Rich,
Thanks for your reply, and the photo. Very cool. My post was mostly tongue-in-cheek and were addressed to the UP's steam operations, but your responses beg the question...
At over $1 million a pop, that's a lot of money sitting out there in the desert on UP's storage line, so why can't they properly fund their steam program? They have the money to buy new locomotives, but yet they have hundreds or thousands just sitting?
Seems odd.
I think like some you are confusing two very different things. As Rich noted in a prior post and in another one below, the UP has those engines sitting idle because they don't need them at the moment. They bought those engines likely based on traffic levels they anticipated (and keep in mind that kind of capital spending is often done long term, if you anticipate X volume levels in 5 years and think you will need Y engines due to some engines being retired and then extra volume, you will buy them in anticipation (plus I assume that with engines they are built to order, you don't go to the GE Engine lot and say "I'll take that one" *lol*
One article I read on that said that part of it is PSR, that with the way they do shipments now they didn't need that many engines, the other is that demand for key products has been down, especially oil during covid (that might pick up a bit with demand for oil sky high at the moment).
In any event business is always a kind of guessing game, sometimes you guess right (okay, or your analysis failed to take into account......), other times you over or underestimate, it happens.
The steam program is not mainline business, it is not a revenue generator directly (it generates Goodwill that can in turn help the bottom line or help where public opinion is important). Spending 1 million bucks on an engine to pull trains is tied to revenue and profit, it is from the capital budget directly tied to rail operations. The steam program is likely under marketing and PR and customer relations, it is very different. It isn't like someone said "Oh, I spent 1 million on a new engine, let's take it from the steam budget". Rather when they budgeted both long term and for the fiscal year, they allocated money to the programs, likely on a priority basis. So their capital budget would take precedence involved with running the trains along with 'support' infrastructure (office staff, office buildings, IT not involved with train control likely, etc).
The steam program of course has its own budget, but it in turn is a line item in another budget. When you plan in an area, you usually have MBO's you want to accomplish (call it goals), so Ed and the PR and Marketing flunkies figure out a proposed use of Big boy or other units in the fleet. So if they figure out we are gong to do 3 trips in 2021, they budget for it, then figure out an overall budget that includes non event related things, like the cost of maintaining the roundhouse, personnel, insurance, all those things. Sure, many of these are paid for by 'corporate" UP (the roundhouse costs for example, insurance, payroll, materials, etc) but they are 'charged' to the steam program. With all that they come up with a proposed overall budget, run it up the flagpole, and duck and hope no one shoots back..(well okay, I exaggerate; they no longer shoot back, they send sarcastic emails). The PR/Marketing department will likely have an overall budget pool given to them by corporate coming out of the CFOs office and the steam budget will be allocated out of that (it really depends on how UP budgets; I am not an accountant or financial person, and every company has its own way of doing budgets. Usually they project revenues for the next year, project costs based on MBO's on a corporate level ad work from there).
That million dollar engine is way removed from the steam program when it comes to budgets, that kind of thing is decided far apart from each other. when they decide capital spending it can affect the PR budget which in turn would affect the steam program, but it is many steps removed.
And again the answer is that the steam program is not aligned with corporate revenue generation or operations so its budget is going to be limited...and yes, if the PR department gets its budget slashed because they were allocated less, or the company goes through a rough patch, the steam program would lose allocated money.
It is why what Ed said made sense to me. If by using a diesel he and his bosses figure they can get 3 trips in instead of 2 for the same money, they will go for it.
For those saying "This is a CEO level thing", you are both right and wrong. I am sure the CEO of the company is aware of the steam program, but they aren't going to be intimately involved with it either. a CEO is like the president of the US, it is really the office of the CEO, while they do of course make final decisions on things, and if his minions come to him and say "you know, we are running into a bind and we need more pencils in accounting and green eyeshades, why don't we kill the steam program, it is a frill", the CEO will be involved (more likely, the PR department will extol the virtues of the steam program, the CFO office will call it a frill the company doesn't need, and the CEO will decide).
On the other hand, I doubt very much the CEO is involved in the steam operations budget, this isn't a private family run company. They might be the final decision maker if they are deciding whether to keep it or not, but in running a company 95% of the decisions don't involve the CEO (might even be more). This is where the beancounters come in, they analyze cost data coming out of the steam program, and if it is running above budgeted figures they will squawk. If Ed says "we have been running Big Boy and decided to give a big show with it pulling a 5 mile train upgrade at speed" and it ends up requiring 30 grand in costs to maintain the engine and such as a result, they will squawk, believe me, and they would take that out of some other element of the budget to keep costs in line.
About the only way a capital expenditure, like the 1 million dollar engine, would affect the steam program would be if in a given year, let's say, the UP is contracted to buy x engines, and revenue is down, they may slash the PR budget which would slash the steam budget (along with other ones, like swithing from 2 ply toilet paper to 1 to save money). Actually those engines sitting there idle could cause them to slash the steam budget, if the cost of inventorying those engines is large enough (and I don't have the foggiest notion what it costs to have an engine sitting idle), it could cause a ripple down to the steam program.