Volume II Version 10 – This Was The Week That Was – An Amtrak Saga

February 06, 2002

Lots of events and things have happened since last Friday’s Amtrak news conference that created the current terrorist hostage situation regarding the Amtrak long distance train system.

Here is a plain language assessment of the most important part of Amtrak’s multifaceted announcement: Amtrak senior management, and its board of directors, are attempting to blackmail Congress and the Bush administration for $1.2 billion in funding, which must be voted on and in place by October 1, 2002, or all of the long distance train system, except Auto Train, will be discontinued.

What is this $1.2 billion to be used for? Astonishingly, not for the long distance train system. Only $200 million of that sum is to go to the long distance system. A little less than $200 million will go towards mandatory railroad retirement system payments. That leaves more than $800 million, WHICH WILL MAINLY GO TOWARDS CAPITAL IMPROVEMENTS TO THE NORTHEAST CORRIDOR, not the national system.

So, Amtrak senior management and the Amtrak board of directors are saying, “If you don’t give us what we want for the benefit of transit-type transportation in Washington, D.C., parts of Maryland, Delaware, Pennsylvania, New Jersey, New York, Connecticut, Rhode Island, and Massachusetts, we are going to kill trains IN EVERY OTHER STATE OF THE UNION where they run.”

In actuality, they are holding the nation’s long distance trains as a hostage at gunpoint unless they get what they want for the NEC. And, to guarantee compliance, they are filing 180 day train off notices on March 29th to assure they have the authority to cut the trains on October 1st.

OK, let’s review. Israel doesn’t negotiate with terrorists. Nor does the United States (The current situation with the Wall Street Journal reporter backs up that policy.), and a whole host of other nations and states don’t, either. Yet, Amtrak senior management and the board are holding the long distance system hostage, and expecting Congress and the Bush administration to meet their demands – or else.

1. So, is that chutzpah, or what? Some are cheering, saying this should have been done a long time ago. The usual suspects in the Northeast, mostly United States Senators who are willing to give Amtrak anything for any purpose, are cheering, too.

   Others are purple with rage. Many view Amtrak senior management and the board as children who are stomping their feet and holding their collective breaths until they are blue to get what they want.

   Most are just in a state of wonderment at how rational adults could come up with such a foolish plan that makes them look so silly.

   It’s a reasonable argument that what they have done is bring things to a brink – forcing a resolution – but, it’s the WAY that it is being done that is so very, very offensive to most.

   This is not the way rational people do business. Nor is it the way to approach the world’s most august body, the United States Congress, and make demands. Surely many more enemies than friends have been made through this silly process.

2. Some in Washington say they are bluffing. They point to Amtrak’s sordid history during the Warrington and Downs stewardships of Amtrak and how they have concentrated much, much more on extorting free federal money from Congress than running a railroad. It has been pointed out that Amtrak seems to be more in the business of asking for free federal money than serving passengers.

   And, what will Amtrak senior management and the board do if the money is not forthcoming?

   There are some factors that were not mentioned last Friday during the press conference that must be considered.

   Even though the law was modified during the 1997 Amtrak reauthorization, there is STILL IN PLACE a five year labor protection agreement for Amtrak union employees on any route this is closed. And, they are threatening to close 18 of them. Has anybody figured the cost TO AMTRAK of this? Take the present Intercity labor agreement employee payroll and multiply it by five years to pay people to do nothing. Is it likely the Bush administration or any political party in Congress is going to fund Amtrak to pay this money? Hardly.

   Take into account the literally hundreds of cities and towns across America which would lose train service, and with it for many of them, all intercity public transportation. Are these people, who make up huge amounts of the American voting population, going to let their elected representatives off the hook and just say “OK” to the trains going away? Hardly.

   And, then there is Congress and the Bush administration. Are they going to let a group of leftover Clinton administration appointees and their hired help in a quasi-governmental agency set national transportation policy? Hardly.

   The best guess, right now, is that when all of the calculations are made, the Amtrak senior management and board of directors are in a far more tenuous situation than the long distance trains. This will be an ongoing drama and a giant game of “Chicken,” but, in the end, the long distance system is likely to stay and Amtrak senior management and the board is likely to go.

