Union Pacific: The Reconfiguration: America's Greatest Railroad from 1969 to the Present

By Maury Klein | Go to book overview

19
The Problem

On March 15, 1988, Mike Walsh sat down for a lengthy interview with John F. Kawa, a senior vice president at Dean Witter Reynolds. Walsh had been on the job for seventeen months. He had launched the revolution to retrofit the railroad to the new economic realities, and at least some of the dust had begun to settle. Shortly after joining UP he had committed the railroad to improving its net to $475 million in 1987 on what appeared to be flat or declining revenues. The road achieved a record net of $440 million. The operating ratio rose from 79.8 in 1986 to 81.4 largely because of higher fuel prices and personal injury charges. During the year the railroad had also adopted a mission statement to be “the safest, most customer responsive, highest quality, lowest cost, most financially successful, and best managed” in the nation.1

The interview gave Walsh yet another platform for his vision. He repeated his familiar litany about the importance of customer service, quality performance, and communication within the ranks. The reorganization of the operating department was necessary to bring the road into the modern business arena. He had imposed major cultural changes on the company in a short time, but most of the employees were adjusting to them. Those who resisted or faltered were not likely to have a future at UP anyway, especially as the ranks continued to thin. During 1987 the company had cut some three thousand people even though gross ton-miles increased 14 percent.2

On the labor front the UP, like all other railroads, still bore the burden of arbitrary work rules that undercut every attempt at efficiency and modernization. The endless fight to eliminate firemen offered a classic example. The 1964 agreement had been hedged to such a degree that in 1985 the UP still had 1,200 firemen on its roster with a total payroll of $60 million.3

The list of arbitraries seemed endless. If a train was delayed leaving its initial terminal or reaching its final terminal, each trainman got paid an extra twentyfive cents per minute, a charge that totaled $15 million a year. If a train stopped to pick up a locomotive en route, each crew member received an extra hour’s pay

-254-

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Union Pacific: The Reconfiguration: America's Greatest Railroad from 1969 to the Present
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Acknowledgments ix
  • Introduction 3
  • Prologue - The Celebration 5
  • Part One - The Kenefickera, 1970–1985 13
  • 1 - The Industry 15
  • 2 - The Fat Old Lady 30
  • 3 - The New Approach 46
  • 4 - The Godfather 60
  • 5 - The Shifting Landscape 72
  • 6 - The Corporate Relationship 84
  • 7 - The Return of Hump Ty Dumpty 95
  • 8 - The Year of Decisions 110
  • 9 - The New Partners 127
  • 10 - The Coming Together 142
  • 11 - The Right Stuff 154
  • 12 - The Operation 165
  • 13 - The Marketing Maze 180
  • 14 - The Studies 190
  • Part Two - The Walsh Era, 1986–1991 203
  • 15 - The Succession Scramble 205
  • 16 - The Whirlwind 215
  • 17 - The Quest for Quality 229
  • 18 - The Enigmatic Dynamo 242
  • 19 - The Problem 254
  • 20 - The Unstable Chessboard 267
  • Part Three - The Davidson Era, 1992–2004 281
  • 21 - The Empire 283
  • 22 - The Improbable Leader 293
  • 23 - The Bidding War 309
  • 24 - The Shaking out 325
  • 25 - The Sorting out 339
  • 26 - The Changing of the Guard 350
  • 27 - The Nightmare 360
  • 28 - The Road to Redemption 377
  • 29 - The Lessons Learned 391
  • 30 - The Clash of Styles 402
  • 31 - The Lessons Relearned 412
  • Epilogue - The Next Railroad 426
  • Abbreviations 431
  • Notes 435
  • Index 485
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