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Re: PC: Another Penn Central Book.
- Subject: Re: PC: Another Penn Central Book.
- From: w8ln@xxxxxxxx
- Date: Tue, 2 Mar 2004 14:10:02 GMT
> But don't you think that Saunders, Perlman and Bevin deserve some of the blame?
No. They don't deserve blame for the failure. They deserve credit for keeping the thing running for as long as it did. All of the other Northeastern railroads in terrible shape that were folded into Conrail failed without S, P and B at about the same time. Penn Central was doomed from the start, and NYC, PRR and New Haven would have failed if there had not been a merger.
> Perlman, who ran the railroad, had his office in New York City miles away from the operations headquarters in Philly.
Does the railroad president need to involve himself in day to day operations? Micro-management is not a sign of good leadership.
> Saunders and Perlman couldn't stand each other, apparently, and that's no way for the two senior executives of any company to behave.
Even if this is true, does that have any relevance to the root cause of the failure of Penn Central, a sick industry that the government did not allow to change?
> Perlman allegedly distrusted the members of the "Red Team", and in fact worked to get some fired (Smucker, for one, VP of Ops).
If was was a manager and I had subordinates I didn't trust I would try to fire them, too.
PRR and NYC had two different management styles. Isn't it only natural that the leader wants subordinates who operate the way he operates. Many times at many jobs I've heard bosses say "it's my way or the highway."
> Bevin and Saunders spent entirely too much time worrying about deals like Executive Jet (which was illegal for a railroad to own) and other diversification projects. True, these projects didn't really siphon that much money away from the railroad but frankly at that point the railroad could have used every penny it could get it's hands on...
The only thing keeping PRR and NYC out of bankruptcy before the merger was additional non-railroad income. Because the railroad needed every penny it could get its hands on it made sense to maximize the non-railroad income.
A corporation's main obligation is to provide income to its shareholders through dividends and/or increase in stock value. Since there was absolutely no way that the railroad (either Penn Central or its separate pre merger roads) was ever going to make a profit under the existing system the only way to make a profit was these non-rail ventures.
Did the railroad actually own Executive Jet, or was it owned by the parent corporation? Lots of times a company that owns a railroad also owned a business that would have been illegal for the railroad to own.
Not every enterprise that Penn Central entered into was a success, but then again not every car produced by Ford is a Mustang.
> To me, perhaps the most important cause of the PC failure was the grand total of ten minutes of thought that went into the merger.
This may have changed the timing of the failure, but not the ultimate outcome. PRR, NYC and New Haven were doomed in 1968 and by then they would have drug down any potential merger partner in any combination as the game was played at that time.
> It's been suggested that if the PC did what Chessie did, and that's merge very slowly over several years, then perhaps the bankruptcy wouldn't have happened. Maybe, and in any event we'll never know.
PRR and NYC both tried many different things over the years before the PC merger, and everything up to PC was ultimately foiled by the government.
Would all other mergers have failed? It is possible that if PRR+NS and NYC+Chessie had happend many years before 1968 the railroads could have held on and possibly the government would have reformed the regulations enough for them to continue. On the other hand, without the PC failure it is possible that the government would not have been forced into making sweeping reforms and the entire railroad industry would have failed.
> Crimminy, even the two railroad's computers couldn't interface. Don't you think that someone might have spent a little time trying to work that problem out?
Again, did this have anything to do with the fact that Penn Central was going to fail, no matter what?
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