Can Railroads End the Recession?

Can the railroads end the recession? Here is a plan that could help the country get back on its feet. There are a few steps that each railroad needs to take that would create jobs and make our country stronger. This plan call for a little sacrifice on the CEOs and their Executive Officers. Also, this plan requires the senior railroad workers to become true mentors to co-workers. This is the yin and yang plan that would help the entire country to survive a recession.

The railroads are like veins that cover the entire country; however, the railroad executives are hell bent in severing the artery that could send all of us into a great depression. The Class 1 Executives are crying foul on the possibility of re-regulation, but they aren’t acting responsibly, and it appears as though they are only in it for the money. They have sold out their fellow workers for millions of dollars and they have god-like attitudes. But, is there a light at the end of the tunnel? I offer a plan.

First, each Class 1 President/CEO needs to sacrifice like the rest of us. I still don’t know of a single person that deserves $10 million per year. However, we have some CEOs who make upward of $15-20 million per year. As a sign of good will, each President/CEO needs to check their ego at the door, and the days of 20% pay raises during a recession must end. They should reduce their salaries to a respectable $2 million per year and tighten their belt like the rest of us. This goes for their over paid executive officers. Again, I don’t know anyone who is worth $15 million per year…do you?

Second, the remote control locomotive project needs to be scrapped. This has been a financial drain on every railroad that has introduced it, and it needs to end. There are rumors that the Union Pacific (UNP) railroad has planned to re-access the RCL project in every location and scrap up to 90% of the remote control locations. This would be the best idea that came out of Omaha in years. Everyone knows that manned crews can move more cars than remotes — it doesn’t take a genius to figure it out.

Third, return all furloughed employees to work. If there is a seat on a locomotive, fill it. Put a brakeman or a utility man on every switching job. Every railroader knows that more men can move more cars. If the UP returned every furloughed worker to work, that would create almost 5,000 jobs. Think of what this would do if every Class 1 participated. More jobs means more money into the economy. It’s economics 101, and I really hope that every CEO on the railroad took an economics class, or at least an ethics class.

Fourth, the railroad needs to service EVERY customer that they ever turned away. The last couple of decades the railroads have neglected the “Mom and Pop” businesses in order to run grain and coal. Yes, there is more money in grain and coal, but there is still money in the small businesses. If the railroads decided to return to their roots and service these industries, think of how that would stir the economy. The small business would be able to ship by rail instead of truck; therefore, their shipping costs would be reduced. This would result in more people being hired in those small businesses. Again, more jobs means more money into the economy. This would, in turn, create more industry jobs for the railroad. The railroad would then need to hire more people. Once again, economics 101 at work…not to mention better ethics.

The Class 1 railroads are crying foul because of the possibility of re-regulation, but they have the power to stop it. It’s not by threatening to stop capital spending: It’s about going back to basics. Try going back to what got you there in the first place. It’s your people and your customers. Remember, it’s all of your customers, even the ones you forgot about. This little plan would create more American jobs and allow the “Mom and Pop” stores to compete with companies like Wal-Mart (WMT).

Just one more note. The Union Pacific has been threatening the federal government regarding re-regulation. If Jim Young goes through with his threat of eliminating capital spending if the re-regulation bill passes, then you could expect more people to be furloughed. If Mr. Young wanted to eliminate the threat of re-regulation, maybe he needs to change his attitude regarding his workers and his customers. If the UP were to go with my simple 4-step plan, they change their motto to "re-building America." Mr. Young, you may want to ask yourself why you needed a 20% pay raise.

Disclosure: no positions

Comments

[Steven Hansen]

The next time you publish, remember we are not railroad people. you need to provide data on performance vs manning levels.

railroads are continuing to lose because they are a monopoly - and act like one. your rant on management rings of us versus them.

in several countries, the governments are funding open shop highways and starving their rails which hold the country hostage to poor rail management and labor disputes.

2009 Apr 17 02:50 AM

[RES RAIL]

Railroads are a business to make money for their shareholders first, they just happen to be a railroad. If you followed your logic across the country then home builders should keep building houses, even thogh there aren't buyers, but, the carpenters would be busy as well as the lumber companies. If the auto manufacturers would build more cars, more auto workers would be back at work, , oh, but who would buy them?

