WASHINGTON — If Amtrak survives its current financial crunch, the deeply troubled U.S. passenger rail service will owe its salvation to the Toronto Transit Commission, according to the Globe and Mail.
After luring former TTC chief general manager David Gunn out of retirement, Amtrak is now scrambling to replicate the organizational, budgeting and personnel system of Canada’s largest transit system at Amtrak’s headquarters in Washington, D.C.
“Everybody here at Amtrak knows what TTC stands for,” Mr. Gunn said laughingly in his first Canadian media interview since taking the helm of Amtrak earlier this year.
“Basically, what we’re doing is taking the TTC organizational system and putting it in place here . . . It’s identical.”
Indeed, Mr. Gunn recently spotted a line item in Amtrak’s new capital budget mistakenly marked “100 per cent city-funded.” Amtrak, of course, gets most of its funding from the U.S. federal government, and an official had simply copied a TTC spreadsheet.
Mr. Gunn said Amtrak was ripe for a top-to-bottom overhaul, and the TTC provided a convenient model for how to get it right. Amtrak’s budgeting was broken, its financial reporting was a mess and human resources was a shambles, he said.
“The TTC was the most professional organization I’ve ever worked for,” he said. “They’re a railroad. We’re a railroad. It fits.”
In recent months, Amtrak officials have spent many days in Toronto learning the ropes, copying systems and sitting down with TTC executives. Mr. Gunn even tried unsuccessfully to lure away a top Toronto transit official. He’s also relying on the help of two Bombardier Inc. executives who piloted Toronto’s purchase of new TTC trains to work out persistent equipment problems with Amtrak’s high-speed Acela trains.
Mr. Gunn, who headed the TTC between 1995 and 1999, said he knew running Amtrak was going to be the biggest challenge of his career, which has also included stints running transit systems in New York and Washington. But he concedes now that Amtrak’s financial problems were far worse than he had anticipated, partly hidden by poor accounting.
“I knew it had a serious financial problem,” he said. “What I didn’t appreciate was the immediacy of the cash crunch.”
Years of financial constraints and mismanagement had left the railway running short of cash and looking to defer payments, including maintenance of its rolling stock and other critical equipment. By this spring, Amtrak was within days of not being able to meet its payroll, prompting Mr. Gunn to threaten a complete closing of the company.
And unlike Via Rail Canada Inc., Amtrak is not government-owned, but merely financially supported. So from one year to the next its budget has been at the mercy of an unpredictable U.S. Congress.
In early July, Amtrak won an emergency bailout from Congress and a $1.2-billion (U.S.) budgetary commitment for next year. But this month its key Acela service was derailed. Cracks in the wheel assembly of Acela trains and locomotives forced Amtrak to cancel most service along its lucrative Boston-New York-Washington route earlier this month, depriving it of desperately needed revenue.
“If this keeps up it’s a very serious impact on our cash flow and we are not a financially strong company,” Mr. Gunn explained.
Amtrak’s problems stem from years of financial neglect and the unrealistic political mandate that it continue to operate a vast national rail system without subsidies. Amtrak’s system spans 500 stations and 35,200 kilometres in 46 states. Over the next 20 years, it will need more than $30-billion in capital expenditures just to stay in business.
U.S. President George W. Bush has demanded a sweeping restructuring to deal with Amtrak’s long-term survival.
Some in the U.S. administration are pushing for privatization, but Mr. Gunn rejects that as a “red herring.”
“The idea of a self-supporting Amtrak is absolutely fanciful,” he said.
If Americans want long-haul transcontinental rail service, they’re going to have to pay for it through federal subsidies, regardless of whether Amtrak is in government or private hands, he said. Mr. Gunn also insisted that the states will have to assume a greater share of the financial burden of operating regional service, or much of that will die too.
“There’s no way it’s going to happen without government investment,” Mr. Gunn said.
Mr. Gunn noted that the financial problems facing US Airways Group Inc., United Airlines Inc. and other companies are symptoms of a much deeper crisis in the North American passenger transportation industry.
“The whole passenger transit system is so distorted by government subsidies that it’s really hard to make a buck moving people, whether you’re an airline, a railroad or a bus company,” he said.
Mr. Gunn said Canada and the United States are “auto-centric” societies, and that’s why most politicians hate the idea of putting money into railways.
“But they don’t have the intestinal fortitude to stand up and get rid of passenger rail service,” he added. “So they cover it up with this idea of privatization, which sounds like you’ll end up with something, but you’ll have nothing.”