But at CP, the bulk of the top management changes came in a five-month span, not in a single day.
“I can’t think of another example of such a sweep of top executives,” says rail historian H. Roger Grant, a professor at South Carolina’s Clemson University.
CSX said Chief Operating Officer Cindy Sanborn and Chief Marketing Officer Fredrik Eliasson were resigning, while Executive Vice President of Law and Public Affairs Ellen Fitzsimmons would retire. Only Chief Financial Officer Frank Lonegro is a holdover from the previous management team.
Veteran CN executive James Foote was named chief operating officer and replaces both Sanborn and Eliasson.
Harrison and Foote have maintained a friendship that dates to their days working together at CN, former colleagues say. Foote was CN’s chief sales and marketing officer from 2000 to 2009, while Harrison led CN from 2003 through the end of 2009.
Foote left CN after Claude Mongeau was named to succeed Harrison as chief executive. Prior to being tapped for the CSX position, Foote was president and CEO of Bright Rail Energy, a company seeking to transition railroads to locomotives powered by natural gas.
“Jim has a proven track record with implementing Precision Scheduled Railroading and has more than 40 years of railroad industry experience,” Harrison wrote in a memo to CSX employees.
Foote, a lawyer, has minimal operating experience. He held management positions at Chicago & North Western, and joined CN in August 1995 as vice of president of investor relations to assist in the company’s privatization. He later served as CN’s vice president of merchandise.
When Foote was promoted to executive vice president of sales in 2000, then CN CEO Paul Tellier praised his role in boosting traffic.
“Jim’s leadership has been key to the success of CN’s aggressive marketing strategy,” Tellier said. “That strategy has seen a host of new intermodal and carload services unveiled this year, including new transcontinental intermodal schedules that cut almost 24 hours off transit times between Toronto and principal western Canadian cities. CN, year-to-date, leads all North American railroads in traffic growth.”
Foote knows Harrison’s operating philosophy, what’s expected at a Harrison-led railroad, and will be a positive addition to the team, Wall Street analysts said.
“Foote could be the trusted, proven railroader that could be a solid backup for Hunter,” says John Larkin, an analyst with Stifel Equity Research. “Just being part of the senior team at CNI was akin to accumulating operating experience.”
But one industry insider said the lack of direct operating experience could be a liability.
“Credibility with ops people comes from working day and night in the field,” says one insider who wished to remain anonymous. “If, for example, you haven’t changed a knuckle 50 cars from the head-end in blinding rain at 2 a.m., you won’t have much credibility among the ranks of T&E personnel, superintendents, and trainmasters. These are the people who get trains over the road and want to be led by people who know their daily grind.”
Some industry observers expressed surprise at the timing of the moves, which come less than a week before CSX’s scheduled investor day and while the railroad remains under the Surface Transportation Board’s microscope in the wake of a summer of service disruptions.
Many said they were surprised that Harrison, who became CEO in March, waited this long to make management changes.
Concerns about Harrison’s health — he has an undisclosed medical condition that limits his travel and forces him to rely on supplemental oxygen — may have had something to do with the timing.
Investors and analysts have raised questions about the railroad’s succession plan. During last week’s quarterly earnings call, Harrison, 72, said the issue was not being ignored and that it may be addressed during the Oct. 30 investor day. Late Wednesday, however, CSX postponed the investor day, citing the executive changes. No new date was set.
Foote, 63, may be viewed as a short-term successor while CSX grooms Lonegro to be its next CEO, Larkin says. Harrison has a four-year contract.
“Given Mr. Harrison’s focus on operations, and Ms. Sanborn’s operational acumen, her departure is a surprise move and creates further distance from the legacy CSX, as Ms. Sanborn and Mr. Eliasson were part of the triumvirate that were considered to be potential CEO candidates,” Bank of America Merrill Lynch analyst Ken Hoexter wrote in a note to clients.
The legacy of CSX is of little concern to Harrison, however, as he tries to transform its corporate culture and impose his operating philosophy.
CN veterans Foote and Executive Vice President and Chief of Staff Mark Wallace — along with 15 or so CN people hired in operations — will help Harrison more quickly change CSX and its operations, according to people who have worked with Harrison.
The hedge fund-led deal that brought Harrison to CSX prohibited him from hiring CP executives, with the exception of Wallace.
These people in the EHH pack have no idea what Leadership is…they are no different from all of the dogs in an Alaskan dog-sled race…they have no view of the future except the butt of the next dog in front of them…and they seem to like it that way…until the Lead Dog goes over a cliff. Keep in mind that The God of P.S.R. is still in an operating tower on The Frisco, and the Year is somewhere back when George Wallace was running for the Presidency. All of the things he learned about railroad ops can be written on the back of Paris Hilton’s underwear…so when EHH goes out in May next year, do not look for any vast improvements in CSX. Oh, would Mr Foote be so kind as to cut loose all of those coalfield tracks in Kentucky and the Virginias so a real railroad run by mountain men and women, (and maybe even Cindy Sanborn) can get back to the fun business of serving customers and a grateful Nation?
