CSXT Responds to Management Changes
CSX Corporation announced on April 11, 2000, that its president, Ron Conway, and some other officials had left the company. The following are letters sent to employees concerning the matter...
FROM MICHAEL WARD, WHO WAS APPOINTED EXECUTIVE VICE PRESIDENT IN CHARGE OF OPERATIONS AND RAIL NETWORK PERFORMANCE...
Dear Colleague,
The last few years have been a time of great change and challenge for all of us at CSX. One of the things I've learned in my 23 years with this company is that our operating team always rises to the challenges and has learned to embrace change as a catalyst for making us stronger.
It's with a deep sense of pride that I'm joining this team. I'm also pleased to announce to you the key members of the operating team that will help us to meet the challenges ahead. Al Crown will be senior vice president-transportation, responsible for directing all transportation activities, including the five regions and the operations center. Mike Cantrell adds engineering to his responsibilities and becomes senior vice president-mechanical and engineering. Jim Fallon will serve as vice president-network operations, succeeding Clarence Gooden, who joins the commercial team as senior vice president-Coal Service Group. Gerry Gates will succeed Al Crown as vice president-Central Region. Please join me in congratulating each of them as they assume their new responsibilities.
Others who will continue to play key roles in the Operating Department include: Ed Codd, vice president-risk management; Bob Downing, vice president-Northeast Region; Frank Pursley, vice president-service design; Mike Pendergrass, vice president-Southern Region; Mike Peterson, vice president-Western Region; Tom Schmidt, vice president-engineering; Jim Schultz, vice president-safety and chief safety officer; and John Williams, vice president-Midwest Region.
While change is inevitable, my goal is to minimize the amount of change in the operating departments and to focus on the basics: safety, service and costs. We will not compromise on safety - it is our first priority. We will be working closely with Mike Giftos and the commercial team to improve our service performance to a level that meets our customers' expectations. And we'll continue our focus on increasing productivity and the cost effectiveness of the network.
The foundation for building on our successes is the social compact with employees. I have experienced how powerful the compact is, and it will remain the basis for our relationships going forward. With that foundation, the tenets for our organization will be teamwork, leadership and treating everyone with respect. I believe in working as a team and for every individual to understand his or her role in achieving the team's success. I also am committed to improving the quality of work life for our operating employees - union and management - and the operating leadership will be focusing on that initiative.
Each of you holds the keys to our success through your dedication, expertise and ideas for making us a better company. Over the days, weeks and months ahead, you will see me and other members of the operating team often. Please share your thoughts with us. By working together, we can achieve the levels of performance that our employees, customers, shareholders and communities expect.
FROM MIKE GIFTOS, WHO WAS APPOINTED EXECUTIVE VICE PRESIDENT AND CHIEF COMMERCIAL OFFICER...
Dear Colleague,
It is with great pride that I join CSXT's commercial team. While this has been a challenging time for our company and customers, the service groups have performed effectively in meeting many of their goals.
We will work closely with Michael Ward and his operating team to provide customers with the best rail transportation possible. Michael and I have worked together for many years to overcome challenges and seize opportunities like those facing us now. And in confronting these new challenges, we recognize that we are not providing the service our customers expect or deserve. Our teams will partner to change that, making consistency and value our top priorities. Through a renewed focus and close working relationship, we are confident we can provide the service our customers have asked for. In addition, I am committed to improving communications with our customers. We must continually update them on our progress and give them realistic expectations on our service performance.
I am also pleased to announce the senior members of the new commercial organization.
... Dale Hawk, a veteran in the auto arena, will continue as Senior Vice President of the Automotive Service Group.
... Joining him will be two newcomers to the commercial group. Clarence Gooden, formerly Vice President-Transportation and a proven operations leader, will serve as Senior Vice President-Coal Service Group.
... Bill Flynn, formerly Senior Vice President-Strategic Planning for CSX Corporation, has been named Senior Vice President-Merchandise Service Group. Bill formerly served in a number of senior sales, marketing and other management positions at Sea-Land.
... In addition, I have asked Chris Jenkins to transfer his expertise in the commercial area to the broader role as Vice President-Sales and Marketing. Chris will serve as a commercial strategist and help lead our pricing and capacity management efforts.
These leaders bring a unique combination of talents and experiences that will allow us to effectively meet the needs of our customers. Please join me in congratulating Dale, Clarence, Bill and Chris as they move to their new posts.
However, success will only be realized with the help, energy and insights of every one of our employees. Over the next several weeks I plan to visit with as many of our sales and marketing professionals as possible in Jacksonville and in the field. You know our customers' needs and how to serve them. I look forward to working with and learning from you.
Together I am confident we can leverage the full potential of our expanded network and achieve all that is expected of us by our customers, our shareholders and our colleagues.
FROM JOHN SNOW, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, CSX CORPORATION . . .
Dear Colleague,
The attached news release is being issued. The release below details significant changes in our senior management team to better enable our company to move quickly and decisively toward critical goals in safety, service to our customers and revenue growth. I look forward to meeting with as many of you as possible in the days and weeks ahead as we build a foundation for a new, higher level of performance.
Sincerely,
JOHN SNOW
CSX Corporation, which owns and operates the largest railroad in the eastern half of the United States, today announced changes in its senior management organization.
John W. Snow, chairman and chief executive officer of the corporation, is assuming responsibilities formerly handled by Ronald J. Conway. Conway, who joined CSX from Conrail in 1998 and was named president in 1999, has resigned to pursue other interests. "We are grateful to Ron for his contributions, most notably for leading CSX Transportation through the complex integration of Conrail properties into our network," Snow said. "I am pleased that he will be staying with us as a consultant.
