CSX CEO Hunter Harrison has died

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CSX CEO E. Hunter Harrison
R.G. Edmonson
JACKSONVILLE, Fla. – CSX Transportation CEO E. Hunter Harrison, the influential and innovative railroader who was respected, sought after, feared, and loathed in equal measures, died today. He was 73.

Harrison worked his way up through the ranks after beginning his rail career as a carman for the Frisco in 1964 in his native Memphis. He had the distinction of being the only man to lead three of the big six Class I railroads – and twice becoming chief executive after boardroom battles.

Harrison was renowned for leading operational and financial turnarounds at Illinois Central, Canadian National, and Canadian Pacific. Analysts say the results cement his legacy as the best operating chief executive of modern times. “There has never been anyone better at quickly implementing cost cuts and efficiency initiatives in the railroad industry,” says analyst John Larkin of Stifel Equity Research.

Under Harrison, first as chief operating officer and then as CEO, CN became the most efficient railway in North America. Its operating ratio became the envy of the industry. But shippers weren’t impressed. The pace of change, combined with Harrison’s methods – like slapping penalties on cars that weren’t loaded or unloaded on weekends – alienated customers. Harrison’s relentless drive for efficiency ruffled more feathers than necessary, says independent analyst Anthony Hatch of ABH Consulting. “But you can’t argue with the results of his disruptive force,” he says.

Harrison left CN at the end of 2009, but jumped back into the industry two years later. Hedge fund Pershing Square Capital Management recruited him to lead a lagging Canadian Pacific. Harrison became CEO in June 2012 after Pershing Square won a bitter proxy battle that ousted CP board members and CEO Fred Green. The pace of the 18-month turnaround at CP beat the most bullish forecasts and Harrison’s own ambitious schedule. “It was incredibly impressive,” Hatch says.

Rather than retire from CP – something he said he failed at once, after leaving CN – Harrison joined forces with activist investor Paul Hilal and his Mantle Ridge hedge fund to pursue a management shakeup at CSX.

When he left CP five months early in January 2017, whispers that he was pursuing the top job in Jacksonville sent CSX stock soaring by more than 30 percent. CSX ultimately hired Harrison despite concerns about his health and his refusal to submit to a company physical. And CSX stockholders overwhelmingly approved an unusual $84 million payment to Harrison and Mantle Ridge, reimbursing them for salary and benefits Harrison left on the table at CP.

Harrison became CEO of CSX on March 6 and rapidly rolled out his Precision Scheduled Railroading operating model. After initial success in cutting transit time and significantly improving on-time performance, CSX stumbled. A summer of service problems prompted criticism from shippers and increased scrutiny from federal regulators. Harrison said shipper complaints were overblown, part of an effort to lobby for re-regulation of railroads.

Harrison had declared victory over the service problems and said he was proud of the way CSX was operating. But the day he took medical leave and Jim Foote was named acting CEO, the Surface Transportation Board asked Harrison to explain how the railroad would provide consistent and reliable service in light of persistent shipper complaints.

On Saturday, the company said: “It is with great sadness that we announce that E. Hunter Harrison, President and Chief Executive Officer of CSX, died today in Wellington, Fla., due to unexpectedly severe complications from a recent illness. The entire CSX family mourns this loss. On behalf of our Board of Directors, management team and employees, we extend our deepest sympathies to Hunter’s family. Hunter was a larger-than-life figure who brought his remarkable passion, experience and energy in railroading to CSX.”
Edward J. Kelly III, Chairman of the CSX Board of Directors, issued the following statement on behalf of the Board of Directors: “With the passing of Hunter Harrison, CSX has suffered a major loss. Notwithstanding that loss, the Board is confident that Jim Foote, as acting Chief Executive Officer, and the rest of the CSX team will capitalize on the changes that Hunter has made. The Board will continue to consider in a deliberative way how best to maximize CSX’s performance over the long term.”

Precision Scheduled Railroading, outlined in two books published by Canadian National, is about intense use of assets, fewer cars, fewer locomotives. It means there are fewer people to maintain them, and fewer trains means fewer crews.

Rail labor considered Harrison the enemy. Harrison created a culture of fear and intimidation at CP, rail labor leaders say.

“Before Hunter Harrison, we had a number of pretty high-level disputes with CP. It was a pretty standard relationship,” says Doug Finnson, president of the Teamsters Canada Rail Conference, which represents the running trades. “After Hunter Harrison arrived, it just went nuts...it was just an all-out war on workers at CP. The workers became the enemy in his drive to please the Pershing Square venture capitalists.”

It wasn’t only rail labor who felt Harrison’s wrath. Harrison despised top-heavy management structures and bureaucracy. So he culled the ranks at CP and CSX. Managers who didn’t measure up, or who couldn’t grasp Precision Scheduled Railroading, were quickly dismissed at CN, CP, and CSX. CP went through four chief financial officers while Harrison was CEO because it was difficult to find someone who could satisfy both Harrison and the board.

But Harrison’s inner circle speaks glowingly of the railroader and the man who was an unusually blunt and straight-talking executive in an era of CEOs who carefully measure every word.

CP CEO Keith Creel, who followed Harrison from CN to CP, said Harrison was a mentor.

Harrison was an outspoken advocate of railroad mergers. Although while at CP he came away empty-handed in pursuit of deals with Norfolk Southern and CSX, he continued to insist that railroads need to provide seamless service from coast to coast in order to better compete with trucks.

Harrison is survived by his wife and two daughters.

NEWSWIRETrains News Wire

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