Author Topic: CSX is about to look like CN  (Read 2700 times)

spuwho

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CSX is about to look like CN
« on: July 20, 2017, 12:55:58 AM »
This is an opinion post from Fred Frailey's blog on the railroad industry.

http://cs.trains.com/trn/b/fred-frailey/archive/2017/07/17/csx-is-about-to-look-like-cn.aspx

CSX is about to look like CN

Posted by Fred Frailey
on Monday, July 17, 2017

In recent weeks, Hunter Harrison-led CSX Transportation has terminated all nine of its division superintendents (called managers) and their assistants, among many other field personnel, according to multiple sources close to the company. None has been replaced.

The firings appear to be part of a broad realignment of the transportation structure of CSX. When the smoke clears, the railroad will cease to have divisions but be managed from as few as two regional headquarters. A couple of sub-regions may be designated, but with minimal management in the field. This closely resembles the structure of Canadian National Railway, from which Harrison retired eight and a half years ago. And when those regional managers are named, guess where they’ll be from?

If you guessed they’ll be Harrison’s lieutenants from his CN days—people he knows and trusts to carry out his vision for CSX—then step right up and claim your prize. Word is that Harrison has hired a slew of seasoned CN people to work in the U.S. Senior operations jobs were advertised recently on CSX.com for a day or two—long enough for people preselected for the slots to apply—then abruptly taken down.

This could be a spectacularly successful gambit, for as independent analyst Anthony Hatch is fond of saying, never bet against E. Hunter Harrison. Harrison practices a brand of railroading foreign to the managers he inherited when he became chief executive of CSX this spring. So if he can put people he trusts to share his vision of what CSX should become, and with the skills to make it happen, hooray.

But it’s also very risky. Few if any of the CN immigrants will know CSX from Cheerios. What if they parachute in from the Dominion and don’t know the right levers to pull, or who to ask to find out where the levers are? Let’s assume, as I do, that Harrison and hedge fund investor Paul Hilal, who engineered the bloodless coup that put Harrison in the top job, did a wealth of research about CSX by hiring former managers as consultants to Hilal’s company. Maybe Harrison and his new hires will know exactly how to make this railroad take off and land nicely.

If they don’t know what to do and how, look out. Right now, the evidence I see portrays a CSX in great disarray. "We have no senior leadership in the field other than trainmasters and chief dispatchers," says one insider, "and many of the trainmasters are so young and new they have no real knowledge of how CSX works--or a train, for that matter." Cowen & Company’s latest shipper satisfaction survey shows 24 percent of CSX customers unhappy with service the railroad provides, calling it “poor.” Three months earlier just 6 percent of CSX customers felt that way. In this latest survey, only two other railroads--Norfolk Southern (6 percent) and Kansas City Southern (3 percent)--garnered any "poor" ratings from customers.

In any event, word I get is that in its present leaderless state, the railroad is in danger of grinding to a halt--most recently, Cleveland and Willard, Ohio, were plugged. So the race is on to put these new immigrants from Canada in place in the restructured company and get them to work magic before the roof caves in. As things stand, terminals are putting long trains together and running them as X (extra) movements to the next terminal. It’s a game called Railroad Ping Pong, and it never ends well.--Fred W. Frailey

KenFSU

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Re: CSX is about to look like CN
« Reply #1 on: July 21, 2017, 12:19:37 PM »
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thelakelander

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Re: CSX is about to look like CN
« Reply #2 on: July 21, 2017, 12:41:47 PM »
Not necessarily. The new CEO is only here for the short term. This renovation appears to be for his suite.

Quote
Plans show remodeling of 20,450 square feet of space for offices, conference rooms, a recording studio, work café, a warming kitchen, and more, including the C-Suite. That suite appears to be for CEO Hunter Harrison and two other top executives. Their offices are near the almost 1,200-square-foot board room.
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spuwho

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Re: CSX is about to look like CN
« Reply #3 on: July 21, 2017, 02:19:21 PM »
Not necessarily. The new CEO is only here for the short term. This renovation appears to be for his suite.

Quote
Plans show remodeling of 20,450 square feet of space for offices, conference rooms, a recording studio, work café, a warming kitchen, and more, including the C-Suite. That suite appears to be for CEO Hunter Harrison and two other top executives. Their offices are near the almost 1,200-square-foot board room.

Actually EHH lives in West Palm Beach.

He ran CP pretty much from his home. He recently sold his horse ranch a few miles from his house. His daughter and son in law run it now. His son in law is a professional horse rider.

