Harrison Leaves CP early, looks to CSX, end of CSX in MI?

[MQT1223]

Welp.. this is a shock, and also a very scary thought. If Harrison put CP down lower then what it already was, imagine what he will do to CSX if he takes the reins. Michael Ward is already on his way out anyway, and Harrison wouldn't leave CP early if he didn't have something lined up.

Kiss CSX in Michigan goodbye (except Detroit) if Harrison becomes the CSX CEO. I also wouldn't be surprised if he attempts CP/CSX merger 2.0 since the guy is hell bent on one final merger of all the railroads.

If I was Saturnalia, this would be the equivalent of Hillary Clinton beating Donald Trump in the election.

Thoughts?

[Saturnalia]

Ok...let's take a DEEP BREATH, before we throw our marbles around the room in a foamer-tantrum.

1. Could have used an article link first. Here is one. Trains News Wire is free to all this week.
Trains Mag: http://trn.trains.com/news/news-wire/20 ... tires-edit
WSJ: http://www.wsj.com/articles/outgoing-ca ... 1484783110

2. It sounds like a high probability that Harrison will end up at CSX in some capacity. But it isn't a done deal.

3. Ok, now into "what if?" speculation. Here are my thoughts:

a. Harrison is known for beating a railroad into reliability in train scheduling and efficiency. This would likely mean a shuffle in CSX's operating procedures. However, in light of the deep cutting and landbarge operating they've already implemented, the changes are more likely to be smaller than one might otherwise expect.

b. Harrison has NOT spun of lots of property while whipping railroads into shape. He's not about that. So doomsday, goodbye CSX in Michigan is probably extremely unlikely. His philosophy is asset management and wringing as much as you can get out of them. Also, CSX will NEVER fully leave Michigan. North/West of Plymouth are the only bits not necessarily worth having if you're CSX, depending on your analysis structure anyways.

That DOES NOT mean cut to the core. CN still owns TONS of small secondary lines in the UP, with much less traffic than CSX's Michigan holdings. So I don't think he'd be shortlining them en masse. Maybe the long-awaited sellout to the LSRC down to Wixom or Plymouth, and the Plymouth Sub could always be flipped to MDOT, or so goes the long-term thinking on both fronts.

c. Actually, an interesting thing about Harrison: while severing all ties with CP, he knows all about their Michigan situation...as in not owning their own line. And he knows, too, that CP has tried to buy it before. So alternately, besides the MDOT option, this move, in my opinion, would raise the chances that the Porter-to-Plymouth are flipped to CP, with trackage rights from Plymouth to Detroit, if not outright sale. Still an outside chance, but these chances are moving so that's what I'm talking about.

d. CSX's stock price will go up. Already has. Investors will LOVE LOVE LOVE it. Unfortunately, a lot of people are likely to be cut. Although, as I already suggested, I think T&E are actually fairly safe for the most part, as they're already operating bare-bones. The least senior men in Grand Rapids even are working with regularity off the extraboards because they're not stuffed with people.

e. I bet the lion's share of changes will occur in mid-to-upper level management. CSX has been top-heavy for years, and there have already been reports this week that the division structure is about to be reorganized into just a handful of regions, which itself would put a ton of middle managers on the street.

f. It'll also rekindle Merger suspicions. If EHH ends up at CSX, he'd be in control of one of the roads he wanted to merge with CP, which is still run by friendly interests. He'd always have to get both boards to bite fully, but still.

So that's my take. Keep the marbles in the bag, it isn't the end of the world, in any case.

[railohio]

Thoughts?

I bet you don't work for, ship on, or invest in CSX, so it really doesn't matter.

[penn central]

As far as i know the Rapid City Pierre And Eastern was spun off because it was under performing. And the Sudbury Subdivision in Pennsylvania and New York because it was under performing. Other then that im not sure of much else.

[Saturnalia]

As far as i know the Rapid City Pierre And Eastern was spun off because it was under performing. And the Sudbury Subdivision in Pennsylvania and New York because it was under performing. Other then that im not sure of much else.

RCPE was one of those long-awaited cast-offs after the DME elected not to go to the Powder River Basin. The NY and PA line sold to NS was a case of NS wanting to add it to their puzzle while not fitting into CP's.

Point is, that's far from casting off branchlines, like say how CSX went on a tear around 2005 selling off most of the Michigan branches. Harrison's time at CN and CP both show very few cast-offs.

[CSX_CO]

Might kiss Michigan good bye regardless if Harrison makes his power play. New system map coming out of the realignment shows most of Michigan going into the "Shortline Group" which means it doesn't fit into the long range plan/goals. Rumor is lines in that group are up for bids.

[MQT1223]

Thoughts?

I bet you don't work for, ship on, or invest in CSX, so it really doesn't matter.

Who cares??? This could mean big changes for where I live and affect many people I know who work for CSX or are affiliated with it.

[Doktor No]

Thank you Saturnalia. Pretty much sums it up IMHO.
Shares up 18% on JUST THE TALK OF HARRISON COMING. Can anyone else do that? He is the John Berringer of our day. Doctor of sick railroads. Turned CP share price from 30 sumthin to 140 in a few years. Did wonders to CN/IC et,al. Bought the J. Rebuilt Kirk Yard. Last months TRAINS had the Iron Lariat story...good god whats the matter with THAT!?
My 401K is up substantially...and when does one cash out and run to the bank? OY! I can pay off everything and smile the rest of my life. That's what EHH is doing for me. I don't give a rip if the engines are Red. I do care about what happens up here but I have nothing to say about it. I see CP taking the line thru GRP just to make them complete. Build a bridge at Porter to the Porter Branch and they have their link into Chitown and the IHB complete with no interference. That's what I would LIKE TO SEE but time will tell.
Just my thoughts and stop with the doom and gloom already. This could be a very good thing.

