United Rail Passenger Alliance

Volume 1, Number 25

If Amtrak is going to survive in any semblance of what it is today as a nominal national system, there must be a new president and chief executive officer at the earliest moment.

Current President and CEO Joseph Boardman appears to not only be spinning out of control, but rapidly losing the confidence of many Amtrak stakeholders.

Finding a replacement for Mr. Boardman at this point in the political process is going to be difficult for a number of reasons, mostly related to the timing of the upcoming presidential election.

The best solution is to find a distinguished railroader – similar to the late Amtrak president Graham Claytor – with the ability to arrive in Washington quickly, take control of a company nearly devoid of competent senior operation personnel because of the ill-planned senior management buyout program, and attract other outside talent willing to pitch in on an interim or permanent basis and under his guidance, save Amtrak.

The ideal man is already an important part of Amtrak: Jeffrey R. Moreland, a member of Amtrak’s Board of Directors.

Mr. Moreland, 67, is the retired Corporate Secretary and Executive Vice President of Government Affairs and Law of Burlington Northern Santa Fe Railway Company, and before that, was BNSF’s General Counsel and Chief of Staff. He currently serves as President of Western Fruit Express Company.

There is a long, distinguished railroad tradition of law department vice presidents assuming the top spot in the company. The same path was taken by Graham Claytor to the presidency of the Southern Railway and then retirement and next his service to Amtrak as its longest serving president from 1982 to 1993, what some would call Amtrak’s best period. Most of today’s Class I freight railroads have all been helmed by attorneys.

Mr. Moreland’s 14 years at BNSF – a railroad everyone considers to be Amtrak’s most cooperative host railroad – puts him head an shoulders above any other candidate which may be considered to replace Mr. Boardman, especially any candidate which may emerge from the transit world. Mr. Moreland also has a deep background in corporate finance through service with the Securities and Exchange Commission. If someone has to untangle Amtrak finances and at the same time keep train operations going, he’s the man.

It will take the real world railroad experience of someone like Mr. Moreland to grab the Amtrak tiger by the tail and attempt to whip it into shape so there will be an existing company for the stewardship of the next permanent president.

Certainly, Mr. Moreland has the advantage of the other members of the board knowing him well since he began his board service in 2010.

Mr. Moreland is an obvious choice to bring order to the Amtrak Chaos at Christmas.

This can’t be a good time to be an Amtrak employee; the cream of the crop – and, some people who really needed to be gone – either took the management buyout offer and have departed, or outright quit to make sure their reputation and careers stayed on track.

More than one source from a host of contacts are confirming President and Chief Executive Officer Joseph Boardman appears to be experiencing some sort of difficult time with outbreaks of flying off the handle verbally at any given moment, without provocation. His targets are non-discriminatory – employees are not the only recipients.

Mr. Boardman has had a lot to defend in the past weeks and months.

Earlier this year he made a statement to Congress that the biggest financial drain on the company is the long distance system. Many seized on this as evidence he wants to scuttle the long distance trains in favor of the Northeast Corridor and selected state corridor trains in a disjointed, non-national system.

This discussion simmered throughout the year, but heated up after several weeks into the management volunteer buyout program when most of the top level operating executives chose to take the buyout – particularly in critical safety-related positions – and there was a realization the people responsible for keeping the trains running were all abandoning the company simultaneously.

When this became public, a hue and cry emerged wanting to know what direction the company was taking and what type of strategic plan was being implemented.

As this drama has been unfolding, the reference to Amtrak’s “strategic plan” has been constant, but no recognizable strategic plan has been detected.

Which led to this Special Employee Advisory from Mr. Boardman the day after The Business and Politics of Passenger Rail ran a lengthy column about the buyout program and the questionable stability of Amtrak.

Special Employee Advisory

December 07, 2011

Message From Joe Boardman

Dear Co-workers,

I know that there is a feeling of uncertainty in the air for some of you, and that many of you have questions. I don’t have all the answers that many of you are seeking, but I want to tell you where the company is going — knowing what the plan is will at least help reduce some concerns that I have heard expressed.

