 |
Re: Watco as middle man--how much.? ownership corrections
Author: S. L. Murray
Date: 02-16-2007 - 13:51
Dear Mr. Hall,
If you, or any others, have felt ‘flamed’ by my remarks, please first accept my apologies. Second, please feel free to note as such at any time and I’ll delete the post in question. Reasonable people may disagree, but they need to do so reasonably. That said, I find a few main points in your post that I wanted to address.
The first is to pick up on the point made by ‘jdm’ that Watco does not have a reputation in the industry for being a ‘buy, pillage, and scrap’ type of holding company. Unlike some other holding companies, the history of the vast majority of their roads is one where they keep the lines and try and build business. They do certainly try and get public assistance for their marginal lines, but there isn’t any reason to suppose that they somehow bought the PCC/BLMR to be stripped as part of an alternate business model.
The second is that, while I don’t doubt your stories, there is a HUGE difference between anecdotal observations versus actual knowledge of the business plans and contracts Watco has. As for your examples, it is quite probable that the contract for the combine moves was already up and going to be diverted to Spokane anyway. Was Watco being paid fairly to unload the combines? Those TTX flats are expensive, and just why do people think they get 5 free days anyway? And, tearing out a private active customer track would be something a customer could stop in about 10 seconds if they wanted to. The key is ‘if they wanted to’. Also, for the most part, interchange times and frequency are usually set by the Class 1, not the shortline.
From where I sit, I’m confused by all this hatred of Watco. I know the marketing guys, and most of the GMs of the various lines in the NW, and can assure you there isn’t any conspiracy to run off all the traffic. As a taxpayer in Washington, I’m not super thrilled that they have tried to wring every last penny out of the state in selling the lines, but I also am aware that they’re a for profit company. Again, running the traffic off isn’t something you would do if you’re trying to sell the lines.
A last point, and this is important I think, is that there are all sorts of funding sources available to public entities, such as ports, that are not available to private companies. For example, a publicly owned railroad can get outright grants from WSDOT which would have to go as loans, with a lot more difficult application process, to a private company.
In summary, these are very marginal lines on whom no operator could have made a decent profit. Unless there was some sort of state aid, they were going to be abandoned. There ARE operators out there that try and take over a line simply to scrap it, but Watco isn’t one of them.
SLM
If you, or any others, have felt ‘flamed’ by my remarks, please first accept my apologies. Second, please feel free to note as such at any time and I’ll delete the post in question. Reasonable people may disagree, but they need to do so reasonably. That said, I find a few main points in your post that I wanted to address.
The first is to pick up on the point made by ‘jdm’ that Watco does not have a reputation in the industry for being a ‘buy, pillage, and scrap’ type of holding company. Unlike some other holding companies, the history of the vast majority of their roads is one where they keep the lines and try and build business. They do certainly try and get public assistance for their marginal lines, but there isn’t any reason to suppose that they somehow bought the PCC/BLMR to be stripped as part of an alternate business model.
The second is that, while I don’t doubt your stories, there is a HUGE difference between anecdotal observations versus actual knowledge of the business plans and contracts Watco has. As for your examples, it is quite probable that the contract for the combine moves was already up and going to be diverted to Spokane anyway. Was Watco being paid fairly to unload the combines? Those TTX flats are expensive, and just why do people think they get 5 free days anyway? And, tearing out a private active customer track would be something a customer could stop in about 10 seconds if they wanted to. The key is ‘if they wanted to’. Also, for the most part, interchange times and frequency are usually set by the Class 1, not the shortline.
From where I sit, I’m confused by all this hatred of Watco. I know the marketing guys, and most of the GMs of the various lines in the NW, and can assure you there isn’t any conspiracy to run off all the traffic. As a taxpayer in Washington, I’m not super thrilled that they have tried to wring every last penny out of the state in selling the lines, but I also am aware that they’re a for profit company. Again, running the traffic off isn’t something you would do if you’re trying to sell the lines.
A last point, and this is important I think, is that there are all sorts of funding sources available to public entities, such as ports, that are not available to private companies. For example, a publicly owned railroad can get outright grants from WSDOT which would have to go as loans, with a lot more difficult application process, to a private company.
In summary, these are very marginal lines on whom no operator could have made a decent profit. Unless there was some sort of state aid, they were going to be abandoned. There ARE operators out there that try and take over a line simply to scrap it, but Watco isn’t one of them.
SLM