If I hear the phrase “Precision Scheduled Railroading ” once more, I’m going to puke.
ROBERT ASH – These next three years are going to be some very long 3 years, of which we may see the entire destruction of a railroad. IF he does leave at the 3 year mark, it wouldn’t be that far away from us getting a new leader at the presidential seat as well. Indeed some very long 3 years ahead of us.
So Precision Scheduled Railroading sets a schedule and the customers are to follow that schedule? What if the schedule doesn’t meet the requirements of the customer? I guess the customer(s) just go somewhere else or use trucks. Some customer service. The only precision left at CSX will be the dividends to the stockholders as he strips the railroad. That is all EHH wants. He has about three years left on his contract to completely dismantle the railroad if his heath issues don’t overtake him.
If we still had 50+ unmerged railroads all fighting it out for traffic, the Hunter Harrison’s of the world would be known for their skills in rescuing railroads from oblivion a-la John W Barriger or Alan Dustin or Alfred Perlman. But as it turns out Hunter has it easy. He has the benefit of a consolidation monopoly wind in his sails. Because of consolidation, he can afford to piss-off customers in pursuit of his goals whereas the Barriger and Dustin types could not. Same goes with Rob Krebs and Stan Crane, they worked wonders but had consolidation wind in their sails helping them along the whole time.
If I was Mr. Lonegro, I would be updating my resume. He will only last until he has revealed to EHH and his henchmen where all the money is hidden. Anyone who thinks EHH is great at running a corporation (or doing anything but running it into the ground while they strip it bare for the stockholders) is sadly delusional (Mr. Symonds and Mr. Conaway).
RAILROADS are not the only industries that need a house cleaning at the top.
I wonder how many shares of common stock some of the people who make comments have in CSX ?
GERALD MCFARLANE – Thank you for supporting my claim on losing 1/2 of CSX’s traffic. Although I was just saying it figuratively, not literally by any means, it sorta makes sense, seeing how CSX’s stock is going uphill (Especially now with this $1.5 million by back), yet amounts of customers are going down. You have to take somethings with a grain of salt, and EHH is one of those things.
Considering the fact that this functioning lunatic went through not one, not two, not three but FOUR CFO’s during his reign of terror at CPRS, I’m surprised that Lonegro is still there.
Jerry Conaway/Earl Symonds – ANYONE who believes in how “great” EHH is needs to have their head examined. He is a snake-oil salesman, nothing more.
I wouldn’t say that Mr. Foote (“Big-Foote”, as he was known around our yard) had NO operating experience. He was a division manager at CNW’s Chicago Terminal for a time (and if you can run Proviso, you can run just about anything!). He didn’t stay log before moving on up, and I can’t think of any major improvements (or what would pass for improvements) that took place under his tenure, but he was friendly enough.
I remember him coming into the office one time, and announcing to his clerk(s) “I’m Home!” in the best Ricky Riccardo imitation I’d heard up until then.
Gerald- Every RR schedules every carload and measures against the schedule. There is no big “Aha” left to PSR. It’s just basic railroading
Agree with Mr. Symonds. Being fascinated by all things railroad doesn’t make you qualified to run one. There is a reason Harrison is worth 300 million and has a talking horse. Some will argue it’s because he is a smart CEO, others will say it’s because he is a shrewd scam artist. Either way, he’s apparently doing whatever it is better than those of us who are here making snide quips and thinking we know better than the CEO of four different corporations.
W Cook,
Let’s be clear about this, it’s Precision SCHEDULED Railroading…the emphasis on Scheduled is for a reason, as that is really the key to everything. If all your carloads, whether they be merchandise or intermodal have a set schedule they need to meet on a daily basis, you can basically set up an almost self running operation, barring any spikes in traffic. Once you’ve got your network running on this schedule and each car meets it’s appointed transit time(look at CN, I believe the improved on the EHH model and have almost perfected it) then you can go out and solicit new business because you can sell a set schedule down to almost the minute with a customer.
Earl Symonds
It’ll take more than 2 months to fix the problems at CSX because half of them where created by EHH himself. As for half their customers, well if you don’t want to ship merchandise traffic just how many intermodal customers do you think they have?
show me proof that CSX has lost HALF of their customers
The final result of what is taking place at CSX is no different than what took place at CN and CP
The final result will be a much better CSX
Take a look at CSX in 2 months from now
………..arm chair quarter backs belong in football not railroading
Good news for Norfolk Southern, CSX is cleaning house, while eliminating 1/2 of their costumers. Non-competitive business, where’s the fun in that? Ohh I know, looking at the other railroad run around like a headless chicken.
The CSX didn’t need a house cleaning like EHH method. It only needed a good schedule using a 24 hour clock, not 28 hour. Did anyone ever understand the pattern of 28 hours clock? It needs to deliver their cars to customer when they need them, cars which are now being cut up by Hunter. They need daily routine interchange and that need not be called precision. There is no such thing as precision railroading unless it was the N&W in the 1950.