As you know, our board of directors approved a Strategic Plan in October that sets a new course for our company. I recently asked you to read and become familiar with the Strategic Plan — I will ask you again to do so now — because it is in large part the basis upon which we are bringing change to Amtrak. As we follow it, our company will become stronger, more customer-focused, and more bottom-line business focused. Amtrak can no longer hunker down in survival mode, and we do not need to. We are a critical asset to this nation; we must serve

our nation and our customers well.

Before I get into the changes that I’m seeking, I want you to know that there are no planned or expected service reductions anywhere. Similarly, there are no planned layoffs for agreement-covered employees, other than the normal seasonal adjustments that we go through each year. Nothing different there.

As you know, I am seeking to align how we do business with our Strategic Plan. As I’ve communicated before, this realignment of the organization will result in a reduction in the number of non-agreement employees across all departments. We are not going to reduce any management forces during the coming holidays, other than those who have elected and have been approved for the recent Voluntary Separation Incentive Plan. A little more than 150 non-agreement-covered people have chosen to leave the company via the VSIP, several of them from the senior ranks of management. On behalf of the company, I am grateful for the contributions that they have made through the years. Many of those among the group were close to making a retirement decision, and this program provided the incentive they needed to make a positive affirmation that it was time. I saw many struggle with that choice, as so many have done in the past when it was time to enter into retirement.

Also, remember that when we released the Strategic Plan, I told you it was developed with significant employee input and that it is a living document — it’s not set in stone. A grand plan rolled out all at once does not allow for the creative ideas of those that are out there doing the work, or who have been asking questions for years and have nothing but frustrations left. So that’s part of why we don’t have all the answers that people are seeking yet.

So far, we have formally rolled out only one part of the Strategic Plan from a Business Line point of view — the Northeast Corridor Infrastructure and Investment Development Business Line managed by Stephen Gardner. Stephen Gardner and team he has assembled is hard at work to make our vision for very high-speed rail a reality and while doing so improving the infrastructure and its capacity in an incremental way. We must increase current Acela capacity, commuter access to NYC and advance the state of good repair of our entire NEC infrastructure with a collaborative cross-functional team of Mechanical, Engineering and Transportation effort that is goal-oriented and customer-focused. Stephen’s success will be our success, and he must not be alone in the effort.

As we look at Operations outside of the Northeast Corridor, we need to determine how we minimize costs that are not directly connected with the actual operation of safe, customer-focused and reliable service. Our operations outside of the NEC do not cover their basic operating costs, so the questions we need to ask are how can we do a better job to minimize costs, what can be done differently so that cost is lower without hurting the safety, customer service or reliability? Even more importantly, why are we still doing things in a way that does not take advantage of all the improvements available today? What should we stop doing?

We don’t have all those answers, and as I said earlier, no one grand plan is going to give those answers to us. But I do have some answers. We cannot expect a reliable, on-time, customer-focused railroad to operate if there is not dedicated accountability for that. So we will establish a structure that includes a senior-level person who will be held accountable for both cost and revenue, while meeting the standards and the budgets that are set by the Chief Engineer, Chief Mechanical Officer and Chief Transportation Officer. Each of them will report to the VP of Operations. Accordingly, I have asked the VP of Operations to submit his plan for aligning under this structure in early February, and I expect to have given him enough input along the way that it will begin to be implemented by mid to late summer. I expect it to provide fewer levels of management from the top to the bottom, and that will cause an impact to the number of non-agreement-covered positions.

Northeast Corridor Operations is another one of the Business Lines in the Strategic Plan. It will operate differently than the off-corridor structure. The details on that will not come until after the off-corridor structure is set, although once that is known it will help define the boundaries of the Northeast Corridor. So this is an area that will need to wait a while for answers.

There will be one centrally managed Legislative, Government, Policy and Public Affairs function, with a field presence that will keep major contact with our state partners and determines what, if any, planning needs to be done for a customer or state partner. This function has been split up among too many departments, with a lack of focus and accountability. Some of that change has begun with the dissolution of the Policy and Development department. We expect 10 to 15 positions will be eliminated with that change.

In addition, there will be three planning organizations in the company, and they will be relatively small. Facility Planning, which will be within Real Estate under the Chief Financial Officer, will become much more active in proper planning for our real estate assets including our stations. Operations Planning will be placed under the VP of Operations. Strategic Planning, which will be in the President and CEO’s office, and will monitor the Strategic Plan, make adjustments to the plan to keep it current, update the plan or help define course corrections early by paying attention to economic and other business trends to keep Amtrak on top of its game.