Fact is simple on supply and demand and right now there isn't any demand. As far as salary, what does the average pro athlete make, and what do they contribute to society and driving the economy?
RES

2009 Apr 17 09:02 AM

[Ed Lee]

Everything you said about the "god like" attitude of railroad management is right on the mark. Any business that has ever tried to work with the Union Pacific to get their product from their factory to their markets knows that the UP has a "take it or leave it" attitude toward their customers. In several cases the UP lied to me about the location of my rail cars, and when I caught them in the lie - by finding the cars myself, a thousand miles from where they told me they were - the UP complained to my management and demanded that I be fired. Most people on Wall Street continue to refer to the railroads as "well run companies". You are the only one I've seen who is willing to openly disagree. The railroads wield immense political and economic power. They are dangerous. Be careful.

2009 Apr 17 10:40 AM

[madkitty67]

Unfortunately the railroad is a dangerous entity, and they feel they are above it all and do not have to answer to anyone. This is a truth that has not been proven wrong yet. It is time for the giants to get off their pedestals and face the fact that they are indeed not gods but just men who have had too much power for too long. They need to remember the smaller people in the big picture that keep things running. The railroad had a hand in building this great country we call America and it used to be an honor being a railroader. These days are gone. It is sad that Jim Young has chosen to be so self centered instead of being an American hero. It is not too late to change this, let’s hope that Mr. Young along with the other CEO’s choose the right path and bring back the pride of the railroad.

2009 Apr 17 12:15 PM

[PoorDad/PoorDad]

As a railroad employee I have watched for 5-7 years a steady decline in business. We have supervision in key areas that literally refuse to spot customers. When we fight for the customer, we are labeled as trouble makers and threatened with a change in supervision for the worse or job cuts. We have already lost 30 employees due to furloughs in our area and roughly 14 jobs, 14 jobs equals 42 more employees. I have watched them buy out the old style, customer oriented supervisor and replace them with people that have hired out as janitors, clerks, trouble makers (employees that couldn't handle field work), and college grads. Are these employees suited for this work? Absolutely, they passed a test that said they were, they just have never ran a company or supervised any employees in thier entire working career.

Our remotes which came in 7 strong, have now dwindled to 1. They do not hold up mechanically, are ineffiecient with our rule book, and very dangerous, not to mention are run by people with very little seniority, and less than 1% are qualified engineers.

In closing, middle to upper management could care less about saving jobs, our economy, your paycheck, or their customers. For more insight on customer problems check out railcure.org. Rairoads are in business for the stockholders, they make money on 5 large catagories, intermodal, chemical, automotive, lumber, and coal. Of these 5 core metrics, 2 are in the dump and have been for a couple of years. So how do we make up the shortfalls? Fuel surcharges, layoffs, cutbacks in overtime and jobs, which then falls back to not spotting small customers.

By the way, we don't have any labor disputes that I know of with any of the class 1's, because they have the 7 labor organizations in thier back pocket. It's basically take what you can get or we'll make it worse. That's a tough cracker to choke down when thier showing us how much money they can make in a recession. Think of the money they could make with decent management, a working relationship with thier customers, and the safest employees in the world.

2009 Apr 17 12:16 PM

[DanielG]

WHO WROTE THIS! YOUR SPOT ON!!!!
Trying to do business with the railroad I work for is like TRYING TO GET A PHONE NUMBER ON AT&T! (which I just went thru) We actually go to our local customers and tell them to contact us directly when they want or need to know something or to try to find a car for their needs. We can snag them in the yard and forward them MUCH FASTER then the railroad itself can without talking to thirteen people in Jacksonville that probably don't even knwo where you are.
The remotes are a total joke yet CSX wants to go to ONE MAN operation of the remotes which other then being very unsafe will slow things down by a factor of ten. Try getting switches on the lead, pulling pins and chasing after cars with a beltpack on sometime. Toss in winter and sweeping switches (the mofw crews are out of service, its the weekend you know)...well its impossible to get things done in a timely manner. Freight doesn't run on time and the local trainmaster is someone who has no idea about the operations but does a darn good job of handing out discipline...
Working for a Class One is both rewarding and aggrivating. The managers for the most part never had the proverbial train under the christmas tree when they were kids yet posses and arrogence that befouls relations with the hired help....Just writing this tees me off.
Get this page to all the shareholders!!!!!!
I'm reprinting this for our union memebership!!!!!!!!!!
I'm even hoping someone at CSX in Jville will actually read this and wonder.....but no they will roll their eyes and say "you don't see the big picture," and toss it away.
6 years to go until retirement, something I NEVER looked forward to but now I do.

