Honda Chattanooga Review

Honda Chattanooga Review

my name is adjokennedy and i serve as the associate chairfor global programs in the school of civiland environmental engineering. this series is one of severalinitiatives that the school has to advance global educationand research, and also leadershipand development. this particular series bringsdistinguished alum to the campus every fall and spring to sharetheir experiences with them and inside with our studentsand the broader
georgia tech community. it has been made possibleby the generous support of kenneth hyatt,who is also a gt alum, as well as the continuedsupport of mbp, and we wish to expressour gratitude to them. so i'm going to go aheadand introduce one of our illustrious alums whowill then introduce our speaker. rick zalesky, jr. is a retiredprofessional from chevron. he retired in 2015.
he spent over 37 yearsworking on chevron. he is on several georgia techadvisory boards. he is the chair of our school'sadvisory board, as well as the chair of thegeorgia tech advisory board that serves the president. he is also the chair of the strategic energyinstitute advisory board, and he's on the boards of thecollege of engineering and the school of chemicalenvironmental molecular
engineering as well. he has held several positionsof increasing responsibility over the more than 35 yearshe spent at chevron. serving finally as vicepresident of biofuels– vice president of biofuelsand hydrogen in houston in 2003, and then general managerof manufacturing and supply strategy in 2008. he's marriedto a georgia tech isye alum. and they have a sonwho graduated from georgia tech
in 2013in mechanical engineering. and he also has a daughter–he and charlene– he and his wife have a daughterhere in the fourth year in isye. in his free time, he enjoysfly fishing, woodworking, and an occasional game of golf. please join me in welcomingmr. rick zalesky. [applause] rick zalesky:so one of the things i learned about retirement isi had a new expectation.
this is a word to the wise,perhaps. for 37 years, i was notin my wife's life from 8-5. and she made it clear to methe next however long we have on this earththat's still true. eight to five, i need to findsomething else to do. you all probably havethis brochure. you can see that wickhas had a lot of distinguishedaccomplishments. i thought i would tell yousome things
that aren't written down. so i first met wick in 1973 wheni started here at georgia tech. i started as a co-op student,and joined a fraternity, tau kappa epsilon,and low and behold, wick was there. it turned out that we hada little cadre– at this time,it was southern railway– of co-op students. i thinkthere was five of us.
and we are kind of equally splitbetween the mechanical department and maintenanceof way structures. wick was in the latter. and time goes on and we,kind of, graduate and go our separate ways. and in 2008,my son comes to georgia tech, and he too is a co-op student. and low and behold, he windsup being a co-op student for now norfolksouthern railway.
so these things are,kind of, you know, that six degrees of freedom. you're kind of surprisedabout that. so i asked zack. i said, what was it liketo work in the organization, the great companynorfolk southern railway, with wick moorman being leader? he said, "dad,there's one thing that's really important to me personally."
he said, "my safety." "i want to come to workand i want to go home the same way every dayfor the whole time i'm here." he said that's the waynorfolk southern is led. and that starts at the topand works its way down, but if you don't createthat environment for people to be successful,it cannot happen. towards the end of my career,he gets appointed– elected to the boardof chevron corporation.
so we haveanother connection. so it's just amazing whenyou're a georgia tech person, travel around the world,you'll find somebody that you'll know. and they're a good friend,they're always smart people, and they careabout what they do. so with no further ado,i'd like to welcome wick moorman. wick moorman: thank you, rick.
yeah, there area lot of memories. i have a couplearound rick in particular. he and zack, his son,had red hair– red, red hair. and, of course, at georgia techit was a bouffant hairdo. and we called–we called you zag. rick: right. wick: zag.and i always remember there was some kidcame into his apartment
we were living in,and he was looking for rick. and he said, "is zig here?"and we said, "zig?" he said, no, i mean zag.and i thought, okay. but we do go back a long way. and, rick, as you heard, hada great career at chevron which is an absolutelyoutstanding company as well. so thanks very muchfor the introduction. and good afternoonto all of you. it's a great pleasureto be here.
it's always a great pleasureto come back to tech and see the campus. got a little bit loston the campus today. it's amazing what they've done,and see some old friends, as well as hopefullymake some new ones. i will tell you, the audienceis a little bit loaded today. there are a numberof ns folks in here, including representativesof the norfolk southern information technologydepartment
which i had thegreat pleasure to work in for a good long while. tech is a special place. i made friends herethat i have still today. and i received a reallyeducation here about engineering,and about life and i'll talk about thatand its importance in my career in a little bit. so reggie sent me the invitationto give this lecture.
and obvious– you know,my obvious and immediate inclination was to say yesas i'm retired now, right? i don't get outthat much anymore. i'm on a fixed income. my wife said it a different way–says it a different way. she always says i married youfor better or worse, but not for lunch. and most importantly,my ability to have audiences in front of me so that ican discourse intelligently
and impart a lotof wisdom to people that at least haveto feign some level of interest has reallyevaporated since i retired. so, it's gotten to the pointwhere really we have a little eight-pound bichon frisenamed lucy, and i talk to her a lot. and she doesn't really seemthat interested either. so it was a lotof fun to say yes. and then immediately it hit mewho the two prior speakers
have been, right? dr. clough talkingabout climate change, and then phil breedlove–general breedlove– who is the supremeallied commander in europe. and i don't knowabout all of you, but i mean, isn't the title"supreme commander," isn't that what we allwant some day, right? you know, part of the culture ofnorfolk southern which i'll also talk a little bit about toowhich we've done
a lot of work on wasit's a very hierarchal culture, particularly in the operatingdepartment where i grew up. and everyone calls theirsuperior "mr." even if mr. so-and-sowas 30 years younger, it's mr. so-and-so. and it's part of tryingto change at least some of that. everyone i met, i always said,call me wick. and there were some numberof people that would say, "i just can't do that."
