The 1.96-acre property, called the Lay-By, is a retreat on Anna Maria Island, near Tampa, Fla., for current and former NS executives. It features 14 units, a tennis court, pool, and 190 feet of beach frontage on the Gulf of Mexico.
The move to sell the retreat is largely symbolic, says independent rail analyst Anthony Hatch. The for sale sign comes as NS is striving to reduce costs, drive profitability, and accelerate growth — all while fending off CP.
As part of a strategic plan announced in December and further detailed in January, NS says it will achieve productivity savings of $650 million per year by 2020 as it aims to reduce its operating ratio to at least 65 percent, down from 72.5 percent in 2015.
Under CP’s plan to acquire NS, Canadian Pacific CEO E. Hunter Harrison would sever ties with CP and become CEO of NS while the merger is under regulatory review. Harrison would then implement CP’s operating plan at NS, driving $1.2 billion in cost and efficiency savings in less than two years.
To date, NS has taken several steps to cut costs since CP announced its acquisition plans. Among them:
- On March 15, NS consolidated its three operating regions into two.
- On Feb. 1, it combined the former Virginia and Pocahontas divisions into a larger Pocahontas Division. In a related move, it idled parts of its West Virginia Secondary, a 253-mile route linking Columbus, Ohio, and central West Virginia.
- On Dec. 22, the railroad announced it would consolidate its Lake Erie coal docks. The Ashtabula, Ohio, coal pier will be closed by May and its operations shifted to the NS dock in Sandusky, Ohio.
Earlier in 2015 — and before CP announced its merger plans — NS restructured its Triple Crown RoadRailer subsidiary, planned a headquarters consolidation, and reduced capital spending.
The railroad’s strategic plan also calls for additional closures of yards and the downgrade or sale of secondary lines; a 400-unit reduction in the active locomotive fleet; concentrating traffic on fewer, longer trains; cutting overtime costs in half; and reducing employee headcount by seven percent by 2020.
This is just the sort of distraction to the mission of a corporation that gives its enemies (or “reformers”) reason to raise doubt. Maybe in the big picture of the NS corporate behemoth, it was small change. But then, if it wasn’t important, why keep it? The action to sell it off tells a story that the corporation and its execs were more concerned with their comforts and enjoyment than in keeping the railroad profitable. It is these little things that give sharks like HH their openings to pull off takeovers and gutting of corporations. Operations like NS and other non-railroad companies need to keep their operations above reproach before the barbarians such as HH are storming the gates.
Maybe the sale will allow NS to hire back my brother….who they laid off without notice last Friday. But probably not.
Decades ago, corporations owned all kinds of facilities to entertain clients including hunting lodges and golf courses. Most public companies got rid of them decades ago. Now they make professional investors wonder what management is doing. Is the place really needed for business purposes or does the CEO just like hanging out there?
I have a feeling this is the kind of non-railroad asset CP and Ackman are drooling over in their quest to get NS & then sell them off. NS is beating them to the punch & won’t give CP the satisfaction. Smart!
This was on a Facebook post this past Tuesday on a closed group. The Lay-By was a nice perk for non agreement employees such as myself. I took my family there a couple of times. For $600 a week you couldn’t beat the price. It was nice and peaceful there.
“Executives” may a little strong. Any non-union employee or retiree may rent a unit and they do pay to vacation there.