Railroader Blog's  Instablog

The close relationship between federal taxpayer money and railroads doesn’t seem to phase the mindset of the Class 1 rail carriers. Each year the federal government sinks billions of dollars into the rail industry; however, the railroads seem to be more expectant of this money to pad their pockets. The funny thing is that the thought of a private individual using government assistance (or welfare) is considered taboo. My question is: Which is worse – Abusing food stamps or taking billions of dollars to help pay for a $15 million salary for a CEO? I feel that it is more despicable for a Fortune 500 company to abuse corporate welfare than a single individual to use welfare to survive.

When the federal government sets aside money for Railroad Rehabilitation and Improvement, I have to wonder how the taxpayers can tolerate this type of government welfare fraud. Lets look at the salaries for the CEO’s in 2007:

Wick Moorman (NS) $14,568,798.00 Cash with $7,496,031.00 in Stock Options

Michael J. Ward (CSX) $13,771,476.00 Cash with $13,704,274.00 in Stock Options

Jim Young (UP) $11,588,386.00 Cash with $10,655,423.00 in Stock Options

Matthew Rose (BNSF) $10,573,159.00 Cash with $68,135,843.00 in Stock Options

Michael Haverty (KCS) $4,401,556.00 Cash with $24,740,317.00 in Stock Options

These five railroad CEO’s make a grand total of almost $55,000,000.00 per year with a Stock Option Package of almost $125,000,000.00 (combined). Yet, the Federal Government sees a need to funnel billions of dollars into the railroad to support them. Let me ask you this: Did you ever get angry when someone drives up in a new SUV and then uses food stamps? What is the difference between that guy and these five CEO’s taking money from taxpayers to help pay for these outrageous salaries? How much money do railroads need from the government to help build the rail infrastructure when they are making this kind of money? Are they taking advantage of the taxpayers to make huge profits? Do you know ANYONE who is worth this type of money?

The question is: What are the railroads doing to help those taxpayers that are paying their enormous salaries? First, the Union Pacific is willing to take $43,000,000.00 from the California taxpayers, but the railroad says that they don’t have the capacity to accommodate more passenger trains. Why is the taxpayer expected to bare the brunt of the cost while the UP expands to help pay for Young’s outrageous salary? The UP has taken federal and state money and they haven’t invested anything back. With rising fuel costs California needs more passenger service, but the UP only wants more revenues. Yes, having freight railroads to supply goods and services is necessary, but in today’s world the railroads need to be thinking about more than themselves, their CEO’s and their stockholders. The carbon footprint the railroads leave behind is a legacy to greed and corruption.

The railroads don’t want passenger service and why should they? They can invest your tax money into their railroad while ignoring the public. Moreover, the relationship between railroads and money goes way beyond the public. I wonder what the disposition of the fuel surcharge scandal is with the STB? When is that money going to be refunded to the shippers? Should the Federal Government reward the railroads for this type of behavior? Is it time for restructuring…or maybe re-regulation?

The Union Pacific Railroad’s “Building America” ad Campaign is brilliant. The smooth rich voice of Sam Elliott saying, “The road to the future may not be a road at all”, while the camera pans through the most majestic vistas of western America makes you well up with pride and admiration. No kidding, I had a lump in my throat and a tear in my eye. Is this commercial just “hype” for the Union Pacific; moreover, is the railroad industry producing commercials to make them feel like they are doing something greater than what they are doing?

I was talking to one of my colleagues the other day and I said: “If you took the initials and logos off of every railroad in the country…no more UP, BNSF, CSXT, NS, KCS – no labels of any kind, you couldn’t differentiate one railroad from another.” I’m talking about management/employee relations, dispositions and overall arrogance. Railroad corporations and their management styles mirror each other throughout the industry. Railroads have not evolved into the 21st century. They have a 19th century attitude with a 21st century portfolio.

The worker has not changed either. Where the companies are profit driven, the workers are as well. For example, last year UP’s Project 75 looked to reduce operating cost by 25% while their stock prices soared to record highs. Upper management got large bonuses, employees got a 17% raise, middle management got nothing, and no one was happy. The question is: What is the future of the railroad? Neither side can see the big picture: everyone’s in it for themselves. Who’s suffering?—   The customer.

Think of the technology the railroads have today: Remote Control Locomotives, Distributed Power and Hybrid Locomotives to name a few. Some of the most advanced systems created to date; however, the advancement of the railroad screeches to a halt due to the stagnation of the railroad management. Everyone knows the reputation of Norfolk Southern’s hardcore management philosophy. Their corporate headquarters are situated on the Military Highway in Norfolk, VA, which is really appropriate due to their “drill sergeant” management mentality. CSX doesn’t have a stellar reputation either. Their Manage With Intimidation style causes resentment and lower productivity.

The Union Pacific Railroad does take the trophy with their management style. When they started hiring managers off the street and expected them to understand how trains move, that’s when the trouble ensued. I’ve heard instances of managers who would write-up a conductor because he was using a four-point stance on a boxcar. The manager’s excuse was: “The rule book said to use a three point stance”. How humiliating is it for a conductor to be chastised because after throwing a switch he didn’t point hard enough at the switch point? So, the UP’s Manage with Ignorance wins the award for Railroad Excellence.

My point is: You can have all the advancements in technology, but unless the management practices evolve into the twenty-first century the railroads will still be considered less than adequate. Railroads are re-living the 1800’s mentality when it comes to their employees. Again, the equipment has evolved, but the managers may as well ride a stagecoach to work.

The evolution of the railroad manager starts at the top. When the CEO’s of the railroads decide that they want to release their grip on the past, then things will change. I would like to see the entire management structure scrapped and replaced with a more competent style. I’m not saying all managers are bad, but when it comes to business practice the railroads must do better.