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  • G&W to acquire P&W

  • Topics relating to the operation of the P&W Railroad, which is a subsidiary of Genesee and Wyoming. Regional freight railroad based in Worcester and operating in Massachusetts, Rhode Island, Connecticut, and New York.
    Official Website
Topics relating to the operation of the P&W Railroad, which is a subsidiary of Genesee and Wyoming. Regional freight railroad based in Worcester and operating in Massachusetts, Rhode Island, Connecticut, and New York.
Official Website

Moderator: MEC407

 #1397545  by F-line to Dudley via Park
 
Backshophoss wrote:Is there a possibilty of G&W after the merger of a "push" to remove the "paper barriers" that confine CSOR to CSX interchange
and allow P&W to bring general freight on CHFP to the NY&A?
Or is that a lost cause,CSX will not give up?
I doubt CSX is going to give it up, or that it's going to be worth it. But...P&W can have direct access to Hartford Yard now as a staging area and crew base, something Cedar Hill doesn't offer much leeway for as CSX doesn't like CSOR, P&W, and PAS kicking their feet up on the furniture during stopovers. Right now P&W runs nearly everything remote out of Worcester, including crews. They'd save money on lodging and other expenses by finally being able to hire some native Connecticut crews. There wouldn't be any paper barriers to pooling staff and local logistics with CSOR. Could possibly even cross-qualify CSOR and P&W crews in each other's Central CT territory, depending on what the FRA thinks about that practice between 'sister' reporting marks. The CSX paper barriers only extend to the line-specific carloads and who gets them at interchange...not the logo on the engine or whether the engineer is moonlighting on other jobs.

It's possible--if the Conrail barriers don't specifically prohibit--that P&W can also have open access to Hartford Yard to do its own busines...so long as its carloads are walled-off from CSOR's and they're totally above-board on reporting that. P&W could badly use a yard of its own free use in Central CT because they have such a limited list of activities they're allowed to do at Cedar Hill.



The advantages CSOR gets out of this in spite of the paper barriers are:

-- P&W can do all their locomotive and railcar maintenance, and all their 92-day inspections. It no longer takes NECR way the hell out in St. Albans to serve them, with PAS having to be the intermediary for the handoff to Hartford. P&W can deliver right to Hartford Yard. CSOR basically no longer even needs a fleet of its own; they can just get drop-offs in Hartford from the P&W Valley/Air Line local, use 'em for X many weeks, then cycle back. A lot like CSX now rotates all its New England power in and out of Selkirk instead of keeping a 'native' fleet. CSOR can basically downsize their engine house to inspection pit and spot repairs, and reassign staff resources to generating revenue.

-- CSOR gains access to the whole system's railcar fleet, meaning they can offer customers wider range of car configurations than ever before at much better price point.

-- P&W, being at the junction of CSX, PAR, MBTA, and Amtrak service in Worcester, has broad lend-lease access to specialized track equipment. They do outsource work for the T and have an as-needed agreement with CSX for spot repairs/inspections of breakdowns and emergency fueling when their power needs immediate help getting back on the Selkirk shuttle. They're owed enough favors by enough people that they can always get snow plows, tie machines, etc. when they need it. They (and NECR) have better interchange and pricing options for getting ties, ballast, rail, sand, etc. and will be able to deliver those direct to CSOR now. All of this will significantly lower CSOR's operating costs and labor costs for maintaining their physical plant, and lets them maintain better-quality physical plant within their budget.

-- Availability of track equipment also lets them offer customers a better price for installing new sidings. Amtrak still gouges them for final switch installations on the Springfield Line, but they'd be able to tap the full resources of the system for getting the customer's property set up with freshly-laid or repaired track and offering full-service logistics for the property installation.

-- One of CSOR's biggest business challenges is the outrageous carload fees that Amtrak charges them on the Springfield Line. CDOT has pleaded to no avail for some sort of relief, but that's unlikely to ever happen now that the Springfield Line has shot up in stature on the Amtrak network. While P&W can't interchange directly with CSOR, they can perform haulage for them on the Valley/Air Lines to bring loads from Hartford to Cedar Hill in New Haven. CSOR can load its southbound trains strictly with carloads for on-line Springfield Line customers and duck any Amtrak fees for the Cedar Hill-bound carloads if P&W handles those drop-offs on the return trip from its Valley/Air Line locals.

-- These money-saving conveniences let them put more oomph into attracting more business of their own. They're doing pretty well with that on the Springfield Line and with some of the new scrap carloads they're receiving from Naugy via PAS haulage, but the only way to truly take the sting out of the carload fees is to out-pace them in new revenue. There's plenty of rail-accessible properties along the Springfield Line, and it's relatively attractive to light industrial businesses finding themselves priced out of the Shoreline. So what if they can't interchange it with P&W/NECR...it's more money in G&W's pocket.
 #1397558  by freightguy
 
F line,

I can remember bridge traffic for P&W from NYRR(Cross Harbor),and NYA. That faded pretty quick with loads for Frito Lay and Gen Pak. Is the aggregate business part of the paper barrier from the 1996 CR agreement with P&W?
 #1397737  by MEC407
 
Something to ponder:

GWI will soon own two P&W railroads: their existing P&W, the Portland & Western (PWRR), and the one in New England we all love (PW).

