profile; The railroader is coming to town

The unions are ready for a gunfight as a tough American prepares to acquire British Rail's freight services. Paul Rodgers reports
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The Independent Online
THE MOST feared and hated men in America's Wild West were not the gunslingers who held up stagecoaches, rustled cattle and fought dramatic duels on the dusty main streets of one-horse towns. They were the railroad barons who towed prosperity to remote locations behind their locomotives, then creamed off the best of it to fill their bank accounts. Today, as the first privatised trains roll out, Britain is getting its own railroad - or railway - baron, Wisconsin Central Transportation's Ed Burkhardt.

Burkhardt has avoided the public vilification that befell his predecessors, but like them he has been a wildly successful entrepreneur. His US, Canadian and New Zealand lines are all operating at a profit, and his move into the UK, as buyer of Rail Express Systems (RES) and preferred bidder for the three freight firms being sold by British Rail, could be his biggest coup yet.

"There's nothing wrong with steel wheel on steel rail," he says when asked about the moribund reputation of the rail sector. "It's all determined by management and politics." Management he plans to fix himself, and politics has changed sharply over the past 15 years.

Even a victory by Tony Blair in the next election does not worry him. "We'd live fine with Labour," he says. "I've talked to Labourites and find myself in agreement with what they want. There's a push to put more business on rails, and governments, any government, needs private enterprise to do that."

While most attention during privatisation has been on the fate of the subsidised passenger services, Burkhardt has concentrated on profitable, or potentially profitable freight businesses. The loss-making RES, which pulls the Royal Train and shifts letters for the Royal Mail, is the only nationwide rail service to survive the privatisation process. By bagging all three of the freight companies - Transrail, Loadhaul and Mainline - he will successfully create a second national network. And should he want to break into the passenger market, RES has the appropriate licences.

To gauge Burkhardt's potential success in the UK, one only has to look at his performance in New Zealand. He bought Tranz Rail for NZ$60m (pounds 27m) in 1993. Last year alone the subsidiary made a profit of NZ$54m, plus another NZ$20m from the NZ$73m sale of its share in Clear Communications. Wisconsin itself showed a profit of US$37m (pounds 24m) in 1994.

Among his ideas for shaking up the British rail-freight business are plans, tentative as yet, to slash employment. Wisconsin Central carries about the same tonnage as Britain's freight lines, but with a little more than a quarter of the staff. "We're not going to be laying off 80 per cent of our staff, or anything like, but there will be lots of job losses. We're going to be negotiating with the unions to improve productivity."

He is also dismissive of British Class 47 locomotives, claiming they are four times as likely to be in the repair shop as their more advanced American rivals. Switching will involve hefty capital expenditure, but should mean lower operating costs - including the possible closure of one maintenance shop. Staff that remain will at least be well equipped. At one British Rail workshop he visited, the maintenance crews had to share spanners. "We'd give each one his own tool box." Nor is he ruling out a move into the excursion business or adding passenger cars on to his mail trains. "We'd like to look at those things," he said.

One uniquely British practice likely to survive under Burkhardt is the running of smaller trains. Americans tend to run giant strings of 100 wagons or more, with several crew. In Britain, trains of 35 wagons are profitably operated by one man. "It's excellent utilisation of equipment," Burkhardt told the industry trade magazine Rail recently.

Burkhardt neither looks nor sounds like a radical, nor even particularly baronial. He has a folksy way of talking that carries one to a log cabin on the shore of the Great Lakes rather than his Chicago boardroom. His interests range from the sophisticated to the obsessive. He likes classical music and jazz, but his idea of fine art is still "a painting of a train".

It is a taste which illustrates Burkhardt's genuine love of trains. Both his father and grandfather were doctors, but as a boy he fell for the steam, diesel and electric locomotives that whistled into New York's Grand Central and Pennsylvania stations. "I did some train spotting," he admits with a gruff chuckle.

Before he was 12 he was sneaking on to trains, and even talking his way into the cabs. One of the engineers let him take the controls of a 10- wheeler on a short trip from the station to the shunting yard. "I'd have been in deep trouble if my parents had known."

His first job, as a teenager, was on a track gang with the Great Northern Railroad, driving spikes into sleepers with a sledgehammer. For five summers, while finishing high school and starting university, he worked in the company's engine shops and surveying crews. One year he was a train man - the American name for a guard. "I remember one day the engineer and conductor wanted to play cards so they said: 'here, you drive.' I'm sure it was against the rules."

At Yale he studied industrial management and transportation, then took a position with the Wabash Railroad in Southern Indiana as a wagon distributor, making sure the freight cars were in the right place at the right time. After the company was taken over he continued with a variety of management jobs, including a stint as assistant to the regional vice president.

He moved to Chicago & North Western, where he spent 20 years, rising to vice-president of transportation. He never completely stopped driving, however. During strikes, management would be called in to operate trains, and in emergencies, such as blizzards, every available hand was put to work. "In the late 1970s we spent two days opening a 50-mile branch line where the snow had turned to ice," he recalls.

But something was wrong. Half of the mileage in the US was owned by bankrupt companies. "The large US railroads were being strangled by unproductive work rules at the same time as the markets were getting tougher," he says. Even the companies that grew by acquisition were responding to the problem rather than solving it, he argues. "The whole industry was sick."

Then came the 1980 Staggers Act, which abolished price regulation and allowed railroads to sell off unproductive bits without transferring the onerous labour obligations. "In the US, labour protection in the classical sense involves continuing to pay people for six years whether they are needed or not." The Act has created 400 new railroad companies, some of them just a few miles long.

But Burkhardt had bigger ambitions. His break came in 1987 when the Soo line decided to take advantage of the new regime to sell off 2,000 miles of redundant track between Chicago and Minneapolis as a result of an earlier merger with the Milwaukee railroad. Burkhardt and two partners formed the nucleus of Wisconsin Central, hiring entirely new, non-union staff to operate the trains.

He will have a much harder time doing that in Britain. Already the railway unions are gearing up for a fight. So are opposition politicians looking to score points off the Government over an unpopular privatisation. There have been two storms in the press so far, one over a foreigner running the locomotives that pull the Royal Train, the second over Burkhardt's revelation that he was egged on to bid for RES and the freight services by former transport secretary Brian Mawhinney. Being a modern British railway baron is no more likely to make one popular than being a 19th century railroad baron was.