(The following article by Henry J. Holcomb was posted on the Philadelphia Inquirer website on July 28.)
PHILADELPHIA — A few days ago, a freshly repainted locomotive that would turn heads of visitors from Philadelphia rumbled out of a shop in East Africa. It looks a lot like the old Conrail.
Pictures of the blue-and-white locomotive are being e-mailed among ex-Conrailers this week, with little explanation.
As it turns out, similarities to Conrail run deeper than a coat of paint. A Pittsburgh firm, run by ex-Conrailer Henry Posner III, is among the partners reviving the formerly government-run rail corridor from the port of Nacala in Mozambique to Malawi.
“The paint scheme is intended to honor Conrail,” said Posner, who received an M.B.A. from the Wharton School in 1982.
He said he was using lessons learned at Conrail Inc., where he worked for a decade in operations, marketing and sales, to help rebuild seven small, run-down railroads overseas.
Posner went to work for Conrail soon after it was created by Congress, in 1976, to rebuild the rusting remains of six bankrupt lines and maintain critical freight rail service in the Northeastern United States.
Unlike the Western U.S. railroads with profitable long-haul routes, Conrail dealt with the costly Northeast, where trucks offered stiff competition and the weather is often harsh enough to bring the whole network to its knees.
In 1987, the federal government sold Conrail in a $1.6 billion stock offering, and it soon became a Fortune 500 company. In 1997, it was bought for $10.3 billion, the largest amount ever paid for a railroad, by CSX Corp. and Norfolk Southern Corp. The Southern rivals divvied up Conrail’s 11,000-mile network.
While working in operations for Conrail, Posner said, he learned to deal with parts of Conrail’s predecessor railroads that didn’t mesh. In marketing and sales, he learned that competition – not the cost of operations – determines what customers pay.
The eight railroads where his company, privately held Railroad Development Corp., along with partners, plays a role include a wide variety of equipment and climates.
“We have air brakes and vacuum brakes; signaled and unsignaled routes. We have the highest railroad in the world – 15,000 feet – in Peru. We battle arctic conditions in Estonia and a tropical climate in Africa,” Posner said.
Some lines had been abandoned for several years when his group got involved.
“We’re taking some of the elements of the Conrail story and trying to make them work. You can see pieces of the Conrail experience in many of the things we do,” he said.
Posner met his wife, Anne Molloy, who got an MBA from Wharton in 1979, at Conrail, where she worked in strategic planning.
He left Conrail with high hopes of using family money to build a network of short-line railroads. Conrail, as other big railroads would later do, was shedding a massive amount of track, wherever revenue wasn’t sufficient to match its costs.
As it turned out, too many people, some with romanticized notions about owning a railroad, wanted to buy. “The deal usually went to the people who made the most unrealistic projections,” Posner said.
He still owns Iowa Interstate Railroad Ltd., part of the old Rock Island Line, but his early U.S. acquisitions went poorly.
His main interests now are overseas – in Argentina, Guatemala, Peru, Estonia and Africa.
Posner, 49, won’t say how much his company has invested overseas over the last 12 years, or what it earns. Forbes magazine estimates its investment at $20 million, which it says ranks Posner first among U.S. investors in foreign rail operations. He doesn’t dispute the report.
“We usually don’t understand the culture or politics, but we do understand the railroad business. We work with local partners to integrate the best practices of railroading with the local culture, economy, politics etc.,” Posner said.
The new Central East African Railways Co. venture draws on Conrail lessons. “I recall how the port of New York and Port of Philadelphia were always complaining about how Conrail was keeping them from being the best port they could be,” he said.
So the new Nacala Corridor is a partnership of the port and railroad.
For now, only one of its 30 locomotives looks like Conrail. As the Philadelphia freight railroad often did, it has a shortage of locomotives. So, Posner said, “we try to keep them on the road, as opposed to in the shop getting painted.”