EL: What If The Hurricane Never Happened

[wdburt1]

Thank you, LCJ, for your thoughtful comments. I hope I maintain as much objectivity.

Erie Lackawanna's demise will be debated until we are all senile and it's the only thing we still remember. For those of us of lived and worked these issues, it's already the case that we have more in common than what separates us, because everyone else wonders what the heck we are talking about.

Seeing that we are retired railroaders, the nursing home staff will put our chairs together during the mid-day "social time," then wonder why we are shaking our canes at each other.

WDB

p.s., Hurricane Agnes was only the straw that broke the camel's back. The real problem at EL was profits that were touch-and-go at best in the late 1960s and early '70s, such that the company was unable to withstand rapid increases in costs (including government-mandated wage increases), ICC hold-downs on rate increases, the 1973 oil shock, and the sharp recession of 1974. That said, responsible analyses at the time indicated that MARC-EL would have had a shot at success. And MARC-EL is the only scenario worth considering.

[Idiot Railfan]

If the E-L could have limped along to about 1983, I think it would have beenn revitalized by double-stack revolution. As we saw, Conrail was disinterested in promoting double stacks, and let the NYS&W grab that business in the belief that it would be a minor niche.

Had the E-L still been around, with it's clearances and quick route between NY and Chicago, it could have grabbed that business and ran with it.

Problem was, how would the E-L have survived the late 70s and the recession of 81-82 and the closing of the Ford plant in 1980. Obviously union concessions.

But one thing the E-L did have, ironically, was extensive passenger service. While certainly a long-term drain on railroads, the dirty little secret of commuter service for the E-L is that it was a short-term cash cow. It was a guaranteed source of cash each and every day/week/month. Frieght customers might be slow in paying, but passengers pay as they go. I've been told by people who know about these things that the E-L wouldn't have made the payroll frequently if they didn't have the commuter cash.

All the E-L had to do was limp along to 1983, and I think it would have become a new powerhouse.

[LCJ]

That's a very large "if."

All I can think of is the rusty remnants of the steel industry in Ohio, and how that dramatic downturn in the '80s would have affected EL's ongoing financial outlook. As we know, Wall St. analysts are not so easy on companies that are "limping along," as you put it.

I used to work for a guy in Pittsburgh, who, in reference to a "miracle" crying statue in a church in Ambridge, PA, said, "That's not a miracle. A miracle would be seeing smoke coming out of the stacks again at Jones & Laughlin Steel in West Aliquippa!"

Commuter trains may be a ready source of short-term cash, but they almost universally translate into operating losses over time. But as someone wise once said, "In the long-term, we're all dead."

But only if! We can always dream!

[henry6]

Actually the stackers would have been well served by the EL instantly because most of the clearences were suited to the service. In fact, CR found the EL line from Buffalo an excellent stack route. If only CR had kept the EL intact west from Hornell all the way to Chicago....oh, well.

[Otto Vondrak]

A railroad that stretches from Hoboken to Chicago cannot simply "limp" for 8 to 10 years waiting for the next shipping revolution. Even if you had government loans for new equipment and had NJDOT take over the commuter trains (sorry, Cleveland), you'd still have a long route needing constant maintenance to keep tracks speeds up. With competition on both sides from CSX and Conrail, EL would have had all the cards stacked against them.

-otto-

[wdburt1]

Could MARC-EL have stumbled along on a combination of federal and state grants for track rehab and equipment, until deregulation (1981) and the intermodal revolution (1985)? I think so. That's pretty much what Conrail did. And D&H, for that matter.

It is reasonable to assume that MARC-EL would have received its pro rata share of the $3 billion that Conrail received, and put it to good use on a system that, on a percentage basis, had a lot less secondary and branch line trackage to rebuild and could afford to concentrate the federal dollars on the main line.

In addition, MARC-EL would have been the favored recipient of additional New York State grants, as D&H was. Probably a couple hundred million dollars right there (D&H got $150 million or so).

The steel industry, by the way, played no larger role in EL's business than it did for Penn Central. Its decline was a secular trend, but not one aimed especially at the former EL lines in the late Seventies.

Finally, no knowledgeable historian of these matters assumes that MARC-EL necessarily would have continued to operate the ex-EL west of, say, Lima, Ohio or even Akron.

