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> The senior management of the Penn Central was blameless and all their
actions were always altruistic and within good business practice.
I didn't say they were perfect. I just said they did as good, if not
better, job than any other senior railroaders of the time would have done, and
that no management team could have saved Penn Central. Better management might
have stalled the failure months, or maybe a year or two, but S, P and B did a
fairly good job of trying to keep it afloat.
> Planning to efficiently combine operations was a waste of time because
the railroad was doomed to fail.
Again, this was irrelevant to the ultimate failure. Better operations may
have stalled the failure, but the problem was not operational. Penn Central was
a fundamentally unsound business due to a combination of factors such as archaic
governmental regulations, overcapacity, the inability to cut costs, and the
inability to leave unprofitable businesses.
> Making sure that the computers from the two principle merger partners
that kept track of thousands of transactions a day could interface was a waste
of time because the railroad was doomed anyway.
Ultimately, yes.
> Perlman "gunning" for subordinates because he personally didn't like
them and not based on their work made sense and was acceptable (wherever I
worked, the bosses wanted to see results and couldn't give a fig about
personalities).
I don't know the mind of Perlman so I can't say why he wanted to get rid of
certain people, but as someone who has lost jobs in reorganizations I know the
old saying that a new broom sweeps clean. When the railroads were combined
there would be massive duplication in senior positions. It stands to reason that
the president would want to keep the ones who matched his management style and
rid himself of those he felt was unsuitable.
> Diversification was a good thing because the railroad couldn't make it
without it. Well, with diversification the railroad (and Penn Central for all
it's other ventures was primarily a railroad) didn't make it and perhaps
the senior management should have focused of the railroad; i.e., "downsizing
operations", etc. (Admittedly hard to do after all; e.g., Saunders gave away the
store to the unions to get the merger.)
> Executive Jet was owned by a subsidiary of the railroad, but it was still illegal for them to own it and Bevan, a least, was aware of that fact. The railroad did not own Executive Jet. The railroaded invested in
Executive Jet, and the investment was made in nonvoting stock in attempt to
remain within the law at the time. Penn Central was fined because the government
ruled that Penn Central did control Executive Jet (which I could see, since if
you are a major source of money for a company you call the tune even if you
don't have voting stock.)
The chapter on this in "Wreck of the Penn Central" is named "Sidetracked",
but a better name would have been "Side Show." Executive Jet had little to do
with the main event. According to "Wreck" Penn Central lost $21 million in the
failure of Executive Jet. As a condition to the merger Penn Central had to buy
New Haven. I forget the exact figure, but I believe it was around $200
million, give or take a couple of dozen, and this for a company that was losing
the equivalent to the total Executive Jet investment every few weeks.
> Ultimately, all the problems faced by Penn Central and the cause of
the collapse could be blamed on the federal government.
Ultimately, yes. If railroad management could have seen into the future and
fought for the changes they needed in the period from the Twenties to the
Fifties they may have had a chance.
As an aside, it is my opinion that the railroads (with a few exceptions,
such as the Southern in the Sixties) did not want to fight to change the
regulations because (1) they were afraid after railroads were nationalized
during the war, and (2) they didn't see the ultimate problem until it was too
late because of first, the Depression, and later World War Two.
Question. What about all the other railroads in that era, like Southern and N&W, that didn't go bankrupt? They were operating under the same government regulations and policies that PC was. N&W was primarily a single commodity road and that commodity was doing
well. At the time Southern was in a growing region. Penn Central was in a region
where industries were contracting. Neither N&W nor Southern were saddled
with the massive money losing passenger obligations, especially commuter rail.
N&W and Southern didn't have the massive duplication of facilities to
maintain or the staggering labor costs that came from combining what were
essentially two parallel systems with out any cost cuts.
Perhaps Penn Central was destined for failure, along with the other NE railroads that eventually formed Conrail. However, we have the luxury of hindsight, and may be practicing the big no-no of historians, anachronism. Perhaps?
I don’t think what we see in hindsight would have helped Penn Central’s
management. Say the top three were grabbed on the day of the merger, brought to
the future, given an extensive education on all that was going to happen, and
returned the instant they were grabbed. What would be different? I’m certain
they would have done a few things differently to protect their reputations, but
the outcome would be essentially the same. Knowing what we know they may have
been able to hold on for a few more years, but then what? What about the massive
hike in fuel prices that came a couple of years after the bankruptcy? What about
the Nixon staglation followed by the even worse inflation and recession in the
Carter years? How would they shed the commuter and labor obligations with out
using Uncle Sam’s dime?
> Saunders, Perlman and Beven deserve some of the blame because they
were in charge and were ultimately responsible. After all, being responsible is
the function of leadership.
They were in charge and when the company failed they were held responsible
and removed from their positions. I’m not saying that they should not bear
responsibility. I’m saying the Penn Central was doomed from the start because it
was composed of railroads that were doomed before the merger, and that no
management team could have saved it, and few could have held it together much
longer than Saunders, Perlman and Bevan.
Bryan Turner W8LN Louisville and Nashville Railroad Email List http://groups.yahoo.com/group/lnrr |