3. Speaking of Amtrak senior management and its failed business plan, here is a fascinating quote from Wendell Cox, a member of the Amtrak Reform Council in an editorial he wrote this week. “Amtrak’s fundamental problem is costs, not lack of revenues. Amtrak’s revenue per passenger mile is higher than that of either airlines or intercity buses. That means that if Amtrak’s costs were competitive with airlines and buses, it would need no subsidy whatsoever. Yet, how often do we hear Amtrak proponents rail on about costs? It is time to focus on the problem, Amtrak’s excessive costs.”

   It has become increasingly clear during the past decade that Amtrak has become more of a government jobs program than an operating railroad. The pure fact that Amtrak brags it has 11,000 employees just to operate the NEC tells any student of management and finance that something is very, very wrong.

   We constantly hear that Amtrak is cutting positions, shifting managers around, and doing much more to indicate it is getting a handle on management position costs. The word on the street is allegedly that of the last round of cuts made in management, that about a 100 more managers than were cut were added back through new hires. So, the company ended up with a net gain of almost 100 managers more than before the old managers were fired.

   Also, at the management level, Amtrak seems to be becoming less colorful, and much more white and consisting of males. Charges of cronyism and the abolition of blind hiring practices appears to be more the normal practice, now.

4. Oops! Department: John Bromley, a respected spokesman and public relations officer for the Union Pacific Railroad had this to say publicly on an Internet bulletin board in the past few days regarding UP’s relationship with passenger trains:

   “Our handling of Amtrak trains is neither incompetent or malicious disregard of our contractual agreements with Amtrak. The reality is that running long distance trains over single track railroad is going to result in delays to Amtrak, as well as our customers’s freight. And, as most of you are aware, the Coast Line [route of the Amtrak Coast Starlight between San Jose and Los Angeles in California] has a number of slow orders. We have to choose where to best spend our limited capital. It begs logic to spend it on capacity for novelty transportation that doesn’t pay for its costs.”

   “Novelty transportation?” What an interesting choice of words. Passenger trains have been running in this country continuously for over 150 years. Union Pacific’s rightful proud history as an integral part of building of this great nation belies this attitude.

5. Back to the Future Department: Do all of the veteran Amtrak passengers remember the famous Amtrak short ribs that were a staple entree in dining cars for years?

   Well, they could be back. One of Amtrak’s cost cutting moves allegedly is to “standardize” dining cars and passenger food choices.

   So, out the door will go all regional cuisines such as the many wonderful choices found on the Crescent dining car which are lovingly prepared by the Crescent’s outstanding chefs, and the many specialities also found on the City of New Orleans also prepared by a group of Amtrak’s best chefs in favor or preselected (and, in some cases, precooked) “standard” menus.

   Remember when the dining car was a special gastronomic experience? Remember well, because it looks like Amtrak dining cars are yet again going to look like airline food.

6. On a personal note, your humble correspondent was thrilled and honored to be singled out by Amtrak Acting Chairman Michael Dukakis last Saturday afternoon while he gave a speech to California’s RailPAC group in Santa Ana.

   It seems the esteemed Acting Chairman found fault with the rumors which had been reported in this space about the hoped for resignation of Amtrak President and CEO George Warrington. Mr. Dukakis said “that fellow in Florida … that Richardson fellow” is not telling the truth about the Amtrak board’s relationship with Mr. Warrington and his management team, and that, in fact, the Amtrak board is probably one of America’s corporate boards that most cherishes its president and CEO.

   Well. Just to be on Mr. Dukakis’ radar screen is honor enough, but to be mentioned by name by a former presidential candidate of a major party? Ecstasy!

   After this was mentioned on Sunday to some of your humble correspondent’s confederates, one asked, “you’re not taking any of this personally, are you?” Of course not.

   The battle for Amtrak and the long distance system is a political battle that is being waged as an all-out war. Both sides will take shots and hits. That’s the way it’s done. For those of us who have been involved in politics as a profession for a couple of decades, that’s the way the game is played. Emphasis on “game.”

   However, it is exciting to be recognized by someone who is famous for Willie Horton and having lost a major, high profile, national race for the presidency in 1988.

   By the way, last week in this space, it was reported that one of Amtrak’s ongoing tactics is to personally destroy the character of anyone who disagrees with Amtrak and its policies. Along those lines, Mr. Dukakis, in the same appearance in Santa Ana, labeled the Amtrak Reform Council and all who agree with its findings as “wackos.”

   It’s this type of high level rhetoric that keeps things interesting.

That’s it for today. Much, much more to come.

Proud to be a wacko,