Chief will focus on transportation basics


October 21, 1990|By John H. Gormley Jr.

The president of CSX Transportation, who spent most of his career in the aerospace industry, recognizes that you shouldn't try to make a locomotive fly.

Since becoming president of one of the nation's largest railroads in late March, Robert L. Kirk has been learning as much as he can about running a railroad. Now, after seven months of study and analysis, he is preparing to decide what direction to take the company known as CSXT.

While he declined to provide details of his plans, he did suggest strongly that he will be focusing on railroad fundamentals -- what he calls "blocking and tackling" -- rather than a razzle-dazzle approach. There will be no dramatic surprises, according to Mr. Kirk, 61, the former chief executive of Allied-Signal Aerospace Co., one of the nation's largest aerospace suppliers.

He does not intend to try to turn CSXT into an airline, he said, but "I will tell you for sure, I see the railroad being a better railroad."

Since the creation of CSX Corp. a decade ago by the merger of two big Eastern railroads -- Chessie System Inc. and Seaboard Coast Line Industries Inc. -- there have been times when it was unclear whether CSX Corp. really wanted to be a railroad, as the Richmond, Va.-based parent company diversified and invested in oil and gas, telecommunications and recreational resorts, as well as other forms of transportation, including a steamship line, barge company and trucking.

The result was less attention for the railroad at the core of the company's business.

That has been reversed, however, as CSX in the last two years has returned its focus to transportation and has been reinvesting in the railroad's equipment, track and control systems.

Now it is up to Mr. Kirk to figure out how CSX can make the most out of its investment in the railroad operation.

One of the first tasks facing Mr. Kirk will be to improve morale at CSXT by convincing its 36,000 employees -- about 2,600 of them in Baltimore -- that the railroad industry has a future. When he arrived at CSX, Mr. Kirk said, he was struck by a sense of negativism.

The railroad industry has "a long history of retrenchment and contraction," he observed. "The numbers are out there for all to see."

People at CSX and elsewhere in the railroad industry had come to see themselves as part of an outdated, declining industry.

"A lot of people in the business accepted too readily that decline is inevitable," Mr. Kirk said. "I certainly am not accepting of that."

Today the nation's large railroads employ about 217,000 employees, or less than half as many as a decade ago. Similarly, CSX's current employment is slightly more than half of what it was in 1980.

Mr. Kirk has no illusions that U.S. railroads will ever be what they once were, but he does think the decline can be stopped and that CSX Transportation can become a successful business earning a reasonable return on investment for its owners and providing stable jobs for its employees.

"Can you arrest the decline? Can you stabilize the company and market at some level of business?" he asks rhetorically, replying that such an achievement represents "a reasonable management goal."

Those are hardly the words of a firebrand, but achieving eve that seemingly modest goal, stability, could be far from painless.

Analyst Jeffrey S. Medford, who follows CSX for Wheat First Securities in Richmond, said the railroad is "too big a system."

Where most CEOs have to try to increase revenues while controlling costs, Mr. Kirk's task would seem to be to shrink revenues by paring away losing markets and operations. Mr. Medford thinks CSXT's $5 billion in annual rail revenues probably should be shrunk by 10 percent to 20 percent.

CSX Transportation represents the merging of what were at one time or another almost 100 separate railroads. There is much duplication, he said, noting that much of the track does not support profitable operations. "They have to recognize where the company can make money and where they can't," Mr. Medford said.

That's precisely what Mr. Kirk said he is trying to figure out. "Should we attempt to bring back the days of old and be all things to all people in all markets? I know the answer to that is no," he said.

Mr. Kirk declined to say what markets he intends to pursue and which ones he wants to de-emphasize. But the answer to those questions will go a long way toward deciding what kind of railroad he wants CSX Transportation to become.

"It's important to play with style. It's more important to kno what game you want to play," he said. "Then and only then can you attempt to sort out how you should be organized," he said.

The question of organization is a sensitive one at CSX Transportation. The company has a three-part structure. The operations headquarters, with about 3,000 employees, is in Jacksonville, Fla., the former base of Seaboard Coast Line. The marketing and the rail-car management divisions are in Baltimore, the former seat of the Chessie System, where there are 2,600 employees.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.