CSX move derails Baltimore as headquarters city

July 13, 1991|By John H. Gormley Jr.

Baltimore will cease to function as a headquarters city for a major railroad for the first time since the founding in 1828 of the Baltimore & Ohio as a result of a reorganization announced by CSX Transportation Inc. yesterday.

"We really can't talk about it as a headquarters city anymore," Richard L. Leatherwood, president of CSX's equipment division, said yesterday after the announcement. His division, and his job as head of it, will cease to exist as part of the reorganization.

CSX Transportation was created more than a decade ago by the merger of two big Eastern railroads, Baltimore based Chessie System Inc. (which included the B&O, the nation's first commercial railroad) and Seaboard Coast Line Industries, which had its headquarters in Jacksonville, Fla.

In trying to meld the two organizations, CSX opted to retain headquarters in each of the two cities. (The parent, CSX Corp., is based in Richmond.)

In 1986, three railroad divisions were created, each having its own president. The marketing and equipment divisions were in Baltimore and the operations division in Jacksonville. The railroad continued to refer to both places as headquarters cities.

RF By dissolving the equipment division, the reorganization in effect

completes the movement of all the railroad's top managers to Jacksonville. That process began at least two years ago.

For example, Alvin R. "Pete" Carpenter, president of the Baltimore-based marketing division, has effectively been working out of Jacksonville for the past two years. He maintains an office in Baltimore but spends most of his time in Jacksonville.

Asked whether the reorganization has completed the movement control to Jacksonville, Mr. Leatherwood replied, "This resolves it."

Mr. Leatherwood, who was part of the steering committee that reviewed the reorganization plans as they were developed, said he will be leaving CSX but has not found a new job. "There's no bitterness or anger. I'm leaving on good terms," he said. "The business world changes."

The issue of management power has been resolved in favor of Jacksonville, but Baltimore will remain an important employment center for the railroad. About 2,600 people work for CSX in Baltimore and basically will be unaffected by the reorganization.

CSX Transportation employees reporting to work this morning found a letter on their desks from President Robert L. Kirk explaining the changes. The second sentence of the letter said that "the organizational changes will have a minimal effect on Baltimore."

During a phone interview yesterday afternoon, Mr. Kirk said, "Baltimore remains a major center" for the railroad and that he expects it to remain so.

"It's not a major change, at least for the moment," he said of the reorganization, but more changes could be in store. "I wouldn't rule out continuing to make changes as we go along," he said.

The reorganization abolishes the three-part structure, replacing it with one along more conventional lines. Jerry R. Davis and Mr. Carpenter will remain the heads of the operations and marketing divisions respectively, but they will have the titles of executive vice presidents of line departments, rather than serve as presidents of separate business units. As before, they will report to Mr. Kirk.

The most substantive change involves creation of a new group )) called service design. A part of operations, its role will be to closely coordinate the operations and marketing departments and to work on ways for the railroad to make better use of its assets. Its duties will include network planning, operations research and analysis.

The service design group's long-term role will be to devise the most effective ways for the railroad to improve service while increasing efficiency and profitability.

Mr. Kirk said that the three-part approach made sense when CSX was trying to integrate two distinct railroad cultures that remained following the merger. That approach served its purpose then but no longer suits the railroads needs, Mr. Kirk said.

"There was a certain amount of difficulty built into it," he said of the three-part structure.

The new organization will create much better coordination and sharper focus, he said, to produce "one set of objectives for one company."

The new organization should help the railroad carry out its long-term strategy. "It's basically to put the emphasis on appropriate asset utilization in the core business markets we serve," he said.

Mr. Kirk said the new organization will be largely complete by the end of the year.

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