Volume II Number 31 - This Was The Week That Was - An Amtrak Saga

June 21, 2002

Way back in the 20th Century, we used to smile and say “Better living through chemicals!” as we popped the latest medication in our mouths handed out by our doctors for whatever the ailment du jour. It isn’t necessarily so. There was no TW3 since Memorial Day weekend due to an allergic reaction to prescribed medication for this annoying illness. But, things are improving, and what an interesting time there has been in the last three weeks on the Amtrak front.

For all of those who have requested to be added to the TW3 free distribution list in the last few weeks, take heart, housekeeping chores will resume soon and you will be added.

Now, on to the important stuff.

1. The $200 Million Dollar Man: David Gunn, you’re a good man. Brave and true, you’re sorting through the mess at Amtrak, finding out what is true and what is not true, and telling Congress and the public the real story. Coming from you and the way you have made your case, it’s totally believable that $200 million is necessary to get through the end of the fiscal year.

   Here is Mr. Gunn’s message to employees on today, June 21st. It strikes an important chord.
   

   “A Message from Amtrak President David Gunn about Amtrak’s Loan Status June 21, 2002.

   Dear Co-Workers,

   This is a report on our financial problems. We have not obtained a loan as of this date. We are working very hard on three options:

   1: Dept. of Transportation (DOT) loan guarantee.

   2: Congressional action authorizing DOT to issue a loan guarantee.

   3: A bridge appropriation of $200 million.

   Time is running out. When Congress adjourns next week, options two and three will disappear.

   You will hear mention of bankruptcy and cessation of service. These are real possibilities. I still believe wisdom will prevail and we will be allowed to operate and put together a FY03 budget. But as I said, time is running out.

   It is imperative that Amtrak be perceived as an efficient, cost-conscious company. As I said previously, we are not viewed in that light today, but given a chance we will be.

   From the time a Red Cap greets a passenger to the on-board personnel, you all have a role to play. How you treat the passenger is critical. Behind the scenes, giving your best is also important, whether you are doing track inspections, selling tickets in the call center or stations, or working the night shift at Wilmington or at the Bear shops.

   We obviously have a lot of friends, but we also have those who think we are a waste of money. How each of us behaves is important. Individuals who do their best are doing their part to preserve Amtrak and our jobs. Non-performers are risking not only their own jobs, but all of our jobs.

   I have made a commitment to run an efficient, effective service. I have made a commitment to fight to maintain the existing system. I will not deviate from those principles.

   I need and appreciate your help.”

   Any Amtrak President and CEO who can be both so plain spoken and elegant at the same time deserves all the reasonable help he can get.

2. Here is a breakdown of the situation as it appears on Friday afternoon:

   WHAT WE KNOW:

   1. David Gunn has said he has a money crunch. He needs $200 million to get the company through the end of the year. He set the deadline of July 1st as a shutdown date if a promise of the money is not forthcoming from somewhere.

      Note, HE set the date. No one else did. And, he also said Thursday in testimony to the Senate that an orderly shutdown would cost $50 million, and would need to start in the middle of next week if nothing materializes.

      Because of problems that were caused by his current board of directors and his predecessor as president and CEO, Amtrak waited until the last minute to make this call. Most people in Washington knew this day was coming, and openly said so, but only Amtrak itself could say when. Finally, at the last moment (through no fault of the newly arrived Mr. Gunn) did Amtrak say something.

   2. After Amtrak finally said something, it turned to the Bush Administration for help at the last possible moment because Amtrak’s own auditors will not certify its books. Again, this is the fault of the current board and the previous Amtrak administration.

      So, everyone is having to react at the very last moment because of problems caused by people who were so arrogant that it didn’t matter to them what the consequences of their actions are/were. Now, David Gunn, the Bush Administration, and Congress are having to pick up the badly shattered pieces and try and make something work.

      It’s an almost impossible task that is being made more impossible by a lot of unnecessary screaming and gnashing of teeth by various senators and labor unions. Rail fans, using a knee jerk reaction, are prematurely buying film to take pictures of the last train rolling out of the station. Save the money and buy a train ticket instead for the slow Fall travel season.

   3. NO ONE in the Bush Administration has said “NO” to making sure Amtrak keeps going. NO ONE has said “let it die.” EVERY ONE has said we are working on this problem as quickly as possible and are looking for an IMMEDIATE solution. The Bush Administration rightly so wants some long overdue changes at Amtrak. It’s OK to ask for these when Amtrak is asking for help with $200 million of other people’s money. There is still plenty of time.

      The Bush Administration said Thursday that it just heard about this problem on Monday. An incredulous Senator replied, “but you have a seat on the board, and you just learned about it TODAY?” Keep in mind that the previous Amtrak senior management appears to have kept its board of directors in the dark as much as anyone else. There is no other explanation for some of the shenanigans that have gone on that any board would approve of without otherwise thinking so.

   4. Senator Murray has simply said, let’s just have Congress give them the money, be done with it, and move on. That will only solve the problem for a few weeks, not provide any reasonable, long term relief. If it takes a few days longer to come up with a responsible plan instead of just throwing our money down a rat hole, then it’s worth waiting few days. That is what responsible people do instead of panic.
   5. Most people in official Washington hold the current board of directors in great disdain. They realize this inept group of people are the ones who are legally responsible for Amtrak’s current condition, because they are legally responsible for setting policy and direction of the company. They are also legally responsible for notifying their owners (in this case the government instead of stockholders) that the company is about to fail and some action is required. They have not done this in a timely fashion. The fault is in their laps, and their laps alone. If it is true that the board “trusted” its senior management too much and the managers failed them, well, again, that is the fault of the board for not using its best judgement and allowing too many things to happen and then not believing reality.

