Causes of Southern Pacific failure

Have read many times the Southern Pacific failed due to bad finances, but haven't read about specifics such as: bad routes, bad service, short hauled, or any specifics really.

Anyone know the specifics or know any good resources to point me to? Books, documentaries, websites: all fine by me.

Southern Pacific kind of got surrounded. Union Pacific got the Western Pacific, so it got a tough competitor for the Overland Route. Next UP got the MP, so that SP now had strong competition at Houston, Dallas, San Antonio and El Paso. The old friendly MP route through Pueblo which sent traffic to the DRGW through to Salt Lake & Ogden dried up.

It didn't help matters that they tried to merge with the ATSF and the STB & DOJ turned that down. That's how SP wound up being sold to the DRGW.

Know about the failed merger w/ ATSF. Guess being acquired by DRGW didn't do much to improve the bottom line.

If you're looking for specific books or articles, you might try (if you haven't already) the Southern Pacific Historical & Technical Society at sphts.org.

NotYou wrote: ↑Fri Sep 03, 2021 10:23 pm Have read many times the Southern Pacific failed due to bad finances, but haven't read about specifics such as: bad routes, bad service, short hauled, or any specifics really.

Anyone know the specifics or know any good resources to point me to? Books, documentaries, websites: all fine by me.

To give you an idea of what happened all you have to do is look at what happened to SP's Perishable and Auto Industries. In the 1950's and early sixties SP was moving solid trains of fruit out of California every day, some over Donner Pass, and some via the Golden State and Sunset routes. Almost all gone now. Then there was the Automotive business, auto parts hauled in from the Midwest, and a portion of the finished cars hauled out. There were at least four auto assembly plants in California GM had plants at Fremont (Bay Area), Southgate (LA area) and Van Nuys (LA area). Ford had an Assembly plant at Milpitas (Bay area) all of these plants consumed trains of auto parts and shipped out at least a portion of the finished cars back east. All of these plants were closed. The Fremont plant is now owned by Tesla and it ships out some finished cars, but the plant was closed for nearly a decade. And then there are the smaller businesses that have closed or moved.

NotYou wrote: ↑Fri Sep 03, 2021 10:23 pm Have read many times the Southern Pacific failed due to bad finances, but haven't read about specifics such as: bad routes, bad service, short hauled, or any specifics really.

Anyone know the specifics or know any good resources to point me to? Books, documentaries, websites: all fine by me.

If you really want to understand the Southern Pacific the best source is on the pay forum "Trainorders". In a long running series of posts Michael D. Ongerth (posts as MDO, his initials) has a series of postings headed Mad Dog Chronicles covering his time from Management Trainee all the way up the management ranks to Vice President of Transportation at SP. He finished his career at UP as Vice President of Passenger Operations. Along the way you will meet all the characters who constituted SP upper management from Ben Biaggini, to Robert Krebs and other notables. The Mad Dog chronicles are currently up to #321 posted yesterday. Many other former members of SP management frequently chime in with their thoughts. SP managers like Dispatchers are often referred to by their three initials so Mike is MDO, Rollin Bredenberg is RDB, Robert Krebs is RDK, etc.

https://www.trainorders.com/

Is it true that in the 1996 merger, SP actually took over UP, with SP (the surviving company) renaming
under UP? If so, post-1996 UP is SP under the UP name.

JayBee wrote: ↑Mon Sep 20, 2021 5:26 pm Then there was the Automotive business, auto parts hauled in from the Midwest, and finished cars hauled out. There were at least four auto assembly plants in California GM had plants at Fremont (Bay Area), Southgate (LA area) and Van Nuys (LA area). Ford had an Assembly plant at Milpitas (Bay area) all of these plants consumed trains of auto parts and shipped out at least a portion of the
finished cars back east. All of these plants closed. The Fremont plant is now owned by Tesla.

Chrysler had a Los Angeles plant (outside city limits) until 1971, the plant peaked in 1965. One reason for its closure was that "changes in the shipping of new cars, particularly tri-level railroad carriers, made the Los Angeles operation increasingly uneconomical".

