Could closing the Gap have saved the Milwaukee Road?

Discussion relating to The Chicago & North Western, the Chicago, Rock Island & Pacific, the Chicago, Milwaukee, St. Paul & Pacific Railroad (Milwaukee Road), including mergers, acquisitions, and abandonments.

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Could closing the Gap have saved the Milwaukee Road?

Postby USRailFan » Mon Dec 05, 2005 11:00 am

If the Milwaukee Road had managed to "close the gap" (ie electrify Avery - Othello), could this have saved the Lines West from abandonment and ultimately the road from bankruptcy? Or would the Milwaukee have been doomed no matter what?
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Postby ACLfan » Fri Dec 16, 2005 11:02 am

Do you think that the additional electrified section would have made a difference in the Milwaukee Road's overall economic condition?

If so, then why (or how)?

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Postby BillN » Sat Jan 13, 2007 11:59 pm

Yes.
From wikipedia:

In February 1973, and against the advice of studies conducted by both the railroad and independent groups, the Milwaukee decided to scrap its electrification scheme. The board of directors considered the electrification scheme an impediment to its merger and consolidation plans, and that the money required to maintain it would be better spent elsewhere. The high copper prices of time, and the $10 million the railroad estimated it would get for selling off the copper overhead wire, contributed to the decision.

The surveys had found that an investment of $39 million could have closed the "gap" between the two electrified districts, bought new locomotives, and upgraded the electrical equipment all along the line. Furthermore, the displaced diesel locomotives could have been used elsewhere and thus reduced the requirement to purchase new, reducing the true cost of the plan to only $18 million. General Electric even proposed underwriting the financing because of the railroad's financial position.

Rejecting this, the railroad dismantled its electrification just as the 1973 oil crisis took hold. By 1974, when the electrification was shut down, the electric locomotives operated at half the cost of the diesels that replaced them. Worse, the railroad had to spend $39 million, as much as the GE-sponsored revitalisation plan, to buy more diesel locomotives to replace the electrics, and only received $5 million for the copper scrap since prices had fallen.

The badly-maintained track, which was the part of the system most in need of renewal, was never touched.


From some of the other stuff I have read, it almost seems possible that the Milwaukee Road was purposely driven into bankruptcy. It would be interesting to see where her corporate officers went to work after her closure.
The most interesting part was that GE was going to finance upgrading the existing electrical trackage and closing the gap.
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Postby deezlfan » Sun Jan 14, 2007 8:47 am

Pretty good article from Wikipedia, seems to be a good synopsis of the era. [Sometimes I shutter when I see some of the inaccurate junk that is posted there, I question a lot of posts quoting Wikipedia as fact.....] I have read a few references from former employees stating that they questioned the MILW's ability to survive even with the electrification. Since they were on the inside, their stories are an interesting prospective.

To think what a HD electrified railroad could be worth today is quite impressive. Anyone willing to speculate what the Milwalkee Road would have looked like if they had electrified the gap and made it through to the Staggers Act? [Crew reduction and branchline rationalzation to streamline costs even more.]
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Postby Gilbert B Norman » Sun Jan 14, 2007 11:01 am

No
From GBN (MILW 1970-81)

The system, while sworn by from both railfans and on-line employees, was outdated. While I have chosen to make this topic known to Mr. Phil Nasadowski, an Electrical Engineering graduate who posts principally over at the Northeast passenger Forums, and accordingly will defer to his knowledge on technical matters, 3KV does not make for efficient transmission of electric current. Further, the caternary, especially if it were to have been upgraded to today's standard of 25KV, could restrict the line from routing of double stack containers.

The comment heard about the halls of the General Offices atop CUS circa 1974, when the abandonment decision was made, was 'the first step to rebuilding the electrification has now been started". I believe that this decision has been borne out in that no Class I, any of which enjoy far greater traffic than the "one a day' Lines West hosted at the end, has considered electrification. No question whatever, any electrification provided a strong inherent economic advantage over steam locomotives. There were still advantages over "first generation' diesels (FT's, FA's, F-3's), but by the time the 'second gen' such as SDP-40's U-33's and C-430's was in service the advantage was roundly a 'toss up'. However, the current generation of SD-70's and C-44's simply leaves electrification "at the station'.

Now I hope my pessimism regarding the electrification does lead any reader believing I hold same thoughts regarding Lines West. Such is quite the contrary, for it is my firm conviction that had there been a "railbanking' precedent in which an owner could deem a property abandoned in place, and further absolutely held harmless from civil liability to the same extent as if it were unaltered from its natural state, yet with protection from 'squatters" and easements, the line would be providing needed railroad transportation today, although obviously not under the Fallen Flag of the Milwaukee Road.

