Former Kansas City Southern CEO Ottensmeyer dies

Former Kansas City Southern CEO Patrick Ottensmeyer — who led the cross-border railroad through turmoil over free trade, the transition to a Precision Scheduled Railroad operating model, and its historic merger with Canadian Pacific — died over the weekend. He was 67.

“Pat’s vision and leadership played a monumental role in the great history of Kansas City Southern as he helped reshape the railway industry,” CPKC CEO Keith Creel said in a statement. “We have lost a remarkable leader and a cherished friend. Pat’s legacy lives on and can be seen in the work we do every day at CPKC. His contributions as a railroader and as a person will never be forgotten.”

CPKC said it would honor Ottensmeyer by lowering flags to half-staff across its network.

“We mourn his tragic passing and extend our deepest condolences to his fiancée Deanne, his entire family, many friends and former colleagues,” Creel added.

Ottensmeyer, a native of Vincennes, Ind., began his career in investment banking. His introduction to railroading came from working on the financial aspects of the proposed Santa Fe-Southern Pacific merger. Then-ATSF Chief Financial Officer Dennis Springer hired Ottensmeyer, who would go on to become vice president and treasurer of BNSF Railway. He left the railroad shortly after the merger, however, rather than move his family to Fort Worth, Texas, from Chicago. Ottensmeyer then taught finance at DePaul University and worked at a startup company.

Ottensmeyer rejoined the railroad industry in 2006, when then KCS CEO Michael Haverty hired him as executive vice president and chief financial officer. Ottensmeyer helped turn around the railroad’s finances, and in 2008 was named executive vice president of marketing and sales, a key position at a railroad that would see high growth as Mexico cross-border traffic began to take off. KCS went on to become the fastest-growing Class I railroad.

Ottensmeyer was named KCS president in 2015 and added the CEO title in July 2016. When Donald Trump was elected president five months later — after repeatedly bashing the North American Free Trade Agreement as the worst trade deal ever — the railroad’s stock plummeted 11% as the market opened, erasing $1 billion in value.

That morning, Ottensmeyer walked into KCS headquarters and wrote a memo to employees, who were understandably concerned about their jobs in the wake of the election of a president who promised to tear up NAFTA, the trade agreement that was key to the cross-border railroad’s future. “My commitment to the employees and to the board was that I was going to do everything I could to get engaged to try to influence, educate, and stay involved,” Ottensmeyer told Trains.

He kept that pledge and became a free-trade diplomat. He spent considerable time in Washington and Mexico City, speaking with lawmakers and policymakers — anyone and everyone who would listen, really — about how NAFTA benefited both countries.

Ottensmeyer served as the U.S. Chairman of the U.S. Chamber of Commerce’s U.S.-Mexico Economic Council from 2019 to 2023. In this role as leader of the U.S.-Mexico CEO Dialogue, he was instrumental in representing business interests while NAFTA’s replacement, the United States-Mexico-Canada Agreement (USMCA), was developed from 2017-2020.

“We’ve probably been more active on both sides of the border than almost any other U.S. company,” he told Trains in 2018. “I can look back on a number of those conversations and meetings and feel like we did make people – lawmakers, policymakers – more aware of what was at stake.”

In late 2018, KCS began taking its first steps toward implementation of the low-cost Precision Scheduled Railroading operating model, which was sweeping the U.S. publicly traded Class I railroads at the time. As part of its transition, KCS sought to provide a balance between growth and customer service on one hand and reducing costs and better using locomotives, cars, and crews on the other. “For us, PSR is all about improving the consistency, reliability, and resiliency of our network and it’s really focused on service and growth,” Ottensmeyer said in April 2019.

Ottensmeyer played a central role in the merger talks that began in the summer of 2020 as KCS became an attractive acquisition target.

On July 31, 2020, The Wall Street Journal reported that a pair of infrastructure funds was preparing a $21 billion bid for KCS. On Aug. 17, 2020, KCS received an unsolicited proposal from Blackstone Group and Global Infrastructure Partners to acquire KCS for $195 per share in cash. KCS turned down the offer and would go on to entertain dueling bids from Canadian Pacific and the Blackstone-GIP group. KCS ultimately accepted CP’s offer that was valued at $275 per share, and the railroads announced their merger proposal on March 21, 2021.

CP rival Canadian National was waiting in the wings and submitted an unsolicited offer worth $325 per share on April 20. On May 21, KCS terminated its merger agreement with CP and accepted CN’s offer. But the KCS-CN merger unraveled after an unfavorable regulatory ruling from the Surface Transportation Board in August 2021. A few weeks later, KCS and CP ultimately agreed to a merger valued at $300 per share – or $31 billion. The deal gained regulatory approval and became effective on April 14, 2023.

William Galligan, KCS’s retired head of investor relations and author of the KCS history “Vision Accomplished,” praised Ottensmeyer for his role in the merger talks and the ultimate outcome.

“Pat Ottensmeyer had been a major contributor, at times the most important and influential contributor, to the development of KCS’s merger transaction strategy. He had first helped formulate the process the transaction team used to evaluate the bids received from three different prospective acquirers. Then he was integral to the person-to-person negotiations that followed the offers. He kept the dialogue and negotiations fluid, collegial, professional, and productive. The strategy had proven to be sound, and its execution by the board of directors and transaction team was flawless,” Galligan wrote.

After the merger, Ottensmeyer served on the board of directors for the U.S. Chamber of Commerce, railcar manufacturer The Greenbrier Companies, shortline holding company Watco, and intermodal provider J.B. Hunt. Ottensmeyer also was co-chair of the Brookings Institute USMCA Initiative and chair of the Truman Library Institute.

Independent rail analyst Anthony B. Hatch called Ottensmeyer a hall of famer. “Pat was a great leader, a great conciliator, and a very good friend,” he says. “He will be badly missed.”

Note: Updated at 11:09 a.m. with comment from CPKC.