Since he needs an O2 supply around him often, where and how long he works in said spot is an issue.

He ran CN from Chicago until he bought a horse ranch in New England and ran it from there until he "retired".  He moved to Florida when he went to CP.

spuwho

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Re: CSX is about to look like CN
« Reply #4 on: July 21, 2017, 08:19:56 PM »
Interesting coincidence.....

CSX to no longer supply boots, safety gear; railroad to spend $1.8 million on HQ upgrades



http://trn.trains.com/news/news-wire/2017/07/21-csx-to-no-longer-supply-boots-safety-gear-railroad-to-spend-18-million-on-hq-upgrades

JACKSONVILLE, Fla. — Railroaders at CSX Transportation will soon be responsible for purchasing their own safety boots and reflective safety apparel. As of Aug. 1, railroad officials say they'll end the company's safety boots and high visibility bundle program. CSX currently supplies safety boots and high visibility safety gear to its crews.

The change applies to all employees with the exception of a small number of railroaders whose work apparel is governed by a collective bargaining agreement.

“CSX is committed to providing a safe work environment that supports and promotes the health and well-being of every employee through a wide range of safety training and programs,” says CSX spokesman Rob Doolittle in a statement to Trains News Wire.

“At the same time, employees are expected to contribute to their personal safety by following work rules and by ensuring they arrive on the job prepared to work safely, including with appropriate personal protective equipment,” Doolittle says.

He says the change is being made now to underscore the importance of that shared responsibility with employees.

As the railroad shifts the responsibility of buying safety apparel to its employees, company executives are gearing up for renovations to the Jacksonville corporate office building.

The Jacksonville Daily Record reported this week that CSX wants to spend $1.85 million in renovations to the 15th floor executive offices. The railroad intends to remodel more than 20,000 square feet of space for offices, meeting rooms, a recording studio, work cafe, a kitchen, and other improvements to executive suite space, the newspaper reported.

The renovations are reportedly for CEO E. Hunter Harrison and other top leaders.

Doolittle confirmed with Trains News Wire there are plans to upgrade the 15th floor, which houses most executive offices, but there are also plans to renovate other areas of the building as well.

“CSX is renovating several areas of its headquarters building at 500 Water Street in Jacksonville, in order to modernize and update the space and to accommodate changes to the office space needs of our staff,” says Doolittle.

“Projects include modifications to the lobby area, the entire 15th floor and several other locations throughout the 487,000-square-foot building,” he adds.

He says the work will take place at various times over the next year and will take place in phases to minimize disruption to employees.

MusicMan

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spuwho

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Re: CSX is about to look like CN
« Reply #6 on: August 13, 2017, 04:31:07 PM »
From Fred Frailey's Railroad Blog.

http://cs.trains.com/trn/b/fred-frailey/archive/2017/08/03/the-csx-follies.aspx

First, what I know. Then, what I think.

I asked a railroader with excellent access to the details of CSX operations how he would rank the current disarray, on a scale of 1 to 10, a 10 being the equivalent of Union Pacific’s historic 1997 meltdown. His reply: “A 5 heading toward 7. A slow railroad dies faster than a fast one does.” And I agree.  Metrics continue to head down, and now there’s the pileup of a train descending Sand Patch grade near Cumberland, Md. You wouldn’t believe the detours this set off. One Chicago-Portsmouth, Va., intermodal train ran via Atlanta.

I thought the A Line from New Jersey to Jacksonville was immune to the mess until I took the measure of manifest trains on that route, the reason being they get least priority. And oh boy, they have waited hours and hours to get into both Richmond, Va., and Rocky Mount, N.C., in recent days.

Now Jacksonville itself is plugged, according to J. B. Hunt Transport, a big CSX customer, which put out a customer advisory yesterday. Intermodal traffic there is experiencing delays of two to three days, Hunt says. The same is true of intermodal delays in Central Florida, Tampa, Atlanta, Savannah, Charlotte and Memphis.

From Indianapolis comes word today that CSX decided against closing Avon Yard and moving its work to Hawthorne Yard. Hawthorne had been the finest yard on the Pennsylvania Railroad—in 1910. It was in sad shape before CSX spent millions recently to make it partially viable. Now the decision is to keep Avon open, just to shut down its hump yard later this week and flat switch cars. Earlier, a bevy of locomotives had appeared at Avon, assigned to empty yard tracks and haul everything to other yards, such as Louisville, Cincinnati and Willard, Ohio. Customers may get those cars in a week or two.