   WHAT WE DON’T KNOW:

   1. What negotiations and at what level these negotiations are going on. Its doubtful this is being handled by mid-level paper pushers. As always in Washington, someone is angling to get something from someone that needs to be done. As said before, we know the Bush Administration wants some reforms of what is widely known to be the broken corporate structure of Amtrak. What it is, we just don’t know.

      But, we know the most logical and obvious first step should be the formation of a separate government entity to own and maintain the Northeast Corridor. This is where the bulk of the needed budget money for next fiscal year will go. Amtrak, as a purely operating company, could easily subsist on the current federal handout of free money. If the NEC were stripped away and its associated costs moved to other budget categories, most of Amtrak’s problems would simple disappear nearly overnight, and all operations could be judged on their own merits.

      An incidental bargain in this process would be the removal of thousands of Amtrak employees that it takes to maintain the NEC. Amtrak would be much better off if this is accomplished as soon as possible.

   2. Knowing that Mr. Gunn has said it will take $50 million to shut down may indicate he has that much money in the bank and is hoarding it, as he probably should. If this is so and an agreement is reached, that means there is a $50 million cushion if it takes a couple of extra days to get some paperwork done and signed.
   3. We don’t know how many people are doing how much grandstanding over this. Rumors are flying through the company like wildfire. One company official your humble correspondent was in touch with Thursday is keeping their planned travel schedule through the end of June. It is unlikely someone this high in the company would be traveling if a shutdown was imminent.

   WHAT WE NEED TO DO:

   Everyone needs to cool their jets. Responsible people are working on this in a priority mode. Whether you’re a Republican or Democrat or Socialist, no one wants to see Amtrak go away, especially in the middle of the summer. It’s most likely going to be a last minute deal, and that’s the nature of things.

   Up to this point, the previous Amtrak management had done everything it could to kill future business this year with all of the silliness of shutting down the national system to keep the NEC going. Mr. Gunn, again Thursday, said that is a failed strategy. As always, this continues to prove that this crisis in cash because no one is riding the trains is a self-inflicted crisis on Amtrak’s part.

   Mr. Gunn is new on his job. He didn’t come out of retirement to be the last president and CEO of Amtrak and preside over a shutdown.

3. Why are so many people afraid of words and ideas? Secretary of Transportation Norman Mineta on Thursday unveiled the basics of the Bush Administration plan for a New Amtrak.

   Judging from much of the silliness of the reaction from many, one would have thought someone had just suggested turning out the lights at Amtrak and everyone going home.

   For some reason, many people, who are normally rational and open minded in their thinking, have become terrified of the word “competition.” It’s a good word, and a good concept. Amtrak should not be a monopoly. That’s one of the problems with it, now. Any American who is afraid of the word competition may wish to find some backwards Eastern Europe country to move to and be happy living in a controlled environment.

   Oops, you can’t do that. All of the Eastern European countries now have economies that in large part rely on competition and the free market. It’s time to start thinking about Amtrak in the terms of a free country and a free marketplace. What harm can discussion do? What harm can exploring new ideas cause what it’s so very obvious that what Amtrak has been doing for over 30 years is wrong?

   While David Gunn is working miracles at Amtrak, he is still working with a broken concept. He is only going to be able to do so much with what he has to work with today. Unless Congress and the administration continue to debate and discuss what the New Amtrak will look like, and continue to mine the good work done already by the Amtrak Reform Council, Amtrak will continue to be a flawed concept that will never be financially secure and never take its rightful place as an integral part of our domestic transportation network.

4. Gil Carmichael, we’re glad you’re still making your case. Venerable Washington Wise Man and ARC Chairman Gilbert Carmichael continues to promote the good work completed earlier this year by his Amtrak Reform Council. In an essay just published in Progressive Railroading magazine, he points out many things necessary for the New Amtrak to be a success. Mr. Carmichael’s voice will continue to be a part of the discussion as Congress works on the Amtrak reauthorization. And, we’re glad he’s still hard at work.
5. This may be a week late since Father’s Day was last Sunday, but allow a personal moment. Robert E. Richardson, Sr., now 80 and retired from CSX, spent his adult life as a railroader and example to others of hard work and dedication.

   He began his career at the original Norfolk Southern Railroad in Norfolk, Virginia, and then moved to the Pullman Company where he was a seven day a week wartime railroader. For the few hours a day he wasn’t at the Pullman Company, he was working as a civilian employee of the United States Army Signal Corps at Langley Air Force Base in Langley, Virginia, and volunteered over 1,000 hours of night duty for the Army’s enemy air raid early warning system for the continental United States.

   After the Pullman Company, he moved over to the passenger department of the Seaboard Air Line Railroad, and eventually became the manager of the Pass Bureau. He stayed through the SAL becoming Seaboard Coast Line, and finally CSX. In 1970, he and a buddy from the C&O’s Pass Bureau were both summoned to Washington by the AAR to write the new employee pass rules for the soon to be created National Railroad Passenger Corporation. He completed the chore, then stayed with CSX, and retired from its executive ranks in the early 1980s.

   He continues to be a great teacher, great father, great husband of 57 years and counting, and great example of all of the right things.

That’s it for this week. Next week should be REALLY interesting.

This entry was posted on Friday, June 21st, 2002 at 12:00 am and is filed under This Week. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.