for NS to gain merchandise traffic it does not now haul from existing shippers and from new customers.
Having less of a place in the traffic mix would be low-margin intermodal traffic, which Ancora believes NS relies on too much.
Ancora even projects that NS could reach a 55 percent OR through “a different way of selling rail service across global supply chains.” From the akronrrblog

What are they smoking?

DLM Wrote:
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> What are they smoking?

Would cutting that many jobs - from one who's not an employee but who is looking at this from completely outside the company - cause a catastrophic stoppage of lots of customers' shipments being able to move in a timely manner?  If so, one wonders how many NS customrs would simply go out of business, or else demand that be stopped from being allowed.  What "common carrier" regulations cover these kinds of plans, and what agencies might be allowed, by law, to oversee or completely stop any such implementation of such measures?



Edited 2 time(s). Last edit at 03/29/24 15:02 by rbx551985.

redesigning the current NS operating plan in September and then introducing a precision scheduled railroading operating plan over the following two months.

I wonder what that means?  My experience in operating plans is very old; run the same trains with the same blocks almost all of the time, learned on the NYC, CRIP, TRRA in the 1959-1978 era.  We certainly did not have the wealth of information that is likely available today.  I guess that a trip plan is developed for each originating load and use to specify what yards and what trains it should move on, and then tracked and reported on.  I assume (yes, I know how to hyphenate it) that there is software developed in house or by vendors to do that.  I also wonder how the service is measured and reported, how equipment is utilized, both cars and locomotives compared with the past. 

From what I've seen the software platforms are correct to the point of not considering the myriad of things
that go wrong. Hit a car at a crossing and hours of your precision operating pattern goes right out the window
and cascades to the next set of trains., No one wants to put dead time in a schedule for the possibiliry of an
anomoly so here you go.......

Out 

Similar to callum's comments, above...


Loose 'backing-rings' ..... These are circular stamped metal rings 
pressed onto the hubs of car wheel-sets.  They give a smooth
surface for the inner bearing seals to ride on.  The seal in contact 
with the steel backing ring is a neoprene-like ( plasticized-rubber?) 
soft seal that retains the grease in the axle roller bearing assemblies 

What is the relationship of that seal-ring to this discussion?
It can be a cause of failed axle roller bearings.
Failed roller bearings can screw-up your finely-designed scheduling 
of your trains.  At Potomac Yards, we detected loose backing rings 
( a condemndable condition, in about .05% of cars, on a daily basis).

There are presently no systems in place to detect loose backing rings,
yet they can be a precursor to premature axle roller assemblies.
Most axle defect detectors are thermal-detectors.  By the time an
at-risk bearing gets overheated, the time to axle-overheating, and 
burn-off, is down to under 10 minutes---

So, ultra-high audio frequencies can be an early predictor of impending
bearing failures.  Audio detectors can detect 'complaining' bearings about
100 miles before a  derailment conditions are a reality.

Yet, audio detectors are in rare use.
RRs are still relying on thermal detectors --- decades after 'plain bearings'
were prohibited in interchange, railroad-to-railroad.  

We had car inspectors that used long steel rods, with 'hooked-ends' 
to find loose backing-rings on in-bound, arriving car inspections.

We routed defective cars to our car shop, and axles with loose backing-rings,
a fresh wheel-set could be replaced in under 10 minutes.  We had two 
parallel repair tracks, with below-floor hydraulic jacks to handle such 
wheel-related change-outs.  Most wheel change-outs were tread-wear 
related defects, high flanges, etc.  Only a few, per week, were 'shopped'
for loose backing rings.

So, for the millions of freight cars in interchange service,
each car typically has 8-sets of axle roller bearings, each 
roller bearing assembly contains two tapered roller assembliesl
back-to-back.  There are two roller bearing assemblies per axle.

A good way to 'capture' the actual percentages of "loose backing-ring"
numbers, is to keep track of loose backing rings on axles to be
 reclaimed for new wheels, at wheel change-out shops.  

If asked, they could give you reports on the numbers of loose backing-rings,
as a percentage of axles that they find during the wheel change-out process.

Interestingly, roller bearings' service life far exceeds the 
wheel treads' service life.  So that, when the worn wheels
are pressed-off the axles, the wheel bearings are sent to
bearing shops for reconditioning, and ready for application
to the next axle and new wheel set.  The fresh wheel sets are fitted 
with new 'backing-rings' at the time the new wheels and bearings
are pressed onto the axles ( new or re-qualified)....

Starting a survey to capture those numbers of loose backing-rings would
be a good place to begin your plans for better, more reliable train scheduling,
as well as justifying the costs of thermal bad-axle detectors ..

You gotta start somewhere!  
Or, there will be more "Palestines" in the future.
It's inevitable, until you capture defective bearings earlier,
and one cause of bearing failure is loose backing rings----
the rear seal fails, and the grease gets spun-out!
No lubricant, and the bearing soon fails..

There are hundreds of at-risk feright cars rolling around in 
country, right now!

​W.

 



Edited 2 time(s). Last edit at 03/29/24 18:15 by wcamp1472.

Well, if they take over and have another East Palestine or two (or three), I don't believe they'll hit those OR targets as that is what the PSR mindset results in. And if you live near NS tracks anywhere, look out as they'll be coming for your house and town...

JG

More PSR? Hasn't PSR been pretty much discredited?

Voted my proxy for current management (well, except for Richard Anderson)...  

Ancora is not getting my vote. 

Again, it's so easy to ink out a 57 OR plan on paper and it's become easier to deep six
the thing with everyday occurences. You need an 80 or 90 OR until you fix the physical
plant and install safety devices and systems as Wes suggests. Will that ever get done,
wave to it as you dive to the bottom.

