BN Prosperity

[WNYRailfan]

Why has Burlington-Northern stood the test of time? The BN conglomerate was created 03/02/1970. PC was created in 1968 and failed miserably as did E-L (1960). Both went to CR and then NS/CSX.
What made the BN so special that it did not get incorporated with CR and it had the chance to merge with Santa Fe?

[LCJ]

Why has Burlington-Northern stood the test of time?

I would say better planning for integration -- plus the properties that went into BN were in better shape physically and financially than were the other railroads you mentioned.

And -- the economics of the markets served by BN were more favorable than those of the northeastern region served by PC/EL et al.

There's a lot of stuff out there written about these deals and their consequences. Read up, my man!

For me it's clear that the poor planning and the rush to integrate were the main barriers to success for PC, but the list of other factors is very long and has been thrashed about a lot on this and the previous incarnations of Railroad.net.

BN (obviously) did it better, let's just say.

What made the BN so special that it did not get incorporated with CR and it had the chance to merge with Santa Fe?

Well, because they were solvent (making enough profit to service all liabilities) -- and therefore weren't in bankruptcy as were PC and EL. If they had been, maybe they'd have been included in Conrail. Who knows?

They had the chance to merge with ATSF because the ICC disapproved the SP-SF merger, leaving ATSF as a potential acquisition/merger partner. Don't forget BN also readily absorbed SLSF (Frisco).

BN had some very severe problems over the years with major collisions that killed and injured employees. They were very much under the microscope for a while about that.

[catfoodflambe]

Agree with most of the above. PC was doomed before the merger took place - unmerged, my opinion is that Pennsy and the Central would have collapsed on about the same schedule. The expense of the merger itself was probably balanced by the immediate savings. Neither property was capable of generating enough cash to maintain and operate their existing system - let alone to invest in needed technologies and plant to remain in business on anything more than a month-to-month basis.

With the regulatory system in place at that time, I don't think there was much that could be done, managerially speaking - it was like debating on how to manuver the Titanic after hitting the iceberg.

The significant differences, IMHO:

Passenger Service:
I would estimate that PC with the New Haven probably handled more passengers each week than BN did in a year - the cash drain from maintaining the service was incredible.

Physical plant: other than in perhaps Minnesota and North Dakota, BN didn't have a huge network of branch lines. Even those it did have were a different breed of cat. Ag branches can sit idle for weeks at a time - while they run up taxes, they don't need to operated every day, or even every week. The real money-losers were the 1-2 train per day lines that had customers requiring daily service for 20-30 carloads a day. PC was absolutely riddled with branches of this nature - and could not abandon them.

Northeastern property taxes: I recall reading an item that Conrail did about 1/6 of all its business ( in all measures - mileage, revenue, etc) in New York State, but that they paid 55% of all their tax dollars in that state. New Jersey and Connecticut were also infamous for high rail property taxes.

Nature of the service - I would suspect that BN's average linehaul per load was at least three time that of PC's. A sizable portion of the cost of moving a car is fixed - interchange or switching at origin, switching during initial linehaul dispatch, same at termination of linehaul dispatch, and interchange or switching at destination. The revenue margin of profit for the actual linehaul operation itself is where the railroad can make its profit. PC's was very, very short.

Imbalance of loads - PC terminated about 5 load for every three they originated. They spent an inordinate amount time rounding up emptys and moving them off-line. I'm very, very shaky on this, but aren't/weren't terminating roads also responsible for per-diem charge on empty cars until the return to the owing road? {Let's say an SP-owned bulkhead flat is loaded with lumber in Oregon on the SP, and moves Eugene - Ogden/UP, Ogden-Omaha/CNW, Omaha-Chicago/PC, and is delivered to a PC-served lumberyard in Columbus OH. If the car was sent back to Oregon empty, was PC responsible for the per-diem charge until the car hit the SP again?

[LCJ]

If the car was sent back to Oregon empty, was PC responsible for the per-diem charge until the car hit the SP again?

This is a fact. Car hire fees (per diem charges paid to owners for every day a foreign car is on the system) were (are) a major expense for eastern roads. Gathering up and moving trains of empties west was (is) a huge but necessary cost of doing business. Efficiency and good local decision-making with regard to the movement of empties is critical. PC didn't always have the luxury of being able to do it well, nor did they have information systems that would assist local managers adequately in this process.

Also, low system velocity contributed to this cash drain tremendously. Slow orders and congested terminals added days (and many dollars) to the bill for car hire. Roads that interchanged with PC got stuck on this one in a big way after bankruptcy protection was in place!

[XBNSFer]

I'd echo some of the statements made above. Basically, the NYC and PRR were both money losing RRs before the PC merger ever took place, and given the regulatory environment at the time, there was no way for them to get out from under. The governments (state and federal) just assumed the RRs could continually absorb the costs of excessive taxation, ridiculous labor rules and laws, service to branches whose revenue hadn't justified their existence for years, freight traffic being lost to government subsidized trucks, and passenger services that were somehow supposed to compete with government subsidized automobiles, airplanes and buses. As for RRs like EL and LV and RDG, they weren't very healthy either, being in the same operational environment, and in some cases (LV), PC partial ownership meant they got dragged into bankruptcy after PC went into bankruptcy. EL was dealt its final blow by the damage from Hurricane Agnus.

