The Men Who Loved Trains: The Story of Men Who Battled Greed to Save an Ailing Industry

1. The Forrest Gump of Railroading

1 The Forrest Gump of Railroading Dawn was creeping up over Lynnhaven Bay as Jim McClellan walked briskly out of his kitchen, down a hallway, and out the back door. It was a perfect October morning. The air was brisk, barely 50 degrees. McClellan drove to his office in downtown Norfolk. He was going early to clear his desk of any unfinished work because he was leaving later in the week for four days of vacation in southern California. James W. McClellan was vice president for corporate planning at Norfolk Southern Corp., one of the nation’s five largest railroads. His job was to advise NS’s chairman, David R. Goode, on a wide range of key questions that the railroad faced, issues as subtle as changes in the corporate culture or as visual as deciding which tracks to shut down or which railroads to acquire in order to keep the company viable. It was 1996, and for nearly 20 years he had been watching the moves of NS’s archrival, CSX Corp., and its chairman, John W. Snow, who later was to become George W. Bush’s treasury secretary. The two railroads served almost the entire eastern half of the country save for a highly contested block of states in the 2 The Men Who Loved Trains Northeast, and both needed to get into those states for access to the rich port of New York and the chemical plants of New Jersey. The only way to do that was to acquire Conrail, a railroad that held a monopoly of the rail markets in New York, New Jersey, and most of Pennsylvania. The railroad that won Conrail would then be able to negotiate a merger with one of the western roads at favorable terms and form a system that spanned the continent. McClellan was worried because he knew that if NS lost this race, it would remain a regional line that would be at the mercy of one of those western roads. Moreover, NS had another reason for wanting Conrail, a need so crucial to the future of the company’s most critical source of revenues, McClellan and others at the top of the company kept it a closely held secret. Up in his twelfth floor office in the Norfolk Southern tower, McClellan sat at his desk disposing of memos and reports. Outside he could see the Elizabeth River and the Portsmouth Navy Yard almost directly below, festooned with destroyers, frigates, and supply ships. He was just getting into the stack of papers when his telephone buzzed. “What have they done!? What are you going to do about this!?” cried a voice on the other end. It was NS’s chief of investor relations, Deborah Wyld. “CSX and Conrail have just announced a merger.” Stunned, McClellan suddenly saw his career, which had always been an up-and-down affair, once again teetering on the brink. He was hurrying into the elevator lobby when he encountered one of his top assistants. McClellan’s eyes were dark, his face grey and haggard. So shocked was his assistant at the sight, she dropped her briefcase. She thought someone had died. When he got to the boardroom, other officers were trickling in. Some were dumbfounded. Others were ready to take charge. Known for his down-home informality and unflappable demeanor , David Goode was cool and unfazed, despite his surprise. Even though he had feared such a thing for years, McClellan remained stunned. Yet he also was beginning to conceive a plan, and the next day, in a one-page roughly hewn memo to Goode, he outlined the strategy that NS was to follow. Fifty-seven years old, McClellan was well prepared for this crisis. Moreover, he had an advantage over John Snow: he loved 3 The Forrest Gump of Railroading trains, and he shared that love with David Goode and seven older railroaders: Alfred E. Perlman of the New York Central, W. Graham Claytor Jr. of the Southern, Robert Claytor of Norfolk Southern, John P. Fishwick of the Norfolk and Western, Hays T. Watkins Jr. of CSX, and Conrail’s L. Stanley Crane and James A. Hagen. Over four decades each of the seven had come and gone from the stage of U.S. railroading, moving from crisis to crisis, battle to battle, and as they had interacted they had reshaped transportation in the northeastern United...