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Re: PC: Why no money?
- Subject: Re: PC: Why no money?
- From: Jerry Jordak <jer@xxxxxxxxxxxxx>
- Date: Sun, 18 Mar 2001 23:00:43 -0500
WLE2679 -AT- aol.com wrote:
> WHY did PC go bankrupt? Was it because of the NH? Thats what I think from
> reading PC Power's beginning.......
Glad I finally installed that digest, because this one is gonna go on
for a week... :-)
It was a number of factors that led to the PC's bankruptcy. Because
it is late and I should be going to bed, I'll just touch on them, as
I'm sure more knowledgeable listers will elaborate on them for me...
1. Declining traffic base: The northeast was in the process of its
transformation from the manufacturing center of America into the Rust
Belt, especially in the former NH territory of New England.
2. Low-density trackage: Too many lightly-used branch lines that didn't
generate enough revenue to be profitable but the ICC wouldn't let PC
abandon. Look at all the trackage that Conrail was permitted to abandon
after deregulation. That's what PC was probably trying to do all along,
but weren't permitted to by the goverment.
3. Rising labor costs: The agreement that Stuart Saunders made with the
labor unions added plenty of money to PC's payroll, as it made it more
difficult to lay off unneeded employees, which were caused by the two
4. Management: Perlman, Saunders, and Bevan didn't get along, and they
didn't give their subordinates much incentive to either. When there's
division amongst the workforce, things aren't going to work right.
5. Lack of planning: PC began merged operations without their computers
talking together, much less employees from both sides. They tried to
combine everything together at once with a lack of planning of how it
was going to work. Look at the debacles we've had with the UP-SP merger
and the Conrail breakup. Those mergers, especially the Conrail one, had
months of advance planning and were still screwed up...so imagine the
mess you'd have when there was hardly any planning at all.
6. Diversifying: PC sunk money into pipelines, real estate, etc., that
could have been used to fund the railroad. While the jury is probably
still out on if that was the prime reason for the bankruptcy, it
certainly didn't help any.
7. Passenger ops: The passenger and commuter operations had been losing
money for years. Adding the New Haven into the mix made things only
worse. While the intercity trains were given to Amtrak in 1971(?), the
commuter trains never were given to local authorities until 1983, so
PC lost plenty of money running commuter trains in the Boston, New York,
and Philly areas, among others.
In summary, the PC bankruptcy was the result of many negative factors
and causes coming together at once. The jury is probably still out as
to whether or not PC could have survived anyway.
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