Three investment analysts have polled CSX customers since the start of last week. With each survey, the percentage of CSX customers who say they are diverting business grows. The most recent to report was Jason Seidl of Cowen & Company. He says half of the customers not captive to CSX are handing off carloads to rival Norfolk Southern. What really struck me was the anger that customers expressed to Seidl about CSX. A sample: “Service has declined to the point that it appears CSX is trying to drive my plant out of business. I have missed customer orders and been forced to idle my plant numerous times due to failure to get service. The only answers we get are basically, ‘That’s tough. Get used to it.’ The situation is untenable, and I am actively looking to switch my business elsewhere wherever possible, as soon as possible.”

Heard enough? As of last week, the only portion of CSX that seemed to operate normally and close to scheduled times was across the Water Level Route in upstate New York, between Buffalo and Selkirk. Today?

And an update. In CSX is about to look like CN I said Harrison had recruited a bevy of trusted CN people to help him whip CSX into shape. The number I hear is $50,000 per month. But they had to perform, and two of the CN alums have been sent packing. They couldn't untangle Boyles Yard in Birmingham or Radnor Yard in Nashville. I take from this that the boss demands the same from everyone, even his friends.

Now, what I think. Based on my correspondence with railroad luminaries, CEO Hunter Harrison doesn’t have a friend left, not even his dog. Why throw everything in such disarray—change everything at once, damn the consequences? I have a theory. Harrison knew what he wanted to do at CSX—who he wanted to keep, who to fire, what practices to change or abolish and on and on. He had done it all before at Illinois Central, then at Canadian National and finally at Canadian Pacific. I suspect he became impatient, abandoned caution and instituted every change on his list at once. I don’t think he anticipated the inability of his organization to cope with it all. Plus, Harrison publicly blames his own people (by inference, union members) for dragging their feet. Do you blame them? Without explanation, Harrison abolished a slew of safety measures that he thought impeded efficient operations and even told the operating trades to buy the safety gear that the railroad once furnished.

And for what purpose is all this chaos? One railroad executive has a possible explanation, which he shared with me. It goes like this: “He is completely unfazed by market share or business defections to competitors, rail or truck. Business that is prone to competition has, by its very nature, lower margins and is more service sensitive. Who needs that? If he can build a reliable efficient conveyor belt for mainly captive customers he wins. He only wants the revenue and the customers who want what he has to sell. Those who want something different are most welcome to look elsewhere. I’m not sure this ‘you can have any color you want as long as it is black’ model is truly sustainable.”

Those of you who know me know I have a lot of respect for Hunter. I still do, but a bit of it goes away every day that he fails to do what he is supposed to do, which is to operate CSX efficiently for the benefit of his stakeholders. Right now they’re all getting screwed, including investors, who have watched the share price tumble 10 percent the past two weeks.

I do know how this will all end—how all jackpots like this end. Enough business is taken away that the railroad catches its breath and begins to cope. This is already happening, if we’re to believe the analysts. BNSF Railway had a business bonanza in 1997 and 1998, something like a 10 percent traffic bump thanks to the troubles of Union Pacific. Ultimately, according to retired CEO Rob Krebs, every last bit of that bonanza went back to UP. I guess it shows that customers make fickle lovers.—Fred W. Frailey

MusicMan

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Re: CSX is about to look like CN
« Reply #7 on: August 22, 2017, 02:08:46 PM »

I-10east

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Re: CSX is about to look like CN
« Reply #8 on: September 07, 2017, 04:16:28 PM »
CSX says its rail service is improving after major delays
Quote
CSX (Florida Times-Union, file)
OMAHA, Neb. — CSX railroad says its service is improving after a summer marked by delays as it overhauled its operations, but the company is trimming its profit outlook.

 
The Jacksonville, Florida-based railroad said Wednesday it now expects profit to improve between 20 and 25 percent over last year’s earnings per share of $1.81. Previously, CSX had predicted 25 percent profit growth.

New CSX CEO Hunter Harrison says the railroad has made good progress implementing his operating model, but the extensive changes involved did delay some deliveries over the summer.

Harrison says the railroad’s performance has improved over the past month.

CSX shares gained more than 3 percent, or $1.68, to sell for $50.67 Wednesday.

CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.

http://jacksonville.com/business/2017-09-06/csx-says-its-rail-service-improving-after-major-delays

« Last Edit: September 07, 2017, 04:21:29 PM by I-10east »

MusicMan

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Re: CSX is about to look like CN
« Reply #9 on: September 07, 2017, 09:17:01 PM »
Bad press notwithstanding, the stock price (since HH came on board) has been a winner.