Nash Motors was in El Segundo (now a Boeing plant) until 1955, that and the Toronto plant were closed to consolidate in Kenosha after the AMC merger. Kaiser and Studebaker also had assembly facilities at Long Beach. Ford was also in Long Beach. San Jose (Milpitas) built many early Mustangs, including supplying the Shelby fastback shells.

In early years, west coast assembly plants were satellite facilities of Detroit, receiving incomplete knock-down
shells and parts for local assembly.

Here in the northeast, we are well-acquainted with the problem of "one railroad too many" for a given area. In the west, SP became the 'red-headed stepchild' of larger, better funded roads. UP is an absolute colossus, with easily the best route to the west coast, and the ATSF benefitted from federal investment during WW2 more than any other railroad. Had ATSF NOT been spoon-fed during the war, a merger between the 2 would've probably been a good idea.
Also, just like certain lesser mid-west railroads, they tried getting business by undercutting the competition and running the works into the ground. It worked for most of a decade, but when a recession came, business went down, and now the infrastructure was worn-out and nobody was willing to invest in them.

Not so sure SP existed by 1996 unless it was an empty shell following the merger into Anschutz and the DRGW. SP was bought in 1988, so it stopped existing as a standalone company 8 years before Anschutz sold to UP.

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Did some digging... in the proxy filing with the SEC:

https://www.sec.gov/Archives/edgar/data ... 000752.txt

As a result of the Merger, the separate corporate existence of SP will cease and UPRR will be the surviving corporation (the 'Surviving Corporation').

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A related query:

I heard that during the bureaucratically less-than-smooth merger, some villains got into the combining railcar database, and marked certain rolling stock as returned to UP+SP, when it fact the smaller line kept them.

For a year+, they were using the rolling stock, without paying their owners a cent. It worked until a beancounter for the owner investment pool wondered why UP had the cars but not paid them in a year for their use.

Has anyone here heard of this saga, and have any actual cites to same?

SP's finances were more protected by REGULATION than other carriers. Hauling lumber "the long way" from Oregon to St Louis via Los Angeles, El Paso, Dallas, Pine Bluff was good to SP finances.

Once deregulation happened and customers could choose their routings, much of that business fled to shorter corridors. SP was caught out of place by deregulation, selling circuitousness that nobody was buying, and the sudden interest in the Rock's Golden State Route to serve as a shortcut was the result of SP's attempt to become competitive by reducing mileage.

Although the DRGW provided additional mileage shortcuts, it was hobbled by the costs to climb all that tonnage 10,000 feet up and then down again. The same reasons the DRGW route gets no love from UP today.

There is one big factor in SP's downfall which nobody is talking about. When SP and Santa Fe were going to merge, they had already merged their parent corporations into Santa Fe Southern Pacific Corporation. When the ICC nixed the merger of the railroads, SFSP was ordered to sell off either one or both railroads. They chose to sell SP, but keep AT&SF, along with all former non railroad businesses formerly owned by both railroads. As we all know, Rio Grande Industries bought SP.

It is my thought that the other businesses helped support the railroad during dry periods. We also have no way of knowing if any SP assets were transferred to SFSP Corp. before the sale of SPRR. First hand as a Delaware and Hudson employee, I've been told of how company assets were transferred to other Guilford entities before we were placed into bankruptcy. It's like a divorce where one spouse ends up retaining most of the assets. The other is basically left to make it of his own.

I do agree with the other posters about much of the businesses leaving California. Just like my native New England, it is an expensive place to do business. I don't think that al was lost, since the state remained a major source of consumer goods. Alas with increasing trade with Asia, the ports on the west coast should have been major sources of traffic.It should have been a matter of a change of focus.

It seems to me that with lack of capital for improvements, SP tried to make do. This may very well be a result of much of SP's money and assets ending up over on the Santa Fe, as I'd mentioned. The major upgrades to the Sunset Route post UP might be a good example of improvements which SP was forced to forgo due to lack of funds.