The Marketing and Product Development department will be less marketing and more sales. Social media will grow along with the use of other more up-to-date methods of improving our service to our customer. Field functions will be part of operations, part of Legislative, Government, Policy and Public Affairs, or will be a targeted sales function with sales goals or will not exist. The distribution function of the commissary will go to Operations but the Menu Development will stay with Marketing. The Call Centers will stay with Marketing, and Marketing will pick up accountability for selling our management services to commuter operations, as well as evaluating and responding to the solicitations for commuter contracts.

There are other changes that will occur as we respond to the requirements of this new direction. It’s often said that change is the only constant that we deal with. We see it in our families and we see it in the world around us.

Amtrak costs continue to climb with additional direct salaries and wages, and while some revenue from ridership is up, other revenue like federal operating assistance, is down and that is part of the reason we must make cuts and adjustments to improve our bottom line. But frankly, that is not the primary reason. We must operate a more competitive company and it must reflect the realities of the competitive environment today. We have global competitors coming into our backyard and convincing members of Congress, state and commuter officials and others that they can do a better job than Amtrak. We also are in competition for federal assistance across transportation modes — airlines through the Federal Aviation Administration; highways and the intercity buses through the Federal Highway Administration; transit, commuter rail and buses through the Federal Transit Administration. We also have to compete with the funding for U.S. DOT safety programs, which comes out of the same appropriation funding.

We are making these changes for a stronger future, and yet I know when it affects you directly that high-minded idea gets lost. That’s the tougher part of leading change. I’ve tried to mitigate some of this with the VSIP, giving us some room and also allowing those who have other opportunities to pursue them without hurting the company or the people. That won’t be enough, and the positions that have been vacated won’t be filled immediately and others will not be filled at all. When you see them posted and you qualify for them please apply, if your record is good and your skills are the ones that are needed, you will stand in a good position to be competitive.

Please be assured that the steps we are taking are designed to preserve and strengthen the important service we provide to our nation. I will keep you updated as we move forward, and thank you for taking the time to read this important message.

Sincerely,
Joe Boardman
President and CEO

Only comrades of the Amtrak Propaganda Ministry and the cadre of Amtrak True Believers didn’t go “Huh?” when they read Mr. Boardman’s employee communique. It’s entirely likely it caused more problems than it solved, and reports from inside Amtrak back up that notion.

A few days later, respected transportation journalist Don Phillips published an online story on the Trains Magazine newswire containing an interview with Mr. Boardman, with him saying no trains were in any danger of train-offs or discontinuances.

All of this was followed by the Friday (December 16, 2011) end-of-the-day additional Amtrak Special Employee Advisory from the Employee Communications department outlining senior management personnel changes.

This communique was featured in the immediate previous edition of The Business and Politics of Passenger Rail of late on December 16th.

So many senior and upper tier managers and senior managers have departed the company that new lines of reporting and responsibility had to be determined.

In was dubbed the “afternoon of the long knives,” again Don Phillips also outlined the many changes of the 16th.

One important change was the departure of Jeff Geary, Amtrak’s Vice President of Operations, incumbent in the position for just a matter of months. Reports claim Mr. Geary was forced out of his position because he had not moved quickly enough restructuring Amtrak train operations management, and had the audacity to request arrangements be made to temporarily fill some critical management positions now vacant because of buyout departures while the restructuring was accomplished in an orderly fashion.

As a result, Amtrak operations are now under the direction of – and, this is not a typo – Amtrak’s Chief Financial Officer. Yes, the guy in charge of locomotives, all rolling stock, equipment maintenance, engineering, and all train operations is the head bean counter.

On top of that, the gentleman now in charge of the Northeast Corridor is Stephen Gardner, the former Vice President of Policy and Development, and, prior to that, a Senate staffer on Capitol Hill.

Mr. Gardner now commands a troop strength of approximately 6,000 employees between Washington and Boston.

On the West Coast, there is apparent good news. At this point, unconfirmed reports place one of Amtrak’s very best managers as the man now in charge of Amtrak in California and points north. When this is confirmed, we will talk more about him – a man any railroad would be thankful to have as a senior manager.