WDB

[lvrr325]

Finally, no knowledgeable historian of these matters assumes that MARC-EL necessarily would have continued to operate the ex-EL west of, say, Lima, Ohio or even Akron.


Could you elaborate further to that option? It's apparent today with the majority of this part of the Erie being gone, there was very little local traffic, but how do you have a competitive bridge route to western connections, without the bridge? Rely on NS or Chessie? Sell the lines west to a western carrier (AT&SF, BN, ?) with the cash to rehabilitate them? Or not operate that type of bridge traffic at all.


For the benefit of the discussion, MARC-EL would be EL plus Reading, LV and CNJ? It's been too long since I read the specifics of the MARC proposals, but I seem to recall two versions of just what would constitute that system.

[wdburt1]

MARC-EL versions:

USRA Preliminary System Plan 2/26/75—MARC (RDG, LV, CNJ, L&HR) + EL + trackage rights over Conrail to Chicago, East St. Louis, and Cincinnati. Also suggested inclusion of DT&I and P&LE.

ICC Rail Services Planning Office Evaluation of the PSP 4/28/75—Advocated limiting MARC-EL to territory east of Buffalo and eastern Ohio (meaning Akron or Sterling), making MARC-EL essentially a terminating road for N&W and Chessie.

USRA staff study April 1975—Studied MARC + EL east of Lima, Ohio + trackage rights over Conrail Lima-Chicago and Marion-East St. Louis.

Version recommended by RDG and LV trustees in connection with USRA staff study—MARC + EL east of Buffalo and Akron + Poughkeepsie Bridge route, inclusion of which was also supported by New York State Department of Transportation and Port Authority of New York and New Jersey.

Version supported by EL president G.W. Maxwell—MARC + EL (including EL route to Chicago) + trackage rights over CR Marion-East St. Louis.

The EL trustees unrealistically advocated inclusion of all of EL’s west end in either Conrail or MARC-EL because this would net a higher return to the EL estate than abandonment. Maxwell had his own reason for wanting to retain the Marion Division and to obtain trackage rights over the Big Four to East St. Louis—he did not want to be dependent on N&W.

LV trustee Robert Haldeman contended that USRA put forward a version of MARC-EL that was bloated with redundant routes. It would have retained EL’s Marion Yard. The slimmer Buffalo/Akron (or Sterling) version would have relied on Bellevue and Willard as the principal Midwestern class yards.

During the 1980s and early ‘90s the former EL lines east of Buffalo did in fact function as a terminating carrier for both CSX and NS traffic. For several years, CSX Intermodal traffic moved on a Chicago-Buffalo-Little Ferry routing via haulage on Norfolk Southern’s ex-NKP route. Clearly, if the former EL had been intact from Akron eastward, this traffic would have moved that way instead.

Engaging in a little alternative history, one can imagine a scenario in which MARC-EL started life as the entity envisioned by Maxwell and USRA, then evolved into the entity envisioned by RSPO and Haldeman.

Other examples of this “solution” include C&EI (which MP and L&N divided like a wishbone) and CB&Q (which served as Chicago access for both GN and NP).

As with east-west traffic, MARC-EL also would have been Chessie’s and Norfolk Southern’s principal access to the New York market from the Southeast. Add Conrail to that after Amtrak acquired the Corridor.

[lvrr325]

Interesting. So it appears the west end would have been abandoned under those alternate plans?

I can certainly see why Maxwell would be unwilling to be totally reliant on other carriers for eastern traffic. That said, long trackage rights routes rarely seem to work, I don't see the St. Louis route being viable.

But I would have to wonder, if the Maxwell/USRA envisioned entity had come to be, if the west end could have become the double-stack pioneer route east of Chicago. It only would have had to hang on around 10 years or so. But that all would depend on if they were able to maintain it and keep enough trains running fast enough to make it profitable.


Might be interesting to know how the LV was to be handled in these plans. The west end would be pretty redundant, even Sayre to Coxton would be somewhat redundant in these plans - but the sections that remain today would have to be either handed to Conrail, or connected to EL lines somehow.

