Railway Age: Short Line and Regional Marketing Advocate
January 1999


here are some who believe corporate Mission Statements are just so many words-- nice, but without any real teeth in the day-to-day reality of the marketplace. Granted, that can and does happen, however when the Mission Statement is short and to the point, with everybody buying in, it works. This is the story of how the Wisconsin Central grew in size, profiatblity, and importance by living its 21-word mission statement.

Today's Wisconsin Central Railroad began operations in 1987 when Ed Burkhardt bought the property from the Soo Line. On Day One they had 2,000 miles of railroad, 85 locomotives, 2,900 railcars, and some 600 employees. In the last ten years WC has added three shortlines and other rail lines in Wisconsin, Michigan and Ontario, creating a property with half again as much railroad with four times as many employees, three times the locomotive fleet, and four times as many railcars.

WC and Ed Burkhardt
have demonstrated how
a focus on quality as
measured bythe customer
yields rewards
for stakeholders

Since 1993 operating revenues have doubled to $334 million from $152 million, an annual compound growth rate (ACGR) of 18%. Margins in 1997 hit a respectable 23%, and return on equity is running at an industry-leading 22%. Shareholder equity itself has grown since 1991 at an ACGR of 30%, doubling every two and a half years. Double-digit returns like these are what equity investors seek. North American rail operations have racked up impressive gains along the way. For 1997 revenue per car was up more than 3% over 1996. Freight revenue per mile hit $144,000, more than double any of the publicly traded class II and II rail operations. There were 193 revenue carloads per mile, 25% better than its closest peer. Revenue per employee came in at nearly $150,000 - a close second in its class.

As the WC story shows, the best way to build shareholder value is to build the railroad's value to the shipper. To fill that bill Marketing VP Bill Schauer and his team produced this simple and direct Mission Statement: To offer superior transportation consisting of more frequent, dependable train service, at competitive prices, with proper equipment, accomplished by customer-minded employees. Just 21 words, none of more than three syllables, and only a few of them. Let's take a look at what is implied by each element and how each element related to the railroad's success story.

Frequent. Management guru Tom Peters has written that quality is in the eye of the beholder and is measured with respect to the competition. Shippers don't care about on-time performance between terminals; dock-to-dock is what counts and that's what the truckers are selling. More frequent service means more opportunities to be on time dock to dock.

Dependable. That also means consistent, and it's what makes customers smile. It ought to make shortline owners smile, too. With 40% of avoidable costs equipment-related, keeping velocities up keeps equipment rents down. It also keeps locomotive hours up and more hours per unit means fewer units needed for the fleet. Which in turn means more capital dollars for track, crews, and cars -- more tools for making shippers smile.

Competitive prices and proper equipment. Revenue and profit growth are one measure of proper pricing; the ability to add to car fleet is another. Readers of this page know well the car supply problems faced by many of the smaller rails, especially those that rely exclusively on the class 1s for car supply. Yet here we have a class 2 road out buying new boxcars and covered hoppers in particular to serve the needs of its shippers. Doing so clearly fits the mission statement, and the new equipment is there for all to see as proof.

Customer-minded employees. No less an authority than Moody's Investor Services notes that the company's "business strategy is distinguished by a focus on a high level of customer service." Further, WC has a "service-oriented workforce and has developed a reputation for service among customers." In this context it is instructive to note that a recurring theme of the AAR's customer seminars has been a strong customer desire for more contact with local railroad personnel. Looks like WC is way ahead.

Exporting Success. Trading on its domestic results, WC exported its expertise to the once-moribund freight operation of British Rail, setting up the English Welsh & Scottish freight concession. More than half the traffic lanes are less than 100 miles long, trains are short, and car cycle times are measured in hours, not days. Marketing Director Randy Henke (himself a Milwaukee Road grad) told me when I was there last summer that one has to "rethink the paradigm" to operate in this environment, and rethink it they have. Business is expected to triple in the next few years, according to EWS Managing Director Ian Braybrook.

Back in the US, WC's Chief Operating Officer Reilly McCarren presented a paper on the EWS experience at October's Transportation Research Forum annual meeting here in Philadelphia. It was truly striking to see the number of parallels with small railroad operation in this country. In particular, said McCarren, "shippers in Great Britain expect a high degree of punctuality and reliability." And they expect truck-competitive prices too, even as national policies don't always support the national freight rail network. But if business is up, EWS must be doing it right.

The numbers would say the WC organization has met the challenge here, exported the concept across half a continent and two oceans, an in the bargain has demonstrated how a focus on quality as measured by the customer yields rewards for the stakeholders. Perhaps Alice Saylor, VP of the American Shortline and Regional Railroad Assn. sums it up best. "WC shows what can be done with cutting edge innovation combined with a top to bottom sense of doing what ever it takes to get the job done." Thanks, Alice. Mission Accomplished.

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