Who is “killing” Amtrak? October 1st, 2006
By Noel T. Braymer, Editor, Western Rail Passenger Review — Most of what is being said about the new Amtrak President Alexander Kummant is speculative. Mr. Kummant is largely unknown to the general public. It is understandable that people are uneasy when dealing with the unknown. What is known is that Mr. Kummant is 46, and has a B.S. in mechanical engineer from Case Western Reserve University. He also has a master’s in manufacturing engineering from Carnegie Mellon, and an MBA from Stanford University. Among the jobs Mr. Kummant has had were as an executive with the Union Pacific from 1999 to 2003 where he rose to Regional Vice-President. His next job was as President of the German Heavy Equipment manufacturer Bomag. This year he started work as the executive Vice-President, Chief Marketing Officer for the U.S. division of Komatu, the Japanese Heavy equipment manufacturer.
Is the Bush Administration planning to kill Amtrak? In letters to Congress Amtrak has been second only to Social Security in the volume of mail in support. This support comes from across the nation in both red and blue states. The UP’s hostility to Amtrak is no surprise to anyone. But other railroads, such as the BNSF, like getting incentive checks when running Amtrak trains on time. Without Amtrak the railroad retirement system will be in big trouble. The railroads have no wish to have that burden thrown on them. It would not be in the Bush Administration’s interest to eliminate intercity rail passenger service. Where the Bush Administration has little support is along the North East Coast of the country. This small area is where most of Amtrak’s jobs are based, and over half of Amtrak’s services are concentrated. In over 30 years many places have seen cut-backs and total elimination of Amtrak service. The one exception where there have been no cutbacks is the Northeast.
Amtrak is still recovering from a near-death experience. This happened in 2001-2002. Amtrak was so short of cash, it was forced to use Penn Station as collateral to borrow money just to meet payroll. What lead up to this had happened before the Bush Administration. The Acela went way over budget, plunging Amtrak deeply into debt while starving the rest of the system of cash for repairs and maintenance. Even if politicians are blamed for forcing the Acela on Amtrak, Amtrak Management was still responsible for decisions which have proven disastrous. Amtrak Management’s two basic mistakes on the Acela were in marketing and procurement. Amtrak Management thought the Acela would be their “glide path to profitability”. After repeated failures, Amtrak continued to think that short haul express trains were cash cows. This ignored the fact that Amtrak got most of its passenger income from long distance trains. Since Acela was introduced in 2001, Amtrak’s subsidy needs have continued to grow. Amtrak Management bet the farm on Acela, and almost lost it.
The biggest mistake Amtrak Management made on procuring the Acela equipment was not buying a proven product “off the shelf.” .The Acela was an untested product that turned out to have many “bugs”. This was complicated by Amtrak Management “micro-managing” the design which delayed the project and increased costs. The start up of service was delayed by over a year and the equipment still had problems. There were problems with the bathroom locks not working. There were cracks in the yaw-damper of the Acela which caused service to be suspended in 2002. Last year premature brake wear forced a suspension of service. Typically Amtrak Management ignored reports of problems with the Acela brakes, and it was the FRA which ordered the trains out of service. During this time older Metroliner trainsets where used instead of the Acela. They were just as fast and Amtrak admitted had lower operating costs than the Acela. The biggest single blunder of Amtrak Management was allowing the Acela to be built 4 inches to wide to take full advantage of its train tilting to allow faster speeds on curves. Amtrak insisted on buying a train capable of 150 mph, but only has 16 miles of track that can be run at that speed. Even today the Acela has more problems with its on-board electrical outlets not working. Buying a slightly slower, proven tilt-train that was less “glamorous” would have been more reliable and cheaper.
You would think with this level of performance there would have been a major shake up of Amtrak Management. You would be wrong. Many of the same people responsible for nearly killing Amtrak are still there. Amtrak has more executives and managers than conductors and engineers combined. Amtrak’s bloated bureaucracy has many more bosses to workers than any of the freight railroads. In the last five years as Amtrak has been laying off thousands of workers there have been no reductions in management. In fact there has been a slight increase over the years in management.
The Amtrak Board by hiring an outsider as the new Amtrak President is likely planning a major shake up of Amtrak. The current Amtrak Board is mostly made up of businessmen. Payroll is one of the easiest costs to reduce, and is a favorite target of business turnaround specialists. The recent massive lay-offs at Ford are a good example of this. In the past the Amtrak bureaucracy has always cut services without cutting overhead. This left the bureaucracy untouched, but reduced revenue. The result was instead of saving money, these cut-backs left Amtrak worse off. We will have to keep a close eye on Mr. Kummant. A slash and burn approach of Amtrak’s route system is totally unacceptable. Amtrak’s problem is not too many trains, but too few. Can Mr. Kummant lean out Amtrak’s Management and retain competent managers? Will the NEC remain a “sacred cow”? Does Amtrak “need” to own Chicago Union., Penn Station, Philadelphia 30th Station or Beech Grove and Sunnyside Yard? Can these properties be sold or redeveloped into income generators instead of cost centers? The job ahead at Amtrak is to increase revenues while controlling cost. This means expanded service.