2009 Apr 17 12:42 PM

[HardwoodFlooring]

Have you ever done business with a railroad? I have. They are totally inept. Their customer service dates back to some mantality from the middle ages. They make it impossible to handle logistics and in todays day and age where it is all just in time inventories and everyone is running lean- the idea of shipping by rail makes alomost no sense. Besides it's more expensive than shipping by truck.

The only caviat, I think the only type of business they want, is people shipping things like coal or ADM or Cargill shipping ethonal/grain etc. The railroads are a wreck.

As for the guy writting abou the Unions well that says it all. Unions are useless and the harbinger of all things idiotic. They are nothing more than pyrmid schemes whereby the only beneficiaries are the clowns that organize them. They drive a wedge detween managment and the work force and make it impossible for a company to hav ethe flexibility it needs to adapt to market changes. Unions and Railroads go to gether- to totally antiquated ideas that should go the way of the dinasour.

That being said, I would love to have a good rail system int he country- it just doesn't exist because the rail companies don't want to make the investment they need to to be able to provide the kind of customer service nessassary to the guy who wants to ship a car a week.

2009 Apr 18 01:20 PM

[TinyTim]

Interesting article & comments because it's an area I don't hear too much about these days.
As a fuel efficient way to move freight, I would expect there to be potential as diesel goes higher if the many problems described above can be overcome.

2009 Apr 18 09:05 PM

[Henry Buttal]

I have extensive personal experience working with both railroad workers, and railroad executives. The Railroad Blogger needs to go back and study basic economics...the railroads are a service industry. The railroad never lead anywhere, least of all out of a recession. Leadership hasn't been part of the railroad vocabulary for 100 years. RRs are followers, and slow at that, both economically and from industry dynamics.

Railroad executives and railroad workers both have proven to be reticent to change, protective of their union and vocational fifedoms, and most interested in feathering their own beds.

There is no customer orientation, they maintain a profound reluctance to use automation, and plug their ears rather than listening to pragmatic advice from non-railroad sources.

There are a few voices of candor in an overall hide-bound industury, Matt Rose of BNSF being one of them, He recently observed that safety in joint freight/passenger rail routes could only be maintained on the current infrastructure if MPH was capped at 90 MPH or less.

The Administration responded by announcing new high speed rail initiatives, which will ultimately hurt freight traffic, the backbone of the US rail industry.

Step back and think of the railroads as a network management challenge...the railroads are the oldest, and most poorly managed, industrial network. 30% + of the track miles in the U.S. are essentially unmanaged networks. And, as a result, they kill people, including non-railroad people (google graniteville, SC).

Unfortunately, the RR Blogger is typical of the past 100 years of railroading...a lot of noise coming through town, but more empty cars than real and effective RR service and network throughput. Please post again when you understand economics, and have thought about what your are saying....

2009 Apr 19 01:29 AM

[Mad Hedge Fund Trader]

Take a look at Union Pacific. I took some time off yesterday to watch a piece of economic history roll through town. The Union Pacific Railway’s (UNP) engine no. 844 roared past, hauling a trainload of retired union members and railroad buffs in its trademark yellow observation cars. The 4-8-4 steam engine was built in 1944 to haul the massive freight trains demanded by a wartime economy. The company has since spent a fortune maintaining the crown jewel of the great age of steam in perfect operating condition. Normally based in Cheyenne, Wyoming, it hurtled over the Rockies and the Sierras to visit us on a heritage tour. Progress of the belching 500 ton behemoth was updated every ten minutes through Twitter’s tweets, which garnered 481 followers by the time it made it to the San Francisco Bay Area. It barreled through the station like a freight train, blasting its whistle, and singing with heat the faces of the enthralled kids. For video of this piece of transportation history click the play button below. By the way, UNP is a great long term buy as an indirect commodities play.

2009 Apr 22 09:08 AM

[abe froman]

If you don't like dealing with the railroads directly, why not turn to the leading provider of Intermodal transport solutions-J.B. Hunt Transport? As far as JIT and lean supply chains, there are many Intermodal lanes that are comparable to truck transit at a significantly reduced cost. I would suggest visiting their web site for details--www.jbhunt.com/intermo...

2009 May 05 10:46 AM