I further hold that even though the Port of Seattle/Tacoma handles impressive volume of traffic, both tonnage and value, it would not have become the comparative backwater as it has to Los Angeles/Long Beach. Maritime companies consider the lack of a competitive East-West route (OK, UP makes rates but, even notwithstanding their current service "challenges", only has a rather circuituous routing ) a factor in which port they will dock their vessels.

Lastly, a review of applicable material will establish Seattle is closer to any Asian port of note than is LA/LB. Great Circles do amazing things to "rhumb lines".
Last edited by Gilbert B Norman on Sun Jan 14, 2007 12:52 pm, edited 1 time in total.
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Postby Nasadowsk » Sun Jan 14, 2007 12:51 pm

Well, de-electrification sure didn't save it!

Would closing the gap have done it?

One of the complaints I've heard at the time of abandonment was that there weren't enough motors to go around, but the units that WERE on the property were easily outperforming diesels of the 70's. The catenary poles were starting to get in need of replacement (they were wood) but few failures were going on.

The track sucked, for sure.

Would 3kv work? Historically, 3kv systems have been remarkably long lived - remember that NJT ran theirs until the 80's, and no major upgrades were ever done. The substation spacing could be rather long in places, and short in others (this is true for high kv AC systems too). It's not as ideal as 25kv, but the MILW's line voltage was somewhat higher than 3kv anyway (I've heard as high as 4 in places). 3kv locomotives still pack a good punch, Some of FS's newer units push 6MW - far beyond what any US diesel can do HP wise. Yet they're rostering units as far back as the 1950's - sugesting that perhaps 3kv units are longer lived than higher voltage AC ones. Localaized wire heating from standing and starting units is an issue, but there are dual mode pantographs that can help, there.

Of course, with the respikes in oil prices, the savings could have been huge. Would it have been enough to save them? Who knows?

But we get back to the track. Reports say it was in poor shape. And the track forms the return circuit, too. without good track, electrification wouldn't be useful, but then, running a RR on bad track isn't a good idea anyway.
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I'LL THROW ONE AT YOU:

Postby henry6 » Tue Jan 16, 2007 10:32 am

I'll throw one at you: what IF (always a big if) MLW merged with an eastern road, like EL or NKP or Wabash? What could have been the results?
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Postby Otto Vondrak » Tue Jan 16, 2007 12:43 pm

I don't think the ICC would have allowed an EL-MILW merger- especially with N&W having a controlling interest in Dereco (which included D&H and EL). Second, NKP and Wabash were already in the N&W fold by 1964, again I don't think the ICC would allow a transcontinental merger in those days- they seemed against it from all reports I have read.

Mr. GBN- I read somewhere that when the dust settled from the Milwaukee's initial bankruptcy in 1977, that it was discovered that there were many double entries for defecits, and that the Western Extension actually was turning a profit! Any weight to that?

=otto=
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Postby Gilbert B Norman » Tue Jan 16, 2007 5:28 pm

Mr. Henry, there actually was a proposal on the table, little known but reported by the Chicago Tribune circa 1980, that Japanese maritime interests wanted to buy Lines West.

Needless to say, the proposal was DOA; anti-Japanese sentiment ran much higher then than such, if any, today,

But the proposal had merit. This would first have a competitive East-West routing that any large shipper wants, could have given Port of Seattle-Tacoma more preeminence in the maritime community then it appears to enjoy (impressive tonnage and value, but a backwater when compared with LA/LB), and had maritime interests been able to acquire a line accross the North Central tier, such as the Erie, there could have been the makings of a competitive land-bridge handling Asian-European trade (that's a long away around the Cape of Good Hope as you never know who will be shooting at who along the Suez Canal).

But as Otto noted, and even though I had learned that 'fifteen more cars a day to the Coast and we would be breaking even", the Trustees simply wanted Lines West gone. Trustees must place the creditors' interest first, and to abandon such meant quick cash with which to pay creditor claims. Reorganizing a company by usually making debt holders into equity holders and wiping out the previous equity in the process must take back seat to creditor interests. Unlike the Penn Central, the public interest was simply not there. There was still means to move traffic (BN had two routes; GN and NP) and freight, unlike people, doesn't vote.