We do not know who with what level of expertise will be running Chicago as we are less than a week away from the official start of Winter. An ill-run Chicago can cause tremendous problems throughout the entire Amtrak long distance system because so many routes radiate from Chicago, not to mention state supported trains in four states.

Here is what one passenger rail insider had to say about this mess laid at the feet of Mr. Boardman and where anyone should start to untie the knots of Amtrak operations.

“One of the easiest and least costly places he could start would be to take his own train operations seriously as a transportation system. This would involve a combination of trivial schedule adjustments (not even speeding trains up or reducing scheduled “recovery time”) and operating discipline in order to have many more trains actually connect with one another. To cite just a couple of obvious examples: Why does the northbound Texas Eagle in Chicago not connect to the westbound Empire Builder, or the eastbound Boston section of the Lake Shore Limited to the northbound Vermonter train at Springfield, Massachusetts?

“Another would be to stop his lying to the public and to Congress and restore the Sunset Limited between New Orleans and America’s Number One tourist destination, Orlando. This can and should be done with the next timetable change.

“Another change he could institute is to stop the insane regimentation in the dining cars, which exist to serve the needs and convenience of customers, not the staff. There is no reason diners need to operate like Soviet bureaucracies. Hours and services need to be opened up and relaxed, and the all but forgotten breakthrough success of the 24-hour dining car service experiment on the Sunset Limited, in 1999 rolled out to more trains.”

Mr. Boardman is not without partners in this mess. Others are looking to the board of directors as a whole under the chairmanship of Tom Carper of Illinois and wondering how much governance and oversight has been occurring. While the calls for Mr. Boardman’s earliest possible departure have been growing, the board’s collective role is coming into focus, too. A Washington Wag had this to say.

Indeed, the “cure” for Boardman’s departure may be worse than the disease. It comes back to sound governance from those nominally in charge of the company.

Having stuck by Boardman, having made him permanent CEO, having approved the Voluntary Separation plan, and having vetted Boardman’s vague “Strategic Plan” for cutting the company to prosperity, how can the Board suddenly now be “concerned” at the departures en masse. Do these people have no shame or an ounce of perspicuity?

People deep inside passenger rail are wondering if Mr. Boardman can hold on even to the end of January, just over a month away. If this was a private corporation with an effective board of directors and stockholders, onlookers would be focusing on the end of December, not the end of January.

If/when Mr. Boardman departs, who other than Mr. Moreland could replace him? The Chief Financial Officer is already the acting Vice President of Operations. Most of the other top people in the company are lightly disguised political appointees from the usual circle of Washington musical chairs who move from government organization to government organization depending on how the political winds are blowing. Some come from District of Columbia jobs, some from local transit agencies, some from Capitol Hill. None are railroaders.

As discussed before in this space, what about the White House? The presidential elections are marching closer and closer every day and this problem is no closer to being solved. Mr. Boardman came to the company by way of his seat on the Amtrak board of directors because of his background as head of the New York State Department of Transportation and as the Administrator of the Federal Railway Administration and a board seat as a result of that position. Is it possible for the board to get it right this time, and appoint the only one of its members who is truly a qualified railroader to run a railroad and not a political appointee? Especially a real railroader – from the West! – who is not enamored with the ongoing pampering of the Northeast Corridor at the expense of the national system.

If you were a qualified railroader without a current stake in the company, how interested would you be in taking over Amtrak permanently at this point? Someone has to stabilize the company and repopulate the critical operations and safety positions before any sane railroader would consider the job. If another transit executive wants the job, plan on business as usual. Amtrak desperately needs a railroader, not a politician.

As the late Austin Coates, founder of URPA in 1976 was fond of saying, “they might as well pull ’em over and park ’em” and the last guy out the door turn out the lights if someone close to perfect can’t be found to run Amtrak – and found soon.

Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at geoff@jdmandassociates.com for your very own copy.

J. Craig Thorpe, noted Amtrak and railroad illustrator is available for all railroads, railroad-related companies, and organizations for his dramatic illustrations on a custom basis. Mr. Thorpe’s impressive gallery of work and contacts for engagement may be viewed on his web site, which is listed below.