CSX's new CEO eyes yard closures, truckers' market share
By Nick Carey, Michael Flaherty and Allison Lampert
DETROIT/NEW YORK/MONTREAL (Reuters) - Shortly after being named CEO of Canadian Pacific (CP.TO: Quote) in 2012, Hunter Harrison hoisted himself onto a roof near a Montreal rail yard, pulled up a beach chair and timed the company's switch engines using a stopwatch and binoculars.
"I was seeing how long it took them to switch the cars," Harrison, who was named chief executive of CSX Corp (CSX.O: Quote) on Monday, told Reuters in an interview. Harrison's appointment came amid shareholder pressure that was led by activist investor Paul Hilal of Mantle Ridge LP.
Harrison has already turned around three railroads - including Canadian National Railway Co (CNR.TO: Quote) and Canadian Pacific. For his fourth stint as CEO, Harrison plans to attack costs aggressively at CSX and says he believes he can deliver growth by taking freight business away from trucks.
"We lost a lot of business to the highway. There's the possibility that shift could be swinging back," Harrison said, in his first comments on CSX opportunities since taking the role.
Harrison's attention to detail - his Florida home was equipped with television screens displaying key switch points along CP's network so he could see problems immediately - is one reason CSX's stock rose 35 percent since mid-January when Hilal first floated the idea of installing him as CEO.
His ability to squeeze railroads' profits by shutting yards, cutting employees and driving efficiency using "precision railroading" is another, which is why Harrison, 72, will likely cost CSX $300 million for a four-year contract.
He takes the helm of America's third-largest railroad at a time when revenue from coal, CSX's most lucrative commodity, has fallen by a third from 2014 to 2016 and the company's cumulative job cuts since 2012 are approaching 20 percent of its workforce.
Now, the question is whether he can work the same magic work a fourth time and also grow the railroad's business absent a coal rebound. Continued...