[Engineer Spike]

I read about the trackage rights on Conrail, to Chicago and St. Louis. What was wrong with the Erie to Chicago? Could EL or more likely MARC-EL have been given one of PC's lines to St. Louis (either the PRR, or NYC route)?

[NYC27]

Their was nothing wrong with Chicago, but they needed to add St. Louis as well. SP didn't go to Chicago back then, neither did the MKT or SLSF. St.L is a lower cost option to get to/from the southwest, considering that much of the future of the industrial northeast revolved around plastics and chemicals from the Gulf Coast, this was a big deal. Conrail would have had a huge advantage over Marc-EL in the continued development of this traffic.

Could they have been given their own line to St. Louis? Maybe, but it would have made MARC-EL look worse on paper (higher operating costs and a bigger repair bill at startup); in reality it would have been better for them, but since it never came to fruition it doesn't matter.

[HSSRAIL]

By the time Agnes struck EL would not have made it even if it had been undamaged. The premeditating factor was that Federal Money which the EL would have needed was only available under Conrail Operation EL could not get Government help on its own outside of Conrail. Insofar as the Marion Yard Project the money was not set aside and by the time Agnes hit obtaining the loans at that time was impractical. Nothing could have turned the EL around in the recession of the Early 1970's it was the worst recession since 1958.

[wdburt1]

Substantial Federal funding was in fact advanced to EL and other bankrupts before Conrail came into being, and the MARC-EL proposal analyzed by USRA and the ICC assumed that MARC-EL would receive some federal rehab and operating assistance, reflecting the fact that it was undertaking expenses that would be (and were, in the end) otherwise borne by Unified Conrail.

The question of whether MARC-EL would have survived the years after its creation has been rehashed endlessly. The 1974 recession, which was the deepest economic downturn since the Great Depression, was largely over by early 1976. The usual question is whether MARC-EL would have survived the structural decline of steel, autos, etc. in the eraly 1980s. On that point, it is worth noting that MARC-EL would have been less, not more, dependent on these industries than that rest of the lines that formed Conrail. And of course, Conrail did survive that downturn, albeit with additional federal assistance.

WDB

[henry6]

Joined: 17 Aug 2006
Posts: 24

Posted: Mon Aug 13, 2007 9:23 am Post subject:

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"washingtonsecondary wrote:
Seven threads down (as of 8:30am) this is being discussed.

http://www.railroad.net/forums/viewtopic.php?t=37952


I suppose I missed that thread... However, after reading all of the posts (which I have read through this thread a few times before anyway), I only saw one statement that somewhat related to my question. I am asking specifically about an EL + D&H + B&M merger in 1976. There are SOOO MANY possibilities to discuss, and I don't want to open up that can again. Obviously Agnes still would have occured, the Ford plant would have closed, steel would have dropped off, etc etc. Really, anything west of Lima would be used to haul intermodel and maybe a few freights, but this combined system would be more of a terminator of traffic for NS and CSX via Buffalo and Akron, respectively. Could have worked...


To answer the specific question would be difficult without bringing in all the factors of the time. On paper, it looks good. And the EL DID HAVE A VERY VIABLE AND COMPETITIVE CHICAGO TO NYC ROUTE! So much so the PC people in CR got rid of it as soon as they could! And with the way railroads were allowed to do business after that time combined with a savvy marketing team and dedicated operating department could the DERECO combination could have been a very viable force.

[rrfoose]

So I have a what-if question...IF the EL hadn't gone into Conrail, but instead merged with former DERECO partners D&H and B&M, could that have made a viable system? From a financial standpoint, could this system have made it into today?

I doubt one would see EL as a big player in Chicago-NYC freight, but they could be competitive into New England by partnering with NS and CSX before the CR split, and NS afterwards - acting much as a terminating road. However, by turning the western part of the system into a built-for intermodal route, they could focus on hauling trailers and containers on a fast schedule, and use the eastern part of the system to gain carload traffic to pay the bills.

And if a combined system were to pick up MEC and the ex-CP lines that are now New Brunswick Southern, EL could potentially haul run-through intermodel from St John-Chicago to the Santa Fe. This would bypass Boston's lack of capacity and the busy ports around NYC. Sure, Halifax is huge for CN today, but this could be a reason to expand St John and create a new super-port.

How about this?