i haven't been trainedto do that. and i always said, well then,in that event, it's simple. "your excellency" will suffice,and that usually brought them back to calling me wick. but anyway, so here arethese people who are truly eminent talkingabout really serious things, and i figured i'mthe light entertainment or something like that. but i decided to do it anyway.
and then i said, well, reggie,what should i talk about? and he said something prettyvague, like, well people are alwaysinterested in hearing about your careerand what you've learned and things like that. and so, fortunately for me,if not for all of you– this really, kind of,leads into really me talking, which i will today,about two of my favorite– three favorite subjects:the railroad and me.
my top favorite is my family. i will be available for pictureswith my grandchildren a little later. but i'm going to talka little bit about the railroad and what it is, what it does,and then my career, and maybe some of the thingsi've learned about it, then we'll take some questions. so, that's a long preamble. let me get started and talkfor a little bit
about the railroad business. so, some years ago,i had to give a talk to the high school classat the school where my childrenboth went to high school. and this could bean intimidating audience. that is a supremelyintimidating audience, right? these are 10ththrough 12th graders, right, sitting in this big auditorium. lord only knowswhat they're thinking, right?
it may have somethingto do with hormones. it could have something to dowith anything, but they're not really lookingforward to seeing an old guy get up and talk aboutwhat on earth a railroad is. so i, kind of, went overand over and over it. and i came up with at least anidea of how to describe our business in very simple terms. and i got so enamored of thisidea that i've used it frequently since thenfor audiences like you
who i want to say right up frontare far more sophisticated than a bunchof 10th to 12th graders. but it's always kind of madesense to me. so see if it makes sense to you. the way i describethe railroad business in general is by using–have you heard this? y'all? any of y'all heard this? you've– it's whati call the three f's. now, i'm cheating because oneis just a phonetic f.
so what are the three f's? they are physics,franchise and finance. and if you understand thosethree elements of our business, you kind of getan idea of what we're really all aboutas a going concern. so let me talkabout physics first. the– it turns outthat the area of contact of a steel wheelon a steel rail is about two and a halfsquare centimeters.
and using the skills whichi learned at georgia tech and the fact that a rail cartypically has eight wheels that means it's about20 square centimeters per rail car of steelon steel contact, right? are you with me so far? this is kind ofwhy i skipped me. so a hundred car train isabout 2,000 square centimeters of contact area. that's about half a meterby half a meter in area.
so we can haul a hundred–you know– i just lost my train of thought. we can haul 100 cars eachwith 120 tons of coal or grain or whatever it is you wantin that surface area. and it turns out–and i actually looked this up for this distinguished audience–that if you look at the rolling coefficient of frictionfor steel on steel, it's about .001 to .002. let's compare thatto a tire on asphalt
which is about .006 to 0.01. and it's that essentialefficiency of moving goods, of moving freight that broughtthe railroads into existence. and it's the reason why180 to 90 years later we are still a vibrant partof this economy. no one has yet figured outa better more efficient way to move lots of freightthan the railroad business. and quite frankly,until teleportation comes along, which will be invented hereat georgia tech,
no one's gonna figure it out. so not only does this tell youwhy we survived and endured, but why we prospered and why wecontinue to prosper, okay? physics is why we're not buggywith manufacturers. franchise.we are franchise businesses. there are seven fairly bigrailroads in north america. two big ones in the west,two somewhat smaller in the east,including norfolk southern, one more in the u.s.,and then two
that are essentially canadian.all of us are franchises. and what we do,and what we haul, and how well we dodepends on where our routes are and what customers we servebecause you don't go out and build new railroads a lot. m&a is not really partof our business. so, if norfolk southern,for example, serves the biggest toyota plant–the first toyota assembly plant in the united stateswhich it does
which is upin georgetown, kentucky. that's part of our franchise,and that's an important part of our ability to make money. the stronger your franchise–and franchises are driven by thingslike industrial development. we are all activelyout there seeking to bring new business online. and it's to some extentdriven by the wisdom or lack of wisdomby the people who built
our lines 100 years ago in termsof their grades and curvature and their operating efficiency. but we're all franchises. and we have to livewith the franchise that we have. so at ns, for example, we spenda lot of time and a lot of money and fortunately a fair–some amount of public money really enhancing our franchisefor our line that runs from essentially memphisand new orleans up to the northeast,so we could haul more containers
and take more trucksoff the highway. so, franchise.make sense so far? the last is finance. we are a really, really capitalintensive businesses, right? we have a lot of infrastructure,a lot of assets, and we spend a lotof money every year all of us maintainingand improving them. so, 17, 18, 19 percent of salesgoes right back into the company in capital.
i'll give you for examplean example. we at ns are an $11 billionplus or minus revenue company. last year we putalmost a billion– our total cap x wasin excess of 2 billion. we put almost a billionjust back into rail cross ties and ballast to maintainthe property. and then spentalmost another billion in expense dollars as well. so, railroads eat cash.we need a lot of money.
what's the implicationof that for our business? we need high gross margins. in general, we liketo see a 30% gross margin which translatesinto what the railroads use as their primary indicatorfor efficiency as 70 operating ratio. okay? we're the exact oppositeof a grocery store. if you want to opena grocery store–
a big grocery store, right? you go builda concrete block building, you put in fluorescent lights,you spend a few– you know, you spend some moneyon freezers and cash registers, and then you put a lotof groceries in there. and your goal is to sella whole lot of cans of soup, and make a pennyon every can because your nextcapital expenditure is when the freezers wear outin five years or cash registers.
somebody spills a cokein a cash register or whatever. so it's put a lot of stuffin it and spin it and make very low margins. but because you don't needmuch capital, it's a good businessand adequate return. we have to make high returns. we have to charge those ratesin order to do that. and our asset turns are less–you know, if you look at our– the book value of our company,it's higher than our revenue.