Basically, RRs in the northeast faced the worst loss of business to the highways, due to the short haul nature of traffic in the region. Until Staggers, the RR industry in the northeast didn't have a chance of returning to profitability.

[AmtrakFan]

Also BN had Better Excutives than PC also this was in Planning Scince in 1904 That was the Year of their 1st Attempte.

AmtrakFan

[XBNSFer]

BN had its share of problems too, and had something of a reputation for poor service and resulting loss of business, and in fact was close to bankruptcy at one point due to extensive employee injury claims for things like noise induced hearing loss, etc. (hence today's fanaticism about safety). A few things got and kept BN out of trouble: the elimination of what rail competition they had (MILW), the discovery of low-sulfer coal in the Powder River Basin and sudden popularity thereof due to tightening power plant emission regs (which was just about a money printing machine for BN, particularly compared with their other operations), and the fact that they had long hauls that gave them a healthier revenue vs. cost situaion than the short haul northeastern RRs. Oh and of course the doublestack revolution that brought a traffic boom obviously never dreamed of by the rip-it-up-'cause-we-ain't-using-it-anyway BN management that had, only a short time earlier, cut the former GN between Sandpoint and Spokane in favor of "funneling" the (then sparse) traffic over the ex-NP instead, ripped up the superbly engineered and fast SP&S route between Spokane and Pasco (save a short stretch to Lakeside Jct.), and sold the ex-NP mainline from Sandpoint to Laurel, MT to the MRL.

[TerryC]

AmtrakFan do you mean 1904 or 1964?

http://trainiaxindex.cjb.net/
Keep asking, keep learning

[Delta]

AmtrakFan do you mean 1904 or 1964?

http://trainiaxindex.cjb.net/
Keep asking, keep learning

I think he meant 1904. The GN, NP, CB&Q, and SPS were actually more or less controlled by the same entity LONG before the merger was finally given official approval.

[2nd trick op]

The date was indeed 1904, and the matter is referred to by historians as the Northern Securities Case.

The original Burlington properties (Chicago, Burlington and Quincy) were developed primarily by John Murray Forbes,who was noted for his very conservative financial strategy. (The Forbes familiy members affiliated with publishing are only distantly related, if at all.)

The Burlington's conservative financing enabled it to survive the unstable business conditions and political pressures of the late Nineteenth Century in much better shape than its granger rivals North Western and Rock Island, and in 1901 Great Northern builder J. J. Hill, also revered for his conservative principles, sought to add it to his GN and the Northern Pacific, which he already controlled. The banking house of J. P. Morgan was intensely involved in the financing.

The newly-elected President Theodore Roosevelt instructed his Attorney General to oppose the move in 1902 and, two years, later, the Supreme Court ruled against the Hill/Morgan interests. It was to take another 70 years, and a drastic change in the competitive areana, before the plan would gain approval.

[AmtrakFan]

They also tried in 1928 and 1962.

AmtrakFan

[WNYRailfan]

Another question:

If the BN merged with the Santa Fe in 1995, why even 10 years later is much of the BN rolling stock still in the BN green paint scheme? Most of the locomotives have been repainted, but the box and coal cars haven't.

[AmtrakFan]

Well they prorably haven't had time.

[Avro Arrow]

Another question:

If the BN merged with the Santa Fe in 1995, why even 10 years later is much of the BN rolling stock still in the BN green paint scheme? Most of the locomotives have been repainted, but the box and coal cars haven't.

They're repainted as needed.

[wigwagfan]

Another question:

If the BN merged with the Santa Fe in 1995, why even 10 years later is much of the BN rolling stock still in the BN green paint scheme? Most of the locomotives have been repainted, but the box and coal cars haven't.

I would disagree with "most of the locomotives have been repainted" - while most, if not all, of the locomotives now have BNSF reporting marks/numbers, there are still a lot of BN green and ATSF yellow/blue locomotives around. Just like UP still has SP gray/red locomotives, but now have UP numbers and shields. BNSF does have a lot of new Dash 9-44CWs on the property which make it appear that they have so many locomotives in the new scheme.

As a railroad philosopher once said, "a dirty locomotive runs as good as a clean locomotive". The same could be applied to a freight car, or the paint scheme it has. Heck, one day I saw a Reading Railroad coal hopper...maybe five or six months ago, out here in Oregon. I had to take a double-take, and sure enough, even with the RDG reporting marks. That sucker was rusty...but it obiviously was good enough for interchange as it was being interchanged from the Union Pacific to a shortline. There are still Rock Island painted cars out there, despite the fact that there is no successor to the RI.

Painting a locomotive or freight car is generally an unnecessary expense. When a car is shopped, then it might be worth the hassle since the equipment is already out-of-service and needs other time-consuming repairs - but to haul a revenue piece of equipment off the road for a few days just to repaint it, isn't exactly a wise move.