By Pat Foran, Editor-in-Chief
In February 1999, I traveled to BNSF headquarters in Fort Worth to talk with Rob Krebs, who then served as the railroad's chairman, president and CEO, for a story I was writing about him. During a period of considerable post-Burlington Northern-Santa Fe merger challenges, Krebs talked with me about culture change (the need for it, how he hoped to cultivate it at BNSF), capacity (how the railroad had to continue investing in it) and improving service and customer confidence — and how his role had changed accordingly.
"My job now is more as a strategist, organizer and cheerleader," he told me.
Krebs wasn't the only Class I leader rewriting his job description in the late 1990s, but he was the first to talk with me about the railroad CEO evolution.
The story I ended up writing — "Relentless pursuit of community: Hard-driving Krebs helps BNSF develop a new corporate culture, as well as a renewed sense of customer focus" — was published in the March 1999 issue of Progressive Railroading. The story hasn't been available online until now.
Krebs, who served the rail industry for 35 years, was head of Santa Fe Pacific Corp. in 1996 when he assumed the position of BNSF chairman, president and CEO after the Santa Fe and Burlington Northern merged. He stepped down as BNSF president and CEO in 2000, but continued to serve as chairman until he retired in April 2002. He was one of only a handful of leaders to head three Class Is.
"Breaking down barriers, creating a common vision and a set of values to guide decision-making at all levels of BNSF will be Rob's legacy to BNSF," said Matt Rose, Krebs' successor, in March 2002.
At Burlington Northern Santa Fe headquarters in Fort Worth, Texas, evidence of a cultural evolution is everywhere. Here, employees are learning to value and cultivate diversity. In so doing, they’re also learning to be better listeners — to customers and each other. Also here in Fort Worth is a new, 24-hour, licensed day-care center, a signal that the railroad is pushing the family-friendliness envelope. The dress code at BNSF headquarters? Casual.
Overseeing this culture change is a railroader whose approach to work is anything but casual. By any measure, BNSF Chairman, President and Chief Executive Officer Robert Krebs is intense. He doesn’t suffer fools. A colleague characterizes him as “slightly relentless.”
But Krebs also is relentlessly pragmatic. If it’s good for the BNSF “community,” as Krebs calls it, it’s good for the railroad.
Since overseeing the BN-SF merger two years ago, Krebs has pushed hard to keep his railroad — and the industry — on the better-service track.
He’s invested in locomotives and capacity. He’s found ways to compete and cooperate with rival railroads. He’s reorganized business units. And, as chairman of the Association of American Railroads, Krebs has been an industry voice of reason at a time when rhetoric rules.
But Krebs’ legacy may be his ability to see the need to “pay attention to improving BNSF’s psychological state,” as he told employees in a recent letter. His goal: Build a sense of community on a 34,000- mile railroad with 44,500 employees.
It’ll take time. But the pragmatic Krebs appears to be on his way to becoming a community development specialist of a different sort.
“Are we getting there? I think so,” Krebs says. “Most of the evidence is anecdotal. You’ve got to believe it makes a difference, little by little.”
Wanted: One culture
Incremental improvement should be a rallying cry of all railroad CEOs. For Krebs, it’s fundamental.
“He’s perceived as a forceful leader, and one who has a vision for both his company and the industry,” says Scott Flower, managing director of equity research at PaineWebber Inc.
It’s a vision he’s sharpened over a 33-year career. Krebs started with Southern Pacific in 1966, holding a variety of positions in the operating department before becoming vice president of operations in 1980.
In 1983, he was named president and chief operating officer of Santa Fe Southern Pacific Corp.; by 1987, he was CEO. In 1995, Krebs was named CEO at the newly created BNSF.
Employees and observers wondered how Krebs’ hard-driving, no-nonsense style would play at BNSF, particularly among BN executives and employees who’d gotten used to life under Chairman and CEO Gerald Grinstein. (“When he laughed, you could it hear it all the way down the hall,” says a BNSF exec.)
For Krebs, personal style wasn’t the key issue. Developing a single corporate culture — a BNSF community — was.
“The big change was that we got bigger — from 7,500 to 30,000 employees,” Krebs says. “That puts a premium on having a good management team.”
He believes he’s got one, although adjustments have been made. Late last year, Krebs & Co. reorganized the Merchandise Business Unit to focus resources on market development and revenue growth.
“We need to be easy to do business with,” Krebs says.” Right now, we aren’t.”
Intermodal is key
Krebs’ desire to simplify extends to the BNSF community. Since 1996, he has met with 17,000 employees system-wide at 99 “town hall” meetings. In March, Krebs will conduct No. 100.
“There are a lot of ideas out there I need to hear about,” Krebs says.
Especially when it comes to issues that have surfaced as a result of the BN-SF merger. Managers and employees alike are still learning what it means to be part of a mega-railroad.
“It’s been difficult to put this thing together,” Krebs says. “But I think we’ve been successful.”
The numbers back him up. In 1998, BNSF posted record net adjusted income of $1.1 billion, a 19 percent increase from 1997 adjusted net income. Revenues were $8.9 billion, up 7 percent. Leading the way were coal (up 14 percent) and intermodal (up 8 percent).
“We handled a lot of extra business due to the UP congestion,” Krebs says. “We did it without tying up the railroad.”
Revenues could climb again this year.
“Coal demand is going to be strong — every load in the Powder River Basin we could carry, we have,” he says.
Even grain business, which has been sluggish, is improving. But like his colleagues at other Class Is, Krebs is counting on intermodal — “the engine that drives the industry”— to fuel BNSF’s future. It won’t happen without considerable investment, and Krebs is putting his money where his mouth is. Over the past three years, BNSF has expanded intermodal facilities in California and Texas, and at its three Chicago-area hubs.
“Investment is crucial , and Rob recognizes this,” says Gil Carmichael, chairman of the University of Denver’s Intermodal Transportation Institute. “He’s going back and spending the money to double-track.”
BNSF is spending in other areas — $2 billion since 1996 on 1,400 locomotives. The railroad also has boosted the frequency of train service. But like all railroads, BNSF still must convince shippers that it can meet their needs.
“We seem to be showing signs of more consistent and better on-time performance. But we really need all of the railroads to do this,” Krebs told attendees of the Intermodal Association of North America’s Fall Intermodal Conference.
“We will only restore customer confidence by mutually adjusting our operations to improve service and efficiency, as well as by spending more time with our shippers and listening to their needs.”
Blocking and tackling
Last fall’s AAR-sponsored customer outreach sessions helped get the customer-confidence ball rolling, Krebs believes. But Class Is could do a lot more to improve operating efficiencies.
“The railroad business really isn’t rocket science,” he says. “It’s doing a lot of little things right. It’s blocking and tackling.”
BNSF’s trying, Krebs says. Last year, the railroad entered into a coordinated dispatching arrangement in Houston and the Gulf Coast with Union Pacific Railroad. Last month, BNSF and UP joined forces again, entering into the largest coordinated dispatching agreement in rail history. The pact covers operations in Southern California Kansas City and the Powder River Basin.
Meanwhile, BNSF will continue to seek interline partnerships, such as a five-year deal inked in January with Texas Mexican Railway for traffic moving between Robstown, Texas and Mexico. But such deals can take time to develop; this one took a year and a half.
Cheering by example
Given the level of frustration from various shipper constituencies, which may push for reregulation this year, railroads may not have much time to prove themselves. Krebs believes capacity investment, route simplification and railroad cooperation will make a difference.
But commitment to customer service starts at home. And in the era of the mega-railroad, Krebs has had to rethink his role a little bit.
“My job now is more as a strategist, organizer and cheerleader,” he says.
He cheers more by example than through a rah-rah demeanor. The $2 million day-care center, which opened in January, has his full-fledged support. He helped shape BNSF’s “Vision of Values.” When the railroad launched its corporate diversity program, Krebs was first in line for awareness training. And his commitment to rail safety is lauded by Federal Railroad Administration officials and BNSF employees.
Signs of his — and so, BNSF’