[Super Chief]

Hunter owns a horse estate in Ocala so it doesn't surprise me he will be in Jacksonville. He always gets his way just like Trump. Im surprised he wasn't picked for Transportation Secretary too?

[jrgerber]

Mr Trump is about to find out that getting his own way isn't happening anymore.

[BL2-1843]

Mr Trump is about to find out that getting his own way isn't happening anymore.

Actually, I suspect Trump will, but E. Hunter Harrison won't.

[dmitzel]

c. Actually, an interesting thing about Harrison: while severing all ties with CP, he knows all about their Michigan situation...as in not owning their own line. And he knows, too, that CP has tried to buy it before. So alternately, besides the MDOT option, this move, in my opinion, would raise the chances that the Porter-to-Plymouth are flipped to CP, with trackage rights from Plymouth to Detroit, if not outright sale. Still an outside chance, but these chances are moving so that's what I'm talking about.

This is what I think makes the E.H. Harrison move to CSX interesting to Michigan 'fans - CP running their Chicago-Windsor traffic across the old Pere Marquette makes this roundabout Michigan corridor viable again. Would actually be good news for fans along this line (and make Plymouth a train-watching destination once more).

[OwlCaboose2853]

Hunter owns a horse estate in Ocala so it doesn't surprise me he will be in Jacksonville. He always gets his way just like Trump. Im surprised he wasn't picked for Transportation Secretary too?

Trump picks Elaine L. Chao for transportation secretary https://www.washingtonpost.com/local/tr ... 65df13d944

[CSX_CO]

c. Actually, an interesting thing about Harrison: while severing all ties with CP, he knows all about their Michigan situation...as in not owning their own line. And he knows, too, that CP has tried to buy it before. So alternately, besides the MDOT option, this move, in my opinion, would raise the chances that the Porter-to-Plymouth are flipped to CP, with trackage rights from Plymouth to Detroit, if not outright sale. Still an outside chance, but these chances are moving so that's what I'm talking about.

This is what I think makes the E.H. Harrison move to CSX interesting to Michigan 'fans - CP running their Chicago-Windsor traffic across the old Pere Marquette makes this roundabout Michigan corridor viable again. Would actually be good news for fans along this line (and make Plymouth a train-watching destination once more).

Harrison has touted Buffalo/Niagra Falls as an under utilized connection point. Besides, why wouldn't they just add CP's business to existing CSX traffic that currently avoids the PM anyway? That's if the PM isn't relegated to secondary status long before any merger is consummated.

[Buster Manning]

That's if the PM isn't relegated to secondary status long before any merger is consummated.

I think it already is....

[CSX_CO]

That's if the PM isn't relegated to secondary status long before any merger is consummated.

I think it already is....

Under realignment the short line group will be 25 mph speed limits and any thru traffic routed off those lines. Other "secondary lines" will be 40mph speed limits. PM is in the "Shortlines" group on the system map.

[JoJames]

With traffic levels down. Plenty of room on the Garrett and Willard subs for anything Hunter Harrison would like to run Chicago east toward Canada.

[Saturnalia]

With traffic levels down. Plenty of room on the Garrett and Willard subs for anything Hunter Harrison would like to run Chicago east toward Canada.

This is the sort of short-term thinking that ends up causing the B&O to melt down when traffic levels rise.

Additionally, FWIW, half the line in question, from GR west, will not be allowed to degrade to 25 mph, since Amtrak runs over it. Now it may end up that Amtrak is forced to foot a larger bill to keep it that way, but the current contract stipulates that the existing speeds must be maintained.

[CSX_CO]

Downgraded the Monon from 79 to 60 mph and AMTRAK didn't have a leg to stand on.

[Saturnalia]

We're getting off-track, but this is a point worth bearing out. The GR Sub in particular will collapse into ruin if allowed to degrade to 25 mph. Simply put, CSX would have to establish a crew change point in St Joseph. The coal trains and 326/327 would not make it over the road in 12 hours, factoring in Chicago. There are 136 miles from GR to Porter, which Amtrak currently covers in 3 hours. 5.5 hours to Porter, and therefore 6.5 to Chicago would not stand - something would give. Maybe not CSX, but something would.

I doubt the plan from CSX's HQ really is a blanket 25 over all of the "shortline" territories. But if it is, or is close to it, then I hope EHH get some control, because that reasoning would sink CSX. Go ask the Rock Island, Espee and WP, among dozens of others, what happens when lesser maintenance becomes a policy. Railroads SINK in those conditions.

Turns out, trains only make money when they move. And allowing large portions of your network degrade doesn't do much but decay service and increase crew/operational costs. You can't grow business, so it does nothing to help but trim maintenance costs now. Perhaps Wall St bears some blame for making quarterly results matter, but it's ultimately Jacksonville making decisions like this.

On the other hand, of this "Shortline Division" was allowed to operate like a Shortline, with a strong emphasis on customer care and reliability, then it could be a good thing.

But that doesn't sound compatible to CSX's long-standing management regime.

Harrison doesn't allow his physical plant go to hell to make his railroad operate at a 60 OR.