CSX & Hunter Harrison Drops Bomb

PSU1980 posted:

"I thought we had a hell of a quarter," Harrison said. "There's a lot that's been done and a lot that's been accomplished."

That quote should be continued with, "but I'm getting out with my bag o' loot and leaving that to whomever comes after me!"

PSU1980 posted:

Harrison acknowledged the difficulties of the cuts his company has made and addressed the "culture of fear" some have accused him of creating.

"We can't carry dead weight," he said. "Everybody has to do their job. Everybody has to do their part."

Harrison said it is not his goal to create a culture of fear, but rather create a culture where everyone can add value to the company in the most effective way.

Epic fail for addressing a culture of fear!

Hmmmmm.....

"You've got to know when to hold 'em Know when to fold 'em
Know when to walk away And know when to run
You never count your money When you're sittin' at the table
There'll be time enough for counting When the dealin's done"

Selling it was no doubt a good idea. I bet next year you will be able to buy it for 23 again.

Ed

Interesting that now he calls himself a "short timer" !!  Standing in the door with his chute on for a quick  get away after robbing the bank.   I can just imagine what the employees are going through.  Near the end of my work career I had 3 different owners and bosses in 3 months. Never changed my desk,  or office or territory.

I wonder, looking at the CSX map, that it, instead of CR should have been cut up between Big Blue and Big Black.

I think CSX was perfect to be robbed. I don't know about the rest of the railroad, but back here money had been spent to repair and replace much of the old crap, and I bet that was nearly all over the system. A great spot to come in and raid. "Take the money and run". Yep.

I have worked for people like him. It becomes untenable after a few months. Survival takes special skills in hiding.

Dick

p51 posted:

.. then moving on and leaving a wreck in their wake.

Have any of you given any thought to the fact that CSX was essentially a "...wreck..." before EHH arrived?

Maybe, but CSX has a lot less cash now.

Was CSX a wreck before Harrison? How so if so?

Ed

Ed Mullan posted:

Was CSX a wreck before Harrison? How so if so?

Yeah, I have no idea about this myself, but I've never looked into it. I was referring to the general idea of people going from company to company, doing questionable things, then leaving when it's good for them. I have no idea how so many of these people do this over and over again and no future "victims" see it coming from their past experiences before hiring them for a new chapter... 

OGR Webmaster posted:

p51 posted:

.. then moving on and leaving a wreck in their wake.

Have any of you given any thought to the fact that CSX was essentially a "...wreck..." before EHH arrived?

Well, they sure have had their fair share of them over the years! 

OGR Webmaster posted:

p51 posted:

.. then moving on and leaving a wreck in their wake.

Have any of you given any thought to the fact that CSX was essentially a "...wreck..." before EHH arrived?

Rich, can't be. The CSX Board of Directors and previous CEO's would never have allowed that to happen!

OGR Webmaster posted:

p51 posted:

.. then moving on and leaving a wreck in their wake.

Have any of you given any thought to the fact that CSX was essentially a "...wreck..." before EHH arrived?

Yes, I did.  CSX should have cut up as posted above.

Did anybody expect Harrison to be in it for the long haul??  

Short term gains for long term pains, is the way I looked at it...   and so here it is, maybe.

Harrison knows what he's doing.

Remember, on this very forum, just a few years ago, a CSX employee was complaining about all those worthless ex NYC coal hoppers? Guess what, they are no longer around. A complete new fleet of aluminum hoppers grace the rails of CSX.

Harrison can park hundreds of locomotives. CSX has purchased 300 new ones 2015-16. Not to mention the extensive rebuilding program of the SD40-2s and others. Gives him a newer, more modern fleet of engines.

Thanks to a multi million dollar program, double stacks  are now flowing thru the system from Chicago to eastern ports. Even faster when the second Virginia Street tunnel is built.

New improvements to the plant everywhere, making it more productive. They were even planing for longer trains, improvements such as longer sidings where already in the works. I understand that's one of Mr. Harrison's more efficient improvements.