"CSX has a terrific opportunity to grow earnings substantially," Snow noted. "Our job now is to sharply focus the entire organization on the overriding goal of enhancing shareholder value by stepping up the pace of operations, making this the safest railroad possible and bringing customers the level of rail service they want and need. We've done that before, and now is the time to do it again."
Reporting to Snow, these senior executives will have key leadership roles:
... CSX Corporation Executive Vice President and Chief Financial Officer Paul R. Goodwin has been named vice chairman. All financial functions in the company have been integrated under his supervision, and he is heading a major effort to drive out costs and improve financial performance.
... P. Michael Giftos, formerly CSX Transportation senior vice president and general counsel, becomes executive vice president and chief commercial officer at the railroad. Giftos, who has been responsible for pricing strategy, will be in charge of the railroad's merchandise, coal, and auto marketing and sales efforts.
... CSX Transportation Executive Vice President Michael J. Ward is now responsible for operations and rail network performance. He formerly led the railroad's coal operations and managed the company's two-year effort to integrate former Conrail operations into the CSX system.
The Office of Chairman, established in 1999, will continue to manage all CSX staff and key support functions. It includes Vice Chairman A.R. "Pete" Carpenter; Goodwin; Mark G. Aron, executive vice president-law and public affairs; Andrew B. Fogarty, senior vice president-corporate services; William J. Flynn, senior vice president-strategic planning; William J. Ryan, senior vice president-human resources; Jesse R. Mohorovic, group vice president-corporate communications and investor relations; and Robert W. Shinn, vice president and executive assistant to the chairman.
John Snow Calls for "Sense of Urgency"
[From CSXT Employee News, April 13, 2000] . . . In a meeting with employees in Jacksonville - the first in a series that will take him to all five regional headquarters - Chairman and CEO John Snow committed to lead CSX to a new level of safety, service to customers and financial performance. "We have to get this company turned around fast, and we can," Snow told employees Tuesday in the lobby of the Jacksonville General Office Building. "We're falling far short of our potential. Our potential is to enhance shareholder value and to delight customers, and right now, we're not doing that." Earlier in the day, Snow announced that he was assuming the "hands on" running of the railroad in place of Ron Conway, who departed. Snow thanked the Conrail veteran for the many innovations he brought to CSXT, including the development of the five geographic regions and the service groups representing coal, merchandise, automobiles and intermodal.
Snow said he would "accelerate the pace of change" and make more rapid progress in increasing train velocity and reducing terminal car dwell and cars on line. But to reach CSX's full potential, something more was needed. Snow pledged to create a workplace built on consensus and decisiveness, urgency for action, and one in which employees feel free to express ideas and disagreement. In the end, however, the results must improve. "Nothing is going to move us ahead like running the railroad better and faster," Snow said.
Michael Ward Says 'Railroading Will be Fun Again'
[From CSXT Employee News, April 13, 2000] . . . Michael Ward, newly appointed executive vice president for rail operations and network performance, said he wants to bring some of the fun back to railroading. "We've done this before," he told employees during the Jacksonville lobby meeting. "We've run the railroad in fine fashion. It's fun to be on a winning team." Ward pledged a return to the basics, with an intense focus on safety, customer satisfaction, costs and asset productivity, and pricing. Ward also echoed Chairman and CEO John Snow's theme of accountability, and Vice Chairman Pete Carpenter's long-held view that companies succeed when they are "hard on facts and easy on people." Ward said CSXT would operate on a "no-fault fixing" mode. Rather, energy and ideas should be directed to finding the problems and eliminating them.
Mike Giftos Looks Ahead to Better Days
[From CSXT Employee News, April 13, 2000] . . . Mike Giftos, newly-appointed executive vice president and chief commercial officer, said that the commercial team will work closely with the operating team to provide customers with the best rail transportation possible. "Michael [Ward] and I recognize that we have not been providing the service that our customers expect or deserve," Giftos said. "Our teams will partner to change that, making consistency and value our top priorities." Giftos pointed to strong product demand and enormous franchise potential as key drivers on the road to improved results. "The combination of these together will allow us to achieve our performance expectations," Giftos said. Giftos acknowledged that while he has worked on key commercial issues as the company's top lawyer, he still has a learning curve to overcome. But Giftos championed the strength of the commercial team and said that he looked forward to working with and learning from them. "I welcome this opportunity and look forward to far, far happier days at CSX," he said.
Paul Goodwin Brings Intense Focus to Costs
[From CSXT Employee News, April 13, 2000] . . . CSX Vice Chairman and Chief Financial Officer Paul Goodwin says he is looking forward to rolling up his sleeves with the new team. "We're going to be doing some of the things that we did in the early 1990s when we produced record earnings, a much lower operating ratio, and pleased our investors and shareholders," Goodwin said. In addition, Goodwin said he would ask his team to evaluate new ways to reducing and eliminating unnecessary costs, and making CSX a much more efficient company. "We've had some success in bringing operating, marketing and finance perspectives together," he said. "There is much more potential with closer alignment of departments as well as with corporate and the railroad."
Pete Carpenter Points Out Lessons of the Past
[From CSXT Employee News, April 13, 2000] . . . The architect of CSX Transportation's success in the 1990s says the lessons of history can be inspirational - and brutal. The inspirational ones include CSXT's not-so-long ago turnaround in safety and financial performance. The brutal ones include the near-death of the rail industry in the 1970s. "We've been part of digging this company out of some tough spots," said Vice Chairman Pete Carpenter. "We can do it again." CSX's turnaround is necessary for many reasons, but among the most important is its critical need to access capital to keep the railroad strong and able to grow. Carpenter said such a process would require "accountability and common sense" and the commitment by people to "manage in the proper way - slow to anger, quick to praise."
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