Out 

           And if the 57 number NEVER happens and some of those bad things DO happen ( Derailments, crossing accidents, business lost,etc , etc ) the new computor whizo kids simply dump it on the market and cover their mess and lousy normal lack of know how with - the employees refused to run per our instructions. AKA - It isn't our fault.

DLM Wrote:
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> What are they smoking?

The really strong, hallucinatory stuff. This is scary.

My guess is that they're probably going to to try to squeeze operating costs mainly through reduced crew starts (achieved only through attrition - really?). That may mean not only demarketing lower-margin intermodal, but using longer and heavier carload trains. Will this induce "non-fitter" problems with trains too long for sidings and yard leads such as UP has had out West with its monster trains? How timely will yard operations, block swaps, train originations and departures be as they need more doubles and triples to make up a road train as train lengths grow? And as more originations and arrivals are squeezed into fewer yards? (they say they plan to close yards)

And where is all of this magical carload traffic going to come from? After years of running off carload shippers, are the industry switches and sidings still there? Do those shippers really even want to come back? How will all of those carload shippers get switched, how often, and how timely will they be switched, when switching and yard leads are being used for block makeups, pickups and swaps - a key part of PSR doctrine to minimize yarding (for the yards that remain)? And if there are not regular enough and timely enough switches for the carload shippers they say they want, how will those shippers be kept satisfied - and stay on board without regular and tinely switching?

Questions like these - and many, many, many more -- are what shareholders (I am not - thank God) should be absolutely mercilessly peppering these Ancora people with. I grant Mr. DeWeese's point: the traffic analytical tools today, in an era when car trip plan railroading has substantially been achieved, are vastly superior to the past, That can take you a long way on an overall plan and realizing new blocking and scheduling plans. But if there is one thing that every working railroader (I am not) or shipper (I am a large rail shipper's son) knows about railroading, it's that such details can make or break any plan, no matter how good the theory. And the flaws in the plan that cause problems can eat the plan alive, from the inside out.

This new board is nothing to write home about - pretty mediocre. Where's the domain knowledge? And why in the hell is that washed-up political hack John Kasich on there? (I once admired and supported him - before I learned what an insincere total jerk he is). He has no knowledge-base or skillset to ask questions like these, nor any others, that are relevant to operations, and that will make or break the railroad and its plan. Nor do many of the others. This is a rubber-stamp board that the PSR-niks will walk all over. As they hollow out the railroad and leave it less capable of truly serving ALL customers. After they walk away with their their stock market gains and fat bonuses.

Geez, do I absolutely hate the over-financialization of business today, and the ascent of people like this Ancora bunch.. Politicians have their place in causing so many of our problems. But people of this ilk are right up there with them. Heaven help us all.

Glad I'm a CSX stockholder. I think we're in for some substantial increases in business. After all of his years in the Detroit automotive rat-race with Ford, constantly sniffing out and exploiting small competitive advantages in one of the most competitive of all industries, I like our chances behind Joe Hinrichs and his team. They'll smell the blood in the water. And take advantage of it. Good luck, NS - you're going to need it.

MC



Edited 2 time(s). Last edit at 03/30/24 18:57 by ironmtn.

The shippers may have a word or two about  Ancora's efforts to take over NS.

It really is time for FRA to outlaw what you call "non'fitters". 

BrynMawr Wrote:
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> It really is time for FRA to outlaw what you call
> "non'fitters". 

Of course the devil is in the details when one starts to write such a regulation (which by the way I would not be opposed to).

For starters, what would the the average distance be between sidings which fit the trains?
 

Sounds like a pump and dump plan.   Ancora is going to talk the talk to get the stock price up and then dump their shares even if they get board control.

I don't understand what Ancora means with its desire to increase merchandise hauling and de-emphasize the shipping of low margin IM business. Isn't merchandise what is shipped in those low margin containers? 

JPB Wrote:
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> I don't understand what Ancora means with its
> desire to increase merchandise hauling and
> de-emphasize the shipping of low margin IM
> business. Isn't merchandise what is shipped in
> those low margin containers? 

For better or worse much is moving to imtermodal....box cars and hoppers are reserved for the largest loads....

I have sent a letter to Messrs. DiSantis and Chadwick at Ancora expressing my displeasure with their proposal and copying Mr Shaw. Here is the body of the letter:

Dear Messrs. DiSantis and Chadwick:
 
I, too, am a meaningful investor in Norfolk Southern and I take great exception to the claims your organization is making in your attempt to elect your own slate of directors to the NS board. Over my 50+ year railroad career I have too often witnessed the deleterious effects of Wall Street on my industry. It’s myopic focus on the “holy grail” of Operating Ratio has forced railroads to think only of the next quarter at the expense of long-term growth.
 
With the popularity of Precision Scheduled Railroading (PSR) of late, this myopia has only increased. What has been lost is the proper focus of any company. Customers, Creditors, Employees and Community, all before Shareholders.
 
Corporate raiders delight in stripping the bones of otherwise good properties and leaving with their profits, while claiming they are doing this to “improve stockholder value”. To paraphrase Mark Twain, “Not even a burglar could have said that better.”
 
It seems best to me that NS be allowed sufficient time to implement the plans their current board has laid out for the revival of this proud property before the wolves attack. The slate of directors you are proposing does not appear to bring any particular strength to help the railroad grow their business in the long run. Your operating plan actually appears to want to reduce business and attempt to cut your way to profitability.
 
In my time in this industry I have seen many attempts to do that. Guess how many worked?
 
I will not support your efforts for this bald raid for no perceived benefit to the company in the long run and I will actively encourage anyone I know to vote against your proposal, with prejudice.
 

What a great letter!