One needs to understand this guy is no dummy. He's not going to risk failure by taking over a mess. In my opinion, he one smart dude. I suspect he also likes the fact that the President has said he wants the coal mines working again. (Also, as he must know, it is suspected that natural gas prices are going to increase over the next year, making coal a cheaper way to make electricity) Thank goodness CSX already has a quality fleet of hoppers.

It almost looks as if a hedge fund outfit is going to profit in a large way. Then what? Will money be spent on keeping up track and plant?  Cuts into the profits! It will be interesting to see if warts will grow on this thing, in six or seven years when all of the good locomotives have been run into the ground and the plant needs maintaining.

Ed

Surprised that HH is going to be short term, but, then he hasn't stated an exit date yet.

Not surprised: take the money and run.

Hunter didn't start work at CSX until March 2017.   Little you describe above probably has anything to do with him since it takes time to initiate, plan and execute in any organization - especially a big one like CSX.

Another 700 employees to go by the end of the year. Productivity through layoffs, shelving or selling enginees and cars. I can do that too. But at some point that ends so how does he grow revenue.

Oh, yeah, sell to CP or CN. Which might have been his plan all along. Get your cash up front from CSX for leaving early. Get shareholders to think this is a great idea via short term stock gains. My bet he lets or encourages CN / CP to buy CSX for which std stockholders bought get a devalued asset in return - $.50 on the dollar or 1 of the CN / CP shares in echange for 3 CSX or maybe a simple cash buy out for which the small guy loses.

Not sure CSX would have made it the next couple of yrs the way they were structured but..........

My thoughts too -it was so transparent but he was a hero !!

PSU1980 posted:

But at some point that ends so how does he grow revenue.

 

He just grew revenue 8%! Clear as day in the financial statements just filed. Coal shipments increased, he increased shipping rates, improved the fuel surcharge recovery program and almost all commodity types had increased volume. Just the FACTS. 

bigtruckpete posted:

PSU1980 posted:

But at some point that ends so how does he grow revenue.

 

He just grew revenue 8%! Clear as day in the financial statements just filed. Coal shipments increased, he increased shipping rates, improved the fuel surcharge recovery program and almost all commodity types had increased volume. Just the FACTS. 

You might want to read more about the recent financial report from CSX. It seems there just might be "smoke and mirrors" involved

Yes, I recently read an analysis of the financial report-  more than smoke and mirrors. I wouldn't believe ANYTHING that the H H team puts out.

This morning from Railway Age:

What's Going On at CSX?

The "wreck" seems to be piling up higher.

---PCJ

CSX is becoming the SP of the east.

Hunter sees the future and he is not planning to be there when CSX has made all the customers, employees, and politicians angry.  He, his big wad of money, and the hedge funds, will be elsewhere.  Others will be left the task of restoring CSX.  His big trick worked - sort of - on more or less end-to-end railroads, but CSX goes all over the eastern United States, and the big trick might not work so well this time.

Interesting, no wonder he's ready to leave. Now I can believe CSX is a wreck. it is.

Ed

Dispatching out of Jax.  Six months of the year, Cat 5 means more than a computer cable!  Hate to see CSX after a Hurricane Andrew type storm!

Ed Mullan posted:

Interesting, no wonder he's ready to leave. Now I can believe CSX is a wreck. it is.

Told ya...  

It's actually pretty serious, if you look to the future.  Hunter Harrison's big trick is to, first, get rid of a lot of the current managers and take everything down to bare bones, and no frills (except on mahogany row at headquarters).  Everything that can be downsized or consolidated is a target.  Next, he runs long trains that depart on schedule, no matter what.  Even if there are only 20 cars on the train, it departs.  Empty cars are moved long distances in solid trains, if necessary, to keep the yard dwell and car velocity numbers in line.  Customer loads get picked up and delivered in the most efficient way for the railroad, and that is not necessarily the best way for the customers, some of whom count on timely pickups and set-outs.

That's his recipe.  His big trick.

CSX goes in all directions all over the east, and was already hurting from some of its operating practices.  Hunter's big trick will make it better or worse, and many are betting on worse.

