S Saunders, was Re: Class J Shoppings

[NW Mailing List]

Jim,  I would suspect that two of the sources you might have been reading
was "The Wreck of the Penn Central" and "The Men Who Loved Trains".  One
question: on your list of causes I didn't see the forcing of the New Haven
and its continuing debt down PC's throat.  Did you think that wasn't a
significant factor?  Just asking.

Having gotten involved with the New York Central Society (NMRA and three RR
historical societies wasn't enough)including some NYC retirees, I have
heard multiple enthusiastically spoken reasons for the PC failure,
including (shocker)a lot of Red Team-Green Team incompatibiloity.  Funny
how everyone has an axe of one sort.

Abram:  "lawyer who didn't understand business"....now, now, now.

Frank Bongiovanni


On Sat, Aug 8, 2015 at 7:36 PM, NW Mailing List <nw-mailing-list at nwhs.org>
wrote:

> I did a graduate school presentation om mergers a while back and looked
> at the PC mess...several books exist as do  a number of scholarly
> publications, none of which I remember
>
> from a PowerPoint I saved:
>
>    - Merger effective Feb  68    with PRR surviving corporation and
>    Saunders as Chairman and CEO [he got his wish]
>    -   Sept 69                 RR President ousted ( NYC's Perlman….)
>    -   Sept 69                 New president, retired from Western
>    Elec.,  hired to start in Dec!
>    -  June 70                  Chairman (Saunders…) ousted by the  banks  who
>    bailed out of  PC stock (775,000 shares sold in May, 436,000 in June)
>    -    June 70     Gov't loan guarantees fell through
>
>     *June 21st*   *Filed for Chapter 7* *7 bankruptcy*
>
>   reasons the merger failed
>
> •          operating losses of $400,000 a day on RR operations
>
> •          poor cash flow
>
> •          little cash-on-hand
>
> •          PC continued to pay dividends
>
> –         $2.40 a share in 1986 & $1.80 a share in 1969
>
> •          sold real estate  assets to cover losses
>
> •          $300 million short-term borrowing at 10.5%
>
> •          RED (PRR) Vs. GREEN  (NYC) Culture
>
> –        TWO accounting systems
>
> –        TWO computer systems (10% error rate)
>
> –        TWO kinds of signals, car controls, power, etc..
>
> –        poor physical interconnections
>                 –        duplicate facilities in many locations
>
> •          inept management
>
> •          no budgeting
>
> •          poor cost accounting
>
> •          perhaps illegal or immoral book-keeping
>
> •          poor billing (1/3 of revenues unbilled at 30 days)
>
> •          no  pre-merger planning
>
> •          general decline of the NE U.S. (*rust belt*)
>
> •          poor governance
>
> •          The Board of Directors was interlocking, uninformed, no
> operating railroad men
>
>    - deferred maintenance
>
> •           10% track bad ordered- 10 mph
>
> •          average  train traveled 37 miles a day
>
> •          Average train was idle 20 hours/day
>
> •          9% bad order cars
>
> and finally  poor service    to quote AJ Perlman    "If you don't like
> it, walk!"
>
>
> any wonder Saunders was ousted?  Jim McDaniel
>
>
>
>
>
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