I can just imagine a customer phoning GWI and saying, "I need to speak with someone regarding my shipment on the P&W," and the GWI employee saying, "Which P&W?" :-D
 #1397755  by BandA
 
New England Central sounds too generic to my ears. So that will definitely be it.
 #1397886  by Engineer Spike
 
G&W will likely set up a new company. This is a loophole so they don't have to honor any labor agreements. Too bad Mr. Eder couldn't find a way to pass the company on instead. I invested in P&W because is never seemed like the type of company to sell everybody out, especially its employees.
 #1397920  by BandA
 
How much do P&W employees make, and how does it compare to other railroads (and CSOR/NECR)? I wouldn't imagine G&W would want a labor dispute on their new property.
 #1397960  by F-line to Dudley via Park
 
The one thing Wall St. analysts have criticized P&W for is having higher-than-average labor costs. But that can mean a whole lot of things. There's more than one set of union contracts when train crew, shop, and MOW staff are factored. They're based in Worcester right in CSX's, the T's, PAR's, and Amtrak's grill and the amid the East Coast megalopolis where the railroader job market is much more competitive than in Maine or Vermont and cost of living is higher. And a certain amount of that higher cost could be by-choice, as they've always been fastidious about "run fast, run well-staffed to switch customers fast, get back home fast within HOS" and tethering 3 states' worth of railroad out of just 2 main staff bases. It's not a straightforward analysis by any means.

How G&W chooses to structure a combined company is also going to be influenced by what legacy cruft NECR may still be carrying around in pre-1995 labor agreements from its Central Vermont/CN-subsidiary lineage. The answer isn't necessarily obvious or immediately ominous despite any generic company always having overriding motivation to trim labor costs. We're certainly not looking at a repeat of Guilford '87, because no sane business would ever voluntarily destroy itself a la Guilford '87 for the sake of some trite philosophical purity test about the role of labor.
 #1397966  by johnpbarlow
 
Here's a Seeking Alpha analysis of P&W finances and governance from January 7, 2016:

http://seekingalpha.com/article/3795856 ... pportunity

Also note the operating margin % chart showing P&W at 9.5% while G&W is > 21%.

Article excerpt:
The biggest operating expense for PWX has been its' [sic] salaries and wages, which took up 47% of operating revenues for 2014. While this was a reduction from the 50% of operating revenues it took up in 2013, it is still significantly higher than some of its peers. For example, CSX Corporation (NASDAQ:CSX) and Genesee & Wyoming Inc (NYSE:GWR) saw their wages take up about ~30% of operating revenues in recent history. One can argue that both CSX and GWR have better access to capital, which may have contributed to the top-line, reducing the wage expenses as a percentage of operating revenues in effect. In a different light, however, PWX's lack of leverage might be the result of not having a whole lot of sensible opportunities to invest in.

It appears that PWX can benefit from a buyout from a larger railroad in order to scale operations and implement a cost reduction project or three.
P&W's ~$35M in annual revenue is << G&W North America's approx $1.2B in annual revenue.
 #1398066  by Engineer Spike
 
In my labor comments, I was going on what these short line companies, like RailTex, G&W do. A good example is the CV. I used to work with a guy who had worked for CV. When NECR took over, he said that they first interviewed all the employees, and took the ones they wanted. With the union gone, they'd do things like give the best runs to the guys who had been the most junior. Little things like that. This guy finished out his career here on the D&H.

G&W may merge the P&W into NECR, but they may also set up a new company, which is the loophole I mentioned. This is why I'm skeptical of Robert Eder's motives. Maybe he feels that he, and the rest of the stockholders can cash out, and all make out well. The G&W offer may have been to good to pass up. Maybe he just wants out, and screw everyone else. P&W might not be the most profitable company, but it is well run, and I have received steady dividends for a long time. It's too bad to see it go.
 #1398081  by Ridgefielder
 
Engineer Spike wrote:G&W may merge the P&W into NECR, but they may also set up a new company, which is the loophole I mentioned. This is why I'm skeptical of Robert Eder's motives. Maybe he feels that he, and the rest of the stockholders can cash out, and all make out well. The G&W offer may have been to good to pass up. Maybe he just wants out, and screw everyone else. P&W might not be the most profitable company, but it is well run, and I have received steady dividends for a long time. It's too bad to see it go.
I think Eder is getting well on in years-- isn't he north of 80? Might be that as the majority shareholder-- by a long shot-- he figured that the sale was going to happen anyway, and it would be tidier if he controlled it rather than his heirs.

With regard to a new company: maybe, sure. But it occurs to me that P&W has a lot more moving parts than other G&W acquisitions, including trackage rights on Amtrak, operations on state-owned trackage, and (not least) a charter that dates back to the absolute dawn of the railroad in RI and MA. There may be good reason to preserve the P&W corporate identity.
 #1398125  by Backshophoss
 
P&W might be retaining their reporting marks as it's the "stronger brand" in the NE marketplace,and retain their needed ops
clearances from Amtrak,MN,and CSX.
If G&W goes the "rename" route,you wind up getting to "prove" the new company can operate safely on Amtrak,MN,and CSX
trackage all over again,kiss the old agreements "goodbye"(sometimes known as the "recert" process).
 #1398145  by DutchRailnut
 
until the transaction is filed with Surface Transportation Board it will all be just speculation.
 #1398334  by Lincoln78
 
Possible names:

Burlington Southern

Providence Pacific (dream big- maybe they'll end up owning UP..)

Or they could buy a defunct airline and use that name. I was going to suggest Northeast but they folded into Delta. And were originally part of B&M/MEC..
 #1398403  by ebtmikado
 
It looks like all, or at least most, of the other 100+ G&W roads have kept their original names.
Why would P&W's name change?

Lee
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