Re: PC: What If

[Jerry Jordak <jer@xxxxxxxxxxxxx>]

Evil Mike wrote:
 
> What if the PC had had better management, for example the members of the
> PC e-mail list or those member's pets.  What would PC be like today?
> Would it have survived to today?  Would it have just been carved up by
> CSX and NS or would it have absorbed NS or CSX?  Who would have the PC
> merged with?  EL, Reading, PRSL.  You can also talk about what YOU would
> have done if you have been CEO of the PC and didn't have to deal with
> Saunders, Pearlman and the rest.

This is one we could debate forever.... :-)

First of all, the top management of PC weren't exactly inept. Look at
the track records of the top three officers (Saunders, Perlman, and
Bevan) going into the merger. All three had done a pretty good job up
to the point of the merger. If they hadn't, someone else would have
been picked to run the company.

There were many factors that contributed to the PC's collapse. The 
eastern U.S. was turning into the Rust Belt. Industries were closing
down and moving south or west or just going out of business. Therefore,
many lines had less traffic on them, and a lot of little branch lines
were unprofitable to operate. Because of outdated ICC regulations, PC
couldn't abandon these lines. Plus, outdated work rules were costing
the company plenty of money. So the company had to maintain and operate
unprofitable routes and use 5-man crews to do it. All of these factors
together cost PC millions of dollars.

Also, look at today's situation with NS and CSX buying out Conrail.
There are a lot of people working at all three railroads right now who
are planning out how this merger is going to work. That didn't happen
during Penn Central. Because of the scope of the merger, with the NYC
and PRR being two of the larger railroads in the east, and all of the
politicial opposition to the merger, PRR and NYC management focused
most of their effort on getting the merger approved without paying any
attention to how it was going to work. They were more worried about
where they were going than how to get there. Consider the fact that on
2/1/68, the PRR and NYC computer systems could not communicate. Each
"half" of the company was still doing its old thing, using it's same
accounting system as before, using the same computer system as before,
ad nauseum. Is it any wonder that cars got lost because they would get
to a town that PRR and NYC both served and crews wouldn't know which
side of town they went to? A car going to Indianapolis might end up
going to the ex=NYC Avon Yard instead of going to the ex-PRR Hawthorne
Yard because the waybill routing was "Indianapolis: PC". You can see
how this would snowball and cause operational gridlock. (Actually, we
have seen this recently: try the UP in Texas last year).

Of course, there was also the imfamous "red team green team" problems
that added to the mix. It's a textbook example of corporate culture
clash that caused more problems as ex-PRR and ex-NYC people refused
to work together as a team. There's nothing really that could have
been done about this, as this is part of human nature, but it could
have been limited in its effects if the merger would have procedeed
more slowly instead of rushed like it was. The Chessie System had the
right idea--railroads operated separately for a while, but still run
by a common management.

Some people can also make a point that the diversification program that
PC started siphoned too much money from the company. I'll let someone
else address that point.

So where am I going with this? Back to Mike's question: could the PC
still have survived? Yes, *if*:

- the merger had been better planned
- the Staggers Act of 1980 (RR deregulation) had been passed in the
  mid 1960's
- management would have slowly merged the two companies instead of 
  just pushing the two railroads together as quickly as they did

I can't speak for the other Conrail predecessors. However, I will say
this much: if Chessie would have got the Reading and the east end of
the EL as they had proposed in the mid-1970's (instead of the EL labor
unions refusing to give on work rules, and in effect, put themselves
out a job), we could have an entirely different situation in the East
than we do now. And it wouldn't involve breaking up Big Blue.

Later,
-Jer

-- 
Jerry W. Jordak               Time has little to do with infinity
mailto:jer@smellycat.com      and jelly doughnuts.
http://prozac.cwru.edu/jer/                      -- Thomas Magnum
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