Lastly, I reiterate my earlier point; I still believe, that had it somehow been possible to preserve Lines West, it would be providing needed railroad transportation today.
Last edited by Gilbert B Norman on Wed Jan 17, 2007 10:47 am, edited 1 time in total.
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I DID NOT SPECIFY

Postby henry6 » Tue Jan 16, 2007 5:36 pm

I did not specifiy a date for my proposed merger, purposely left it open ended. But since you mention the Wabash and 1964, Otto, you present the perfect setting for an EL-MLW type merger as the N&W had just taken in the Wabash to reach Kansas City. MLW could have taken the EL as far east as, say, Youngstown, then the D&H could have it east from there. My thoughts were closer to the 70's, even mid 70's, when Santa Fe was supposedly courting EL and there were other talks of East-West weddings. The EL was trying to stay out of CR but CSX couldn't deal with the EL unions. So what if, in order to preserve a rail system someone had thought to put EL and MLW...or ever EL and RI...together!
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Postby Otto Vondrak » Tue Jan 16, 2007 11:34 pm

I understand now... I think there were a few mergers that looked great on a map, but didnt look good on the ledgers. Without getting too far afield, NKP+DLW looks good on the map- an end-to-end merger. But the NKP was so much stronger financially, the Board would never allow a merger with th weaker DLW and their huge debt load.

Was there ever any talk of folding MILW into Burlington Northern?

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Postby SooLineRob » Wed Jan 17, 2007 12:52 am

Otto Vondrak wrote:
Was there ever any talk of folding MILW into Burlington Northern?

-otto-


I know several ex-MILW T&E employees from the Aberdeen/Mobridge South Dakota crew boards... and there wasn't any talk among the ranks of any BN interest in the western lines. Many of the T&E people started to flee the Milwaukee in 1978, hiring out on other roads. South Dakota purchased the line and leased it to BN in order to preserve service to the Big Stone power plant in eastern South Dakota, coming from the west, with PRB coal. The T&E crews, in 1977-78, really didn't know if the tracks would still be there in 1980...or if they'd have jobs with the Milwaukee Road. What they did say was, given the railroad climate of the day, they knew either them (MILW) or Rock Island would die... both weren't going to survive intact. The ROCK quit, and Hiawatha shrunk to a Chicago-Twin Cities "core" business, up for grabs by the CNW and SOO...try and find a copy of the book Nation Pays Again, the story of Milwaukee's last bankruptcy; it's in the same vein as Wreck of the Penn Central and Erie Lackawanna: Death of an American Railroad.
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Postby BillN » Wed Jan 17, 2007 3:11 am

The original question was, could the Milwaukee have survived on its own by closing the gap. Yes, the infrastructure was very run-down. But I think that the two key items that would determine this, and should be verifiable are:

1) Was Lines West traffic increasing each year before the "end" as stated in Wikipedia?

2) Did GE actually offer to upgrade the entire overhead system and finance it as stated in Wikipedia?

If the answer to these questions is "Yes", then perhaps turning a profit on Lines West and doing some pruning on some of the eastern branches may have saved the Milwaukee.

As for the amount of traffic available, a layman (like me) would say that it seems transcon traffic has been on the increase for at least a decade, if not since the late 70s. Enough traffic for UP to have been scrambling for a decade to upgrade their transcon traffic.
Feel free to correct me if I am wrong. Just going off general observation.

3) Was the Milwaukee Roads route from the Pacific to the Midwest the "shortest and fastest" as stated in wikipedia?

Kind of hard to think the road with the "best" route would not be able to turn some kind of profit.
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Lines west

Postby SooLineRob » Wed Jan 17, 2007 8:07 am

Regarding the original question, "closing the gap", in short, no.

Even if the money was spent on catenary, it wouldn't have helped. No sense spending money on catenary only to crawl along at 10-25MPH on worn out jointed rail, governed by shaky ABS and train orders.

Even the Chicago-Kansas City line was the shortest rail mile route between the two, and even that route didn't survive under a Class One.

The Milwaukee Road was a mess, and what the SOO got in '85 was a basket case that nearly broke the SOO's bank account trying to repair.

So, adding catenary "out west" would've been akin to "putting lipstick on a pig"...
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Finis

Postby amtrakhogger » Wed Jan 17, 2007 9:16 am

With the industry almost at bottom traffic wise, no amount of
money could have saved the PCE or the Milwaukee in general. I think
they were doomed long before 1970. They never invested the
money in the PCE over the years to upgrade the line (i.e. CTC,
longer passing sidings, double track etc.) to remain competitve
with the GN & NP (or BN.) Look at the BN, they spun off the NP
in MT to MRL, because the traffic wasn't there to maintain two routes
to Seattle (at that time anyway.)

Even if the Milwaukee had stayed out of bankruptcy, they would
have been swept into one of the larger systems BN, UP? Even so,
Staggers would have allowed the MILW to jettison the PCE in favor
of haulage or trackage rights over BN to get to Seattle (IMO.)
"I will stop at St. Avold."
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