our asset turns per yearare less than 1. so it's fine. it works. we're allowed to makeit work these days because of regulation,but it's a very different business model than a lotof other companies. really, the closest thingprobably to us is a utility. and we are often thoughtof as utilities. the problem is, of course,utilities are real monopolies, and our business can go away.
so, that's it. you guys are nowexperts in railroads. okay, there will be a quiz. one other way to think about uswhich i think is always interesting too is–and this is not an original thought to me–is that we are the, kind of, the 19th century version,if you will, of the internet. we are a common infrastructure,and a common set of operating protocols upon which we handle,move a lot of different
businesses with a lotof different business requirements. ups is a huge customer of ours,right? so are people who haulsand and gravel. and those businessesare radically different. and the way you make moneyin the railroad business is you maximize the useof that common infrastructure and those common assetsto handle all of those different businessessuccessfully,
giving each one the serviceit needs. okay, you're now real expertsin the railroad business. so, let me give you somefun facts about our business, and then talk for a minuteabout how it's doing. as i said, there are seven largerailroads in the country in north america. they're really essentiallyfive in the united states, four big ones and a smaller one. there are a lotof little short lines around.
short lines which basicallyare running spin offs from the big companies. little lines where there's justnot enough business to justify norfolk southern staying in it. but a local person who can gotalk to that industry every day and who has tiesto the state legislature so they'll give thema little money for maintenance, and he can buyworn out locomotives, and he can buy five of themand if only one runs,
he's got a good day. you know, there arethose kinds of carriers. but essentiallythere's the big carriers. there areabout 160,000 route miles of railroadin the united states. about plus or minusa quarter million employees, down from over a millionwhen i started in the business. we're very heavily organized. about 85% of the people workingfor norfolk southern
belong to a union. we deal with 13 unions. so... and we are governedby something called the "railway labor act," which predates the nationallabor relations act. interestingly enough,the only other industry that's governedby the railway labor act are the airlines. and the railway labor act isdesigned to make work stoppages
almost impossible for reasonsthat i'll talk about. we're very heavily regulated. that's really, to some extent,a legacy of the time prior to world war iiwhen we were a true monopoly or at least much closerto a true monopoly. and that regulation,while it's been moderated, still exists. we're under the something–the surface transportation board which regulates primarilyour rates and issues to do
with surface,things like that. we're regulated by thefederal railway administration which has primarilya safety outlook, and then operating protocolsand things like that. we fall under the regulationoccasionally of something called phmsa. how many of you have heardof phmsa? no, i hadn't either. the pipeline and hazardousmaterials safety administration.
and that became a big deal whenwe started hauling crude oil because they end up havingjurisdiction over that. we're under dojfor various things, and then we're constantlyworking with every– the legislature of every state.norfolk southern is in 22. all the railroads work with thestate legislatures as well. we have a lot of issuesand relationships all over capitol hill. part of my job was to trekup to washington
probably monthly and wanderthe halls of washington. that's a– that's aninteresting experience. i'll say it like that. you can walk away and sayi don't know what our world is coming to,but you still got to do it. we haul a lot of stuff. we produce about 40%of the gross ton miles of transportation–freight transportation in this country.
that's a misleading figurebecause we haul everything that people ship in bulkthat's heavy. our actual loads area significantly smaller part of that,but i'll give you some examples. if you bought anything recentlyat a big box store that was made in asia,the odds are very good it got herein a container on a train. if you've beenin an automobile today, there's a 70% chancethat automobile moved
from either a portor an assembly plant to the local distributorship. and while this may not bepolitically correct in some circles,even with the recent changes in the energy markets,if you have for whatever reason flipped a switch on a wall todayand the lights came on, the odds are really goodthat at least some of those electrons came to youcourtesy of plant scherer down above macon,which burns coal
from wyomingthat norfolk southern brings in from memphis. so, if the railroad shuts down,within three days there are significant parts to the economythat shut down. not known widely, right? you don't– you kind of thinkof us as the people that block crossings. we're invisible which isa real problem to us to a large partof the community.
yeah, we're the people whomake noise, block crossings, do all of this stuff. and because 40 years ago–or more importantly– 60 years ago,there was a really good chance that an audiencesitting here 60 years ago i could have gone around itand almost everyone would have had someonein their family they were aware of who workedfor a railroad at one time. those days are gone.
