E. Hunter Harrison on CNBC

[jukeman45]

Coming up in the next half hour.

[AARR]

Someone please post what he says. Thanks.

[firemedic54]

Never heard of him. I assume he has something to do with a railroad??

[AARR]

CEO of CN...he's not popular with anyone except, maybe, shareholders.

[PAT.C]

CEO of CN...he's not popular with anyone except, maybe, shareholders.

HEY DON, EMD ACE STEVE IS A BIG FAN OF EHH..

[firemedic54]

Why isn't he popular? Making bad decisions?

[AARR]

Why isn't he popular? Making bad decisions?

He's making decisions that are not good for traditional GTW lines. He's closed Battle Creek yard with a goal to improve train speed by eliminating stops at yards. Some people have said that he's making decisions about how local trains operate on the Michigan lines that hurt customer service and chase away customers.

[firemedic54]

Ahhh..I see. He probably had something to do with the reduced number of trains which go past my house (Holly Sub thru Fenton).

[AARR]

Ahhh..I see. He probably had something to do with the reduced number of trains which go past my house (Holly Sub thru Fenton).

Many would say yes. They gave away the coal contract to CSX because CN didn't feel there was enough money in the short haul from Chicago to the Shore Line Sub to cover the wear and tear on the track. Many feel CN did not put it's best foot forward to retain the GM traffic from both Hamtramck and Orion. Intermodal into Moterm has not developed as hoped. So right there would be another 4-6 trains per day.

The emphasis Class 1 railroads are putting is on speed. Local customers and yards slow trains down. So while railroads are fiddling to figure out the right formula to maximize customer service and speed, employees and customers are treated like statistics rather than individuals. It's how big business works.

So for railfans and the average railroad employee who tend to see things very narrowly it's hard to understand what CN is doing and is looked upon negatively.

[Norm]

They gave away the coal contract to CSX because CN didn't feel there was enough money in the short haul from Chicago to the Shore Line Sub to cover the wear and tear on the track.

So, CN accepted the short haul from Lang Yard to the power plants south of Detroit rather than pick up the coal in Chicago and haul it a couple hundred miles. They chose to take the thirty or forty mile haul. Somehow, that doesn't make good business sense considering they were whining that short hauls don't make money for them. NS also had to benefit from CN's not wanting to haul coal via Durand. Where's the profit in that? It sure isn't on CN's bottom line.

I don't know if the problem is in Montreal or rests with those CN managers here in Michigan, but one thing is sure. Traffic, both local and overhead, on the Holly Sub is down substantially. CN, whether right or wrong, has told GM to 'bug off', or maybe GM told CN to 'bug off'. Either way, the bottom line is loss of revenue for CN and probably higher costs for GM to haul their product to Utica for loading on NS or CSX. Seems the truckers just won another battle in the railroad/truck war.

BTW, show me a business whose customers have defected and I will show you a padlock on the door.

Like every other business, railroads are under siege. It will be interesting to see where this all plays out. Class I's have gone by the wayside before, and we may see it happen again.

[esprrfan]

CEO of CN...he's not popular with anyone except, maybe, shareholders.

I know I read alot about him in the bathroom on CN units

[intocable83]

Well, if he is making bad decisions regarding customers and other things, if it keeps up like that eventually it will lead to the downfall of their business all together and open the doors up to other railroads who can run things better. There is always something good in a bad thing. Look at it that way.

[AARR]

So, CN accepted the short haul from Lang Yard to the power plants south of Detroit rather than pick up the coal in Chicago and haul it a couple hundred miles. They chose to take the thirty or forty mile haul. Somehow, that doesn't make good business sense considering they were whining that short hauls don't make money for them. NS also had to benefit from CN's not wanting to haul coal via Durand. Where's the profit in that? It sure isn't on CN's bottom line.

Norm's correct. I hope CN knows what it's doing even if it doesn't make sense to those of us who don't get to see how the numbers work.

[AARR]

I don't know if the problem is in Montreal or rests with those CN managers here in Michigan, but one thing is sure. Traffic, both local and overhead, on the Holly Sub is down substantially. CN, whether right or wrong, has told GM to 'bug off', or maybe GM told CN to 'bug off'. Either way, the bottom line is loss of revenue for CN and probably higher costs for GM to haul their product to Utica for loading on NS or CSX. Seems the truckers just won another battle in the railroad/truck war.

My understanding of the situation is the increased demand for smaller vehicles caught railroads with a shortage of tri-levels so some railroads are hording what they have. Since CN does not control the tri-levels once their turned over to the connecting railroads CN depends on timely returns of the tri-levels but they're not getting that. The connecting railroads are keeping the tri-levels for their own use. Many will say, "then CN should buy more tri-levels" (it's always so easy for us railfans to spend the railroads money ). But CN would do so in the face of a company (GM) that may not survive another year. Notice CN keeps its Ford, whose future looks a little brighter, customers stocked with tri-levels.