If enough angry customers take action, the entire railroad industry could become regulated again, and nobody would be happy with the result, even those vocal customers of CSX.  Oh, wait, there would be one group that would like it - politicians.  At least hedge funds would not have any interest in investing in railroads any more.

From the Surface Transportation Board: Copy of Letter

I saw this last week when it came out but it didn't get much, if any, play in the news. And this was BEFORE the Hyndman derailment.

jim pastorius posted:

Interesting that now he calls himself a "short timer" !!  Standing in the door with his chute on for a quick  get away after robbing the bank.   I can just imagine what the employees are going through.  Near the end of my work career I had 3 different owners and bosses in 3 months. Never changed my desk,  or office or territory.

I worked for a company for 14.5 years.  In that time, I had 10 (yes, 10) bosses.  Three were excellent; three were middle of the road; 4 were dreadful.  Kept hitting my performance goals out of the park, but was never really recognized or promoted (wonder why? ).  Finally got laid off by a VP who perfectly embodied the quote "1st rate people hire 1st rate people; 2nd rate people hire 3rd rate people."

Glad to be retired.

George

Hunter did his stuff at IC after most of its lines were spun off to regionals.  Looking at the CSX map, maybe they need to do the same except for the inverted triangle and the recently upgraded lines for double stacks..

And it seems to me the B&O/C&O and "Family Lines" sides of CSX culturally never truly merged.  This infighting was, from what I have read, still going on during the CR split up, and I doubt it never really stopped.

Number 90 posted:

Customer loads get picked up and delivered in the most efficient way for the railroad, and that is not necessarily the best way for the customers, some of whom count on timely pickups and set-outs.

That, right there, is one of the primary things that killed LcL car loads...

BobbyD posted:

OGR Webmaster posted:

p51 posted:

.. then moving on and leaving a wreck in their wake.

Have any of you given any thought to the fact that CSX was essentially a "...wreck..." before EHH arrived?

Rich, can't be. The CSX Board of Directors and previous CEO's would never have allowed that to happen!

While CSX certainly had it's share of problems, it was solidly profitable, more profitable than NS at times.  There are probably a LOT of improvements that need to be made, but I don't see anything that justifies turning the whole system upside down all at once to accomplish.  I think one of the things that people need to realize is that the eastern railroads will always be more complicated and expensive to operate and will likely never generate as much revenue as UP and BNSF will , or CN for that matter.  For all of Hunter's "effort", CP isn't exactly the darling of the industry either.  I have been saying from day one that Harrison's cookie cutter bare bones approach to railroading is the LEAST likely to be successful with CSX than probably any other class one system. A couple more points to ponder;  CSX was a difficult system to operate even before the Conrail split. Norfolk Southern totally jobbed CSX and took most of the best parts of Conrail, leaving CSX with lesser portions.  CSX is much like SP was.  As goofy as some of their operating plans looked on paper, there was a method to the madness.  CSX has traditionally had a lot of infighting among alum of the various railroads, such as the "Chessie Mafia" and the Richmond VS Jacksonville people, although as people have retired or moved on that plays a smaller roll than it used to.  CSX has never been a very friendly place for outsiders.  When Jerry Davis came from SP, he was constantly undermined by his own staff, making it difficult to implement needed changes.  CSX has never really had what could be called an "operating culture" compared to some of its competitors, and it's resistance to outsiders has made it all the more difficult to change that.  Even if Harrison was the most brilliant railroader in the country, (I don't believe that for a second) I think this job would be an uphill battle for him, and I think his "culture of fear" management style will serve him even less well at CSX than it would at other places.  I guess in four years (or less) we'll know if I was right or not.

The news I heard out of Ohio last night about CSX  was not good.  "Parking lots", "chaotic" "like the CR split meltdown" etc.

But there is something else interesting about CSX.  The Chessie and Family Line sides almost match those parts of the country during the Great Rebellion (Civil War) split.  Other class ones, including NS cover areas of the country with different cultures.  But it seems CSX transverses some of the most diverse and cultural opposites in the country.  That has to have some effect on the company!