we don't employeethat many people. the days when we had an agentin every town that we served who got outand did public stuff, as well as handled business,those days are gone. we're largely invisible,although, i will say one of the most interestingthings that's happened in my time at ceo in the lastten years: all of a sudden, we've gottena little more visible, and our importance particularlywith public policy leaders
and community leadershas become– we've become much more desirable in some waybecause it's seen that we really foster economic activity. if we put an intermodal facilitysomewhere, businesses start to grow allaround it, just de facto. so that's a positive sign,but we're still largely unknown. so, how are wedoing these days? the answer is:fortunately, pretty well. the railroad business wentthrough a very significant
decline post-world war ii. really, the construction–the interstate highway system and the advent– serious adventof commercial aviation just took awaya lot of the business that we normally handled. and the economicsof most of the industry suffered precipitously. i'm happy to saythat the southern railway– the company i went to work forand then norfolk southern
which it became– which thesouthern became part of after the merger–were exceptions to that rule. we did well. but the other thingthat happened is the infrastructureof the american railroads just really went into declineto the point where in the northeast,some of you may remember, the penn centralwhich at its time was the largest bankruptcyin the history
of the united states. they tracked somethingcalled "standing derailments." so you got a box car,it's there on the track, and then the next minuteit's not because the track is bad enough that it's justcollapsed under it. there was real discussionin the '70s about nationalizing the railroad business. it was a serious conversationthat went on. and finally,confronted with a crisis,
the congress actedten years later. but in 1980, they partiallyderegulated our business in something calledthe staggers act, which replaced the oldinterstate commerce act. it liberalized our abilityto market. we actually could signa contract with a customer which we had not been allowedto do before. crazy stuff like that. it allowed us to downsizemore effectively,
and allowed us to mergemore effectively. and that was really importantbecause there were a lot of surplus assetsout there, and there were a lotof railroad companies. it took us a while to sortthrough all of that, but by 2000–following the three big mergers: upsp, the burlington northernand the santa fe, the bnsf which is now owned bywarren buffet and then conrail– ns and csx splitting up conrail,we kind of had
a stable industry structure. and once the recessionin 2001/2002 ended, the railroads really wentthrough a real renaissance. we, kind of, right-sized andthe business started to grow. and it was really good. and it's been,with a few exceptions, pretty good ever since. and there's a really goodnew story here. and it's a good new storynot just for the railroads
and their shareholders,you know, and people like thatand their employees, but for our customers– right–for the communities we serve, and really for the publicin general, because what's happenedis the railroads have grown more profitable. we've taken all of that money–all of us– and put it back in the property,and improved our infrastructure, improved our assets,improved our ability
to deliver service. and with it, take more trucksoff the highway and do all the things that the general–are just generally good in about every senseyou can think of unless– i was going to sayunless you're a trucker, but that's not true becausea lot of trucking companies now team up with usand use us for the long haul and they do the short delivery. so one thing i will tell you–and you read a lot of stuff
to the contrary–the freight railroad– and by the way, i'm talkingabout freight railroads in the united states. i'm not talking about amtrakor any of that stuff. i'd be happy to talk about itin q&a, but not here. the railroad infrastructuretoday is in probably the best conditionthat it's been since world war ii or before. it is by and largein superb condition.
people tend to think thatit's probably not because a lot of people judge railroadby a bridge over a highway. and let me just be frank,we don't paint bridges unless we have to. but the track on top of itis really good, and the service we offeras a result is really good. now, this is a contrastto the highway system, right? the highway systemin this country– remember, the interstate highwaysystem was built in the '60s.
and a lot of thingsthat were built had a theoretical 50-year life. sixty plus fifty, right?we're about due. in some places, we're overdue. the fact of the matter isthere is not the money, and even if there was money,there's not the political will to spend it. i'm afraid to even fixwhat we have, let alone add the capacitythat we need if the u.s. economy
is going to grow. but the good newsfor everybody is that the railroadsare investing. we are growing capacity. we're doing itwith private dollars, not taxpayer dollars. and we understand the challengesas an industry and are prepared to do our share. and hopefully take more and morebusiness as a result.
sound like a plan?everybody good with that? good. that's all you needto know about railroads. so, that's enough about trains. let me talk about somethinga little more exciting: me. i'm going to give youmy life history very quickly which includesa lot of lessons learned. so i was telling someone earlieri grew up in a little town in mississippicalled hattiesburg. my father was an englishprofessor and then later a dean
at southern miss. and my mother actually taughtlatin and greek at southern miss for a while. and that is really a weirdgenetic pairing to produce an engineer, right? i mean,that's just kind of strange. my brother's a doctor.you can, kind of, see that. but the most important thingto know about my childhood is that i was a kidwho loved trains.
now, there are kids who lovetrains, right? i have a 3-year-oldgranddaughter who really likes trains. i am trying so hardto foster that. but i was one of the kidswho didn't grow out of it, and that's unusual. but it's turned out to bea great blessing for me. and the theme i would give youabout my career and my life in general is that you willnever see or meet anyone
more fortunate than i am. i have been blessed in every waythat i can think of: family, education, career. i am just–in the random walk through life– and things always can change,and i'm very aware of that. let me put it– in the randomslot machine of life– what is it, five cherriesor three cherries or whatever? so far it's been really good. and a big big partof that good fortune
was finding my way up hereto georgia tech. and it wasn't quite random. i thought i would bean engineer. i was good at math and science. that's about all i knewabout engineering. i liked the idea of atlanta,the big city. so i came up here. i was telling someone earlierthe first time i ever saw georgia tech was when i gotmy keys for my dorm room
in the summer of 1970. and i signed on also to bea co-op student. i didn't know any moreabout being a co-op student than i did an engineer. but in another strokeof great good fortune– and there's a story involvedwith this that just illustrates that good fortune–i signed on as a co-opwith southern railway. that's kind of– it's aboutas good as it gets, right?
it was for me. and in the mean–and at the same time as part of the deal,i changed my major from mechanical engineeringto civil engineering. and it was only after a whilethat i realized that this was yet one more blessingbecause i really liked the civil engineeringcurriculum. and i only had to takeone quarter of thermodynamics versus three, right,which was probably
the most unintelligible coursei took my entire time here. so i loved civil engineering,and i got a great start in my career. so, that alone i owean enormous debt to tech for. but it did some other thingsfor me as well. it obviously gave mea life-long distain for the university of georgia,which has served me well. but it really did–and this is to some extent a clich㩠and the problemwith giving talks about anything
is when you start to talkabout the eternal truths. they're all clichã©s, right? they're the markers of life,and you know, the fundamental thingswhich are absolutely true always becausethey're said so often, sound like almost trite,and they're not. what georgia tech did is ittaught me how to think, right? to think analytically,to ask questions, to find data, and to try and makejudgments based on data
rather than purely emotion. you always have emotionwhen you make decisions. that's part of the deal. but the more factsand the more data you can gather,the better your decision is going to be. there was a great quoteby george orwell which i had on a postcardand kept on my desk for many years and it was–it said– he said, i should say,
"it requires an enormous amountof effort to see what is in front of one's nose." and georgia tech, i think morethan any other place, taught me how to tryat least to always look in front of my noseand see what was going on. so it's a wonderful institution. and one of the great strokesof good fortune in my life, as i said, was to come herenot knowing necessarily what i was doing.