[AARR]

Here's what I was looking for:
http://www.cnbc.com/id/15840232?video=947352942

[saxman]

If nothing else E. Hunter illicts controversy. In his CNBC interview he touched on a couple of his axioms of railroading:
Asset utilization and cost control. This is why he explained that his performance figures at CN are a bit different then the rest of the industry. Like or not he has been able to weather the econoimc storm in fairly good shape.

Since E. Hunter is big on cost control this helps to explain why CN does not handle as many coal trains as before. Hunter is charged with making the CN profitable. Is it profitable to bid on traffic that you are already at a 100 mile disadvantage to the competition? Is it profitable to get into a bidding war with your competition for business and then move the traffic at a lose? As is want to be portraied on this and the other Michigan board CN just gave the DE coal business to NS and CSX. This is not true. NS aggressively went after the DE coal business. They under bid CN. They use a long pool from Elakhart to reduce crew costs. They built a two track siding at Wagon Works on the Dteroit Line to stage the coal trains. They have a better connection with BNSF in Chicago then CN. Also, since this is a contract for a service what did DE want in return? In the process CSX got in the act for movement of western coal from BNSF as well as the eastern coal requierd by DE and works a deal with DE and CN. So in the end, NS gets the lions share of the business. CSX delivers to Lang and CN then delivers to DE. In reality, CN could have cut out Lang all together and had CSX pay trackage rights to deliver the coal straight to DE. Part of the resason this probably didn't happen is the occasional need to re-stripe the train so all the rotarys line up. Don't think this type of prctice doesn't go on. The CN (exIC) delivers to a power plat in Baldwin, IL from East St. Louis and uses a portion of UP track to do it. In the end the finacial wizards at CN say: "Hey we are making the same or more then as if we ran the trains all the way." This is what E. Hunter is paid to do. Make a profit at the lowest cost possble.

This type of practice is not new to E. Hunter being at CN. The DT&I ran coke trains deliverd from the N&W at Glen Jean, OH to Ford Rouge. The N&W offered that they would give DT&I the same division of revenue for the coke trains to deliver them at Homestaed Yard in Toledo instead of Glen Jean. This was obviously going to be a cost savings to the N&W. The DT&I agreed because of the costs savings to them. They eliminated two crew starts and lodging expenses for starters and all the other associated expenses with a train from Flat Rock to Glen Jean. Now answer this question: If it was your business what would you do?

Everyone should take the time to watch CNBC clip on the link provided. It gives one an insight as to what a person in E. Hunter position deals with. You will also see that he is not some three headed hydra bent on destroying the railroad worl as we know it. He is commited to making the CN a profitable company in an extermely difficult economic enviorment even in the good time let alone now.

[Cinderpath]

My thoughts are that CN is a house of financial cards waiting to fall once he leaves. Sorry but costing in any business tends to be similar, and with Class I railroads it is especially the case, they all have similar union contracts, etc, unlike in automotive where it is union vs. non-union and legacy cost. The fact that CN's operating ratio being significantly lower than competitors (again where costing is very similar with other Class I railroads) leads me to believe the books are getting cooked, which given the way corporations have been in past decade (Enron, World Com) it would not surprise me. Not to mention, CN's track, physical plant and infrastructure are terrible, and are under maintained, will cost Harrison's successor dearly as they will have to play catch up. My thoughts are if you are a CN stockholder, sell your shares just about the time Hunter retires, as the price will be inflated so he can exercise his options, then bail. Its the American way, get your own big slice of the pie, and who cares who gets screwed behind you. Fortunately roads like BNSF, and NS seem to take a longer term approach vs short term gain, and their payoff will be greater in the end.

[sd70accsxt700]

They use a long pool from Elakhart to reduce crew costs.

Espeefan, can answer this better, but I believe that all the coal trains are short pools, no long pools on coal trains. Three crews, one from BNSF to Elkahart, Elkahart to Toledo, and Toledo, to the power plant.

In the process CSX got in the act for movement of western coal from BNSF as well as the eastern coal requierd by DE and works a deal with DE and CN.

CSX has always been in on the Eastern coal contract nothing new there, NS has the lions share of the western coal and CSX has the lions share of the eastern.

In reality, CN could have cut out Lang all together and had CSX pay trackage rights to deliver the coal straight to DE. Part of the resason this probably didn't happen is the occasional need to re-stripe the train so all the rotarys line up.

From what I understand, that was supposed to happen, but CSX did not want to pay what the CN wanted for trackage rights, to the power plant at Monroe. And we have always been to supposed to be restriping the train, (we have a specific rule for trains to and from all the power plants in Michigan, via reporting marks), and just recently we started pulling trains into Walbridge yard just for that purpous.

[AARR]

My thoughts are that CN is a house of financial cards waiting to fall once he leaves.

Cinderpath - Do you have any thoughts about what EHH said that he's done what he's done to get through the recession? Question is for anyone, actually.

[ns8401]

My two cents Don- If he's doing cost cuts to get through the recession great. However does he expand business when things pick up again?