so i got out of tech in '75. i was hiredby the southern railway in their management trainingdepartment. i am one of those slackerswho never did a day's worth of engineeringafter they graduated, right? actually, i drew some drawings,i think, or something like that. but, i went out to work in themanagement training program at tech and–i mean, at southern railway,here in atlanta.
i worked for a guy who heldthe position of division engineer,and this gentleman just passed away. he was really somebodywho i thought the world of. believed that the best wayto learn how to work for the railroad–and management trainees went to workin the track department, right, maintaining the track, right. the best way to do thatwas to go out and work
on the track gang in the heatof the georgia sun, and that's what i didfor the first six months. i figured out i could driverailroad spikes with railroad spike mauls. and, you know, the ge hammer? i could pick that baby up,and probably hit a spike with it.i might still be able to. but i figured out actuallythat once i got out and did that,i kind of liked it.
i've always enjoyedphysical work. and all through my careerin the track department, which lasted 12 years,i always liked to do a little bit of workalong the way. i learned a lot in thati learned the value of hard work. and in the railroad business,out in the operating department, you've got to work hard. you're on call all the time.
you're expected to be therecome rain or shine regardless of the dayof the week. for a long, long timein our company– you know, i look back at it now. i spent 12 years beingat a telephone somewhere on my region at sevenin the morning every morning, even if it wasa three-hour drive from home. so, i learned all of that. i became a pretty goodtrack guy.
and that leads me to, kind of,a lesson that for people that i thinkis really important. if you're going toadvance in your career or whatever it is,the first thing you gotta do is be pretty goodat something, right? no one has ever said,you know old so-and-so is really not workingout over there. let's give him a bigger jobover here. you've got to, kind of,have that as a baseline
for everything you do. if you're not competent–highly competent, the odds are you're not goingto be given the opportunitiesthat you would otherwise. so, along the way i acquiredsome really not so good management traitsin our company. i absorbed some of that culture.remember that "yes, sir?" although, even theni didn't buy into the "mr." thingquite that much.
and by the way,corporate culture is an interesting thing, right? somebody told me once–i was saying i don't really knowwhat our culture is, and they said that's fine. we have an old saying:it's not a fish who figured out there was water. you just go in and youjust start to breathe and then, you know, it's only when youtalk to other people
and they say "really?" y'all don't do that that youfigure out what your culture is. but my undesirable traitswere i really became– and this was, kind of,bread into you at the time– a really adept micromanager. man, i had my thumbon everything and everybody. that's not good. even if people thoughtit was good, it was not really good.
and the second was i hada very narrow, if deep, view of the railroad. i knew all about railroad track,and a lot about railroad operations. and i didn't know anythingabout physics, franchise or finance, right? so i had this–this kind of view of the world. at the end of 12 years,i had an early mid-life crisis which i told people at the timei was having
an early mid-life crisis. my wife, who isprobably the greatest blessing in my life,told me at the time it's okay to havean early mid-life crisis but remember you only get one. and so far i'velived up to that. so i had the great good fortune–again, same thing– to be accepted at harvardto the business school. we loaded up our two children,we moved to cambridge, mass,
and i had two great years. i loved it up there. my wife who isfrom north carolina where people are politeand considerate and chat with each otherin the grocery store line, she uh– they're not like thatup there. they're yankees. let's just say it right now,you know. they're wonderful peopleif you get to know them,
but if you look at someoneand say hey in a grocery store line,you know, you're taking your life in your hands. i learned three lessons up therethat are tremendously important. the first, interestingly enough,was the importance of diversity which i had never really–i never worked in a diverse environment,i never really thought about it. and it was just so eye-openingto me to see this extraordinarily diversegroup of bright people,
and how everyone thought,and how powerful that concept was. and that's somethingthat i brought back to ns and hopefully overthe past number of years– ladies, you're lookingat me skeptically. it's something that we've reallytried to focus on because without diversity,you cannot be as good as you can be. and our company has moveda long way that way,
and that's somethingi'm very happy about and very proud about. the second thing i learnedwas what i called "the interconnectednessof business." marketing is connectedto operations is connected to finance is connected towhatever government relations. and if you push here,you better be aware of what's going on here. you know, businesses are webs,not just silos.
and if you don't figure that outand make sure that you strengthen those websand understand them, you're going to runinto a lot of problems. you have to see the big picture.something i had no idea. and the last thing–which i always say only half facetiously–is i learned the limitations and frailtiesof corporate management, right? when you're, kind of,the mid-level manager down there working on the trackin greensboro, north carolina,
you're really not awareof what's happening at corporate but you think "boy, those peopleare vice presidents and executive vice presidents. they've gotta be really smartand really good." well, the harvard businessschool curriculum is two years of cases designed essentiallyto refute that point, right? it's company after companywhere somebody's done something really stupid, right? i'm exaggerating,but not completely.
and i've always been much moreguarded in assuming that anybody at any particular levelin a company is really competent since then. and every once in a while,it serves me well. back to the good luck thing. i left the company–a long story– but i left norfolk southernand then they hired me back. and it wasn't quite clearthat was going to happen. and i went backto a staff position
here in atlanta. and i was instantly over my headbecause i went into an area where i reallydid not know anything other than the top level. and it was a real shockto the system. and two great lessonscame out of it. first and foremost:you can't micromanage people if you don't know what it isthat you're supposed to do. so that instantlytook me out of that.
and then i found it was so muchmore fun anyway to manage at 30,000 feet. and since then, people have beentrying to tug me down, rather than get meout of their hair. but i was totally relyingon advice and expertise of people that worked for me. so i couldn't micromanage. and the second was i neededto figure out really quickly who was goodand who i could trust
and who wasn't. and that's a reallyimportant characteristic. i had a lot of very talentedand conscientious people around me,but i had to sort through the people in a waythat i really had not had to sort through. and then the last thing isi had a wonderful boss. and he showed me somethingi'd not really seen in quite the same way before:the power of mentorship,
what a good mentor can dofor someone. so, after that i was elevatedfor reasons that still elude me to some extent to a numberof increasingly important positions about whichi knew less and less. i became vice presidentpersonnel, labor and relations. they called me up. told me they had the job–chairman of the company did. i asked him three timesif he was kidding. i didn't know a damn thing–if you'll excuse me–
about personnel and laborand relations. and then after a yearand a half, we ran a buyoutand the head of it left. and my boss said,i think i want you to go run it. here's my sum knowledge–sum total knowledge of information technology:ctrl, alt, delete. right? and i met a lotof wonderful people here. and we limped through,didn't we?
we kind of made it. yeah, not really because i wasany good as head of it, but because i had great peoplein information technology who helped me enormously. i went off and rana little telecom venture. that was exciting. taught me the meaningof failure when the telecom worldcollapsed. and then became presidentand chief executive officer.
to my surpriseand surprise of a lot of people, the newspaper in norfolk–which i now won't read– i canceled the subscription. but, they wanted to doa profile of me because i'd become president,and that was the indication that i would becomechief executive officer. so they talked to all kindsof people. they talked to my brother,and my mother and all these people at ns.
and they were going to do thisarticle in the sunday paper, right, in the business section. and i knew the sundayit was coming out. so, i get up.we had two dogs at the time. and i get up and sayi'm going to walk the dogs. my wife says fine.i go off, walk them. she in the meantime gets up,gets the paper and gets the businesssection out, right? takes a look at it.
and so i walk back in,and there it is. and they have this full pagepicture of me at the top. and i'm a little sensitiveabout my neck. and i'm kind of leaning backwith seven or eight chins, right, laughing. and literally all it lackedwas someone photoshopping the hand with the big cigar,right? daddy warbucks is at it again. and the first paragraph says–and i am not paraphrasing much.
it essentially says,you would think that any company who has a clown whose losttens of millions of dollars in telecom would kick him outon their rear, but norfolk southern hasa different idea. wick moorman's going to be ceo. and i read that paragraphand i saw that picture and i just– i put it down.i couldn't read any more. and it turned out, right,that was their leader and it was a nice articleand all this kind of stuff.
anyway, i overcame telecomand became ceo, and we had a great ride. i had a great ride.i had a great team. and it's a great company. so i'm going to finish up by,kind of, summing up some other thingsthat i learned. the first thingthat you have to– and these are, kind of,the ceo things maybe. you have to have humility,right?
i was saying to someone earlier,if you meet anyone who has been fortunate enough to becomechief executive officer of a fairly big public company,and at some point– you may have to ask them,but if at some point they don't say–just tell you, well, a lot of it was luck, then they're nottelling you the truth. and actually, mostof the ceo's i know– and i know a number of them–would tell you exactly that. it's not that you don'twork hard.
it's not that you don't tryto do the right things. it's not all of that. john would tell you that, right? it's right– you also have to bethe right age in the right time, right place, all of that. and i just happenedto have that. and there were a lot of other–not everyone that works for– not every– well, i wouldn'tgive you a percentage of the 30,000 people who workfor ns that could be ceo,
but more than one, right? more than just me. and you just got toremember that, and you got to trust people,and you got to listen to them, and then you got to getout of their way. because the other thing ceoswill with any veracity will tell you is they don't runthe company. i didn't run the company, right? i wasn't making the bigday-to-day decisions.
i have a good friend who rana big drug company. he said, now you know your jobis to make eight or ten decisions a year. now, the problem is baseballhall of fame averages don't cut iton those eight of 10. you better getmost of them right. you don't necessarily bat 100,but you get most of them right. second thing: we tried to manageby consensus always. i had a great team.
and i keep saying thatand it's true. and we had to debatea lot of things. and if it was really in doubt,i'd have a vote. and every once in a while–and i'd vote. and my vote countedas much as all of their votes and one more,but it was very rare that that ever happened. you don't manage peoplethat way. every once in a whileyou have to, kind of, do that.
but if you do it a lot,people will stop listening, they'll stop talking to you,and they will wait for you to make the decisions. and that's a really bad placeto be. you gotta have some kind ofvision. that's another thing to saythat's, kind of, trite. but it's so true. there's a saying i love–you can tell i like a lot of sayings–if you don't know
where you're going,any road will get you there. that's a bad idea, right? you got to at least have an ideaof where you want the company to go.not tomorrow. although,in a technology company, it may be tomorrow,but in a company like theirs, over the years. and then once youchoose a path, and unless something radicalchanges, you don't waver, right?
you try and set direction.you try so hard not to give orders.it's a bad idea. you think about offense,as well as defense always. you're always open to bad news. you don't ever shoota messenger. you honor the messengers,if you can. and you tell people–and you mean it– if there's something going onand it's not good, you know, come tell me.i'm not going to–
you know, i neverkilled anybody. i guess i'm a bad candidate forpresident of the united states. you lead by example. it's– this was really born hometo me after i got the job: everybody watches you.everybody. right? what are you doing?what are you saying? one of the thingsyou learn quickly is you can't thinkout loud, right? because you'll havesome harebrained thought,
and you'll be just chattingand say i think we ought to do such and such,and two weeks later somebody's done it. and you sayi was kidding, right? that was a really bad idea.i was just saying it. but, there's this thingcalled "tone at the top" which everybody talks about. and it turns out, it is true.it is exactly true. people look to the topof the company
and take their guidance from it. you know, you got to be carefuland you got to realize– you know, there are all kindsof phrases: shadow of a leader.those kinds of things. but they're kind of sobering,but they're true. and the last thing i wrote down–it'll be the next last thing i say–you remember you're human. i went down to ourcorporate retreat a long– ten years ago.not long after i got the job.
i went downwith the operating people, and these are all old friends,right? and i went down for dinnerand a cocktail hour and i spoke to them. i had a great time.saw everybody. it was just a ton of fun. and i came back and was tellingmy wife what a great time i had. and she said, "of course you hada great time. they all treat you like you'rea rock star."
and that's true.it kind of sobered me up. you know, the caesar's–the roman caesar's supposedly when they came backfrom a great military victory, they had a paradecalled a "triumph." and in the chariot with them wasa slave whose whole purpose was to stand there and whisperin their ear the whole time "you are human, you are human,you are human." and i was oneof 30,000 people at ns. i had a job,but i was just one of 30,000.
so, let me talkabout two minutes more. i was thinking about this talkcoming down here today, and i realized the one thingthat i really had not said quite enough about iscorporate culture and how important it is. and this is something that youlearn as well because in some very real waythe ceo is responsible, if no one else is,for the corporate culture. and there's a sayingwhich i think is attributed
to peter druckerwhich is that culture trumps strategy every time. and what he's really sayingis that if you have a corporate strategy,and it's not aligned with the cultureof your company, it will never work.right? companies defeat ideasthat aren't in align with their culture. and we did a lot of workon it in my time.
we started by definingthe values of our company, or what we thoughtthe values should be, which we hadnever really done. and we came upwith something– i'm looking at all these peoplewho know them– called "the spirit values."right? safety, performance, integrity,respect, innovation and teamwork. and we promotedthem relentlessly
throughout the company,and then we did the important thing is westarted to reward people and promote people based onthose values. and that was a big changebecause in a lot of our culture, we rewarded people who carriedout the mission, but if they left a lotof body bags, we didn't care. and that changed. and that wasan important signal.
and then we startedabout five years ago as the next stepin our safety program. and this was really ledby our chief operating officer. to start usingbehavioral science, if you will, to changethe culture of the company, to open it up,to use positive rather than negativereinforcement, something that wewere really not good at. and to, kind of,do briefings and debriefings
about all of this,and we spent a lot of time and we spenta lot of money. it's a long journey, but i thinkthe company is better for it and will be betterand better for it in the future. kid who loved trainsfor reasons that i don't knowthat i can define. there have been a lotof great managers, a lot of great peoplein the railroad business. it's been my great good fortuneto be one of them,
and to be part of that. and i appreciate youlistening to me talk about my two favorite subjects,other than the grandkids. so thanks.and we'll do questions. male speaker: hello, i'm simon[inaudible], ph.d. student in transportation. so first, thank you for comingand speaking with us and giving some of your wisdomand sharing it with us. you said that you were preparedto do your share as an industry.
and last year, clayton countyresidents were asked whether they wanted to improve–extend high capacity transit to clayton county. 76% of them said yes. the only way they will getheavy rail is through a shared agreementwith norfolk southern. so my first question is:are you guys even using these tracks to capacity? and as you did in virginia withthe virginia railway express,
what would it takefor you to have a shared track agreementwith marta? will moorman: well, let's see–marta's electrified, which presents its own setof issues that would be difficult for us to deal with. but let me give youmy general answer to that. vre which we rundown to manassas is a good example of that. if someone wants to talk to usabout running heavy rail–
light rail and heavy rail,you can't– the governmentwon't let you mix. commuters on our railroad,we say we are always willing to have that dialogue,but here are the three things that have to be addressedto our satisfaction. the first is capacity.roger knows all this. the first is capacity.and there are ways to do that. you can model, right,the railroad. you can model additional trains.
you can model interferencefrom commuter operations, freight operations. and, you know,it's our right-of-way. we're a freight carrier. and you got– and so,if someone comes and wants to run trains,we have to be comfortable that there's enough capacityso that we won't interfere with commuter operation,whoever it is, and they won'tinterfere with us.
and if there's notenough capacity and you have to build more,the folks who want to run the commutersbring some money, right? bring the moneyfor the new infrastructure. the second thing that has to betaken care of is the liability, and this is huge for us. and what the railroadreally wants– and we have something thatapproaches is it vre– is what's called"but for" liability.
"but for the factthat you were here, we wouldn't havehad any problem." therefore, regardlessof what happens, the commuter agency,if there's an accident, indemnifies the railroad. that's something, by the way,amtrak has. is, you know, if there'san amtrak accident and norfolk southern had someproblem that was part of that, amtrak still pays.
that's partof the amtrak legislation. the third thing that hasto be addressed is there has to be some kindof compensation to us for the use of ourright-of-away, right? we're a privately owned companyby our shareholders. that's probably the leastof the significant things. so then you get into–but if you get into something like marta, with, you know,you've got to electrify the railroador things like that,
you then enterin to real complexities in terms of the safetyof our operation, right? and platform heightor whatever it is. but that's our general reactionto anyone who wants to use the railroad for heavy rail. we are certainlywilling to talk, but you got to get through–these are the things that have to be addressed.is that fair? male speaker:[inaudible–mic too distant].
wick moorman: yeah. male speaker:that's perfectly correct, but the s line thati'm referring to– and i guess prettymuch any other rail line– this one goes throughforest park and jonesboro, was builtwith some public money. so do you think that there'ssome responsibility for the railway companyto [inaudible]? wick moorman:could you not hear?
i'll answer it. male speaker: i did a studyon a commuter rail from atlanta to macon. that was never builtwith public money. that was private money. wick moorman: yeah but–let me say this: there are examples of railroadinfrastructure out there where there were easementsfrom the state or whatever it was.
but by and large–and the western railroads have a lot, right, of that stuff. there have been any numberof exhaustive studies that essentially said thatin the last 150 years through the transportation–things like the transportation troopsand materials and wartime, the debt has long sincebeen repaid. now, the s line throughforest park, we had extensive– not about marta.
we had extensive commuter railconversations there ten years– i mean, back even when i wasin strategic planning. and the problem wasthe state governments couldn't agree on pullingthe trigger to spend the money. so... but by andlarge, we're will– always willing to talk. but do we feel any–i mean, we always feel the obligationto be a good citizen. do we think that we haveany financial encumbrance?
no. wick moorman: well, i thinkthat we have done a lot. in fact, we're very environment–we're very environmentally focused in a number of ways. obviously,reducing fuel emission– you know, emissionsthrough burning fuel which just makes goodbusiness sense anyway. so we do a whole lot moreto make sure we don't leave engines idlingand put technology
on to prevent that. things in terms of, kind of,optimizing route structure, again, so that we'reas efficient, and therefore, as fuel intensive as–less fuel intensive. we... you know, we do a lotof advertising in terms of our environmentalimpact verses other modes of transportation. we haul a ton of freight. the industry average now isa ton of freight moves
on a gallon of fuel 479 miles. so we have a huge greenadvantage from that regard. at norfolk southern,we found a couple of interesting things. we did a projectabout six years ago, seven maybe now,where we went around essentially to all the buildings and shopsand facilities on the railroad and replaced them with moreenergy efficient lighting, right, which saved us.
again, good business. that had a three yearpayback to get all of that old lighting out. we got a huge project underwayup at allatoona, our locomotive shops up there,to completely do all of the heating to get ridof old coal fire boilers because it runs onsteam heat now and run gas generationand things like that. and then the other thingsthat we've done, kind of,
on the softer side iswe've really been focused on a couple of important things. one is reforestation. we've sponsored the plantingof six million trees down in the mississippi delta. we have a huge corporatefacility outside of charleston. about 12,000 acres we puta conservation easement on it. so we're constantly lookingfor those kinds of things. we've done a lot internallyin terms of chapters
of folks who want to get outand collect trash, recycle cardboard,do all of those kinds of things. male speaker: putting regionaltransportation authority on that line and puttinga line on macon. and norfolk southern agreedto do the dispatching of the train. they agreed to lay welded rail.it was 100-pound jointed rail. been there since 1942.all this kind of stuff. the thing that bogged it downwas the county and the state
would not fund itafter the government funds it for 30 years. and they're goingto put in signals between forest park and maconand it was going to run 70-miles-an-hour,except it was 106 miles as opposed to 92 miles on i-75. but anyway,it wasn't the railroad that bogged it down. it was the fact that theywere not willing to pay
for what it took to cost to runthat thing between the county and the stateafter the government funds had run out. but it was absolutelythe best commuter rail thing that i've ever seen. and norfolk southernwas running three trains a day, and they were all locals. they could have beenrunning at night. we were going to runtwo trains a day to macon
and four to griffin. unfortunately,the fare was going to be $22.00 one way. that was goingto be kind of stuff. excuse me, $11.00 one-way. wick moorman: we worked on that.i thought that was actually– the problem we have now iswe started running more trains down the s line. oops. male speaker: that wasbefore we started
running that macon train. wick moorman: yeah,we ran triple crown then. so the s lineinterestingly enough supposedly– here's a historical factabout the s line. it's the old central georgiato macon. supposedly, it runs alongthe eastern continental divide, and there are no water carryingstructures underneath it. everything on the east sideof the track goes one way, and everything on thewest drains the other.
right? peachtree street is...did i get that right? isn't peachtree street on theeastern continental divide? yeah. okay. all right. trivia. yes, sir? michael? okay.you got to wait. male speaker: i mean,i can answer trivia. male speaker: all right, sir,i have a question about leadership. so i hope you tied your shoesbecause this might be a tough question.
wick moorman: okay. male speaker: you said you weretalking about your three lessons from harvard,and one of them was the limitations and frailtyof big management. so, kind of,a personal question. what was your big frailty? what was your weaknessand how did you deal with that as far as leadership? wick moorman:that's a very good question.
the answer i will give you–i'll answer the second part not very well. you know, it sounds–what i was going to say, it sounds too muchlike my biggest fault is i work too hard.uh... i tend to like people. right? and i tend to try to–i always try to see the best in people. and sometimes that getsin the way of doing something
that i needed to do more quicklythan i eventually did. you know, that's kind ofpart of it. it's part of who i am, right? but let me say this: self-awarenessis not a bad thing. i've always known thatabout myself, but even though– just cause you're aware of itdoesn't necessarily mean that you're really goodat dealing with it. all right, well ask your mom.ask lawanna.
she's known me forever.what were my biggest weaknesses? i'm retired. and listen– this woman has neverspared her opinion of me before. female speaker:you pretty much nailed it. there were times when, i think,it would have been much easier had you just made the decisionand moved on with it. but you tend to like to pleaseas much as possible, and try to find themiddle ground instead of just saying thisis the way it was going to be.
wick moorman: yeah.i got a little better at that later, but never great. yeah. that's it. male speaker: the thingthat's in the news recently, you want to commenton the cp business? wick moorman: in one of the mostill-conceived stupid ideas formulated by man,made an attempt– an offer to buy and mergewith norfolk southern. i think i just expressedhow i feel about it.
god, it's just dumb on–it's dumb on so many levels, and driven unfortunately by ego,and the ego of two people. it seems to be cooperedup right now. well, i don't knowif you saw it. one of the egos is the guywho runs canadian pacific. a guy named hunter harrisonwho i've known for a long time and actually like. but hunter just did an interviewand said, well, we've talked to csx again.
how stupid is that?i mean really. it's just kind of crazy.it's been a lot of fun. i really appreciateyour patience. i droned on for quite a while. hopefully you didn'tnod off too quickly. so thanks. adjo kennedy: we wouldlike to present a small token of our appreciation to you[inaudible] from our leadership programfor the presentation.
female speaker: thank youso much for coming and speaking to us today. wick moorman: thank you. this is probablythe nicest thing that's ever happened to me. thank you so much.it's been a great pleasure. you didn't have to do that.thank you. all right. i've got a little rambling wreckon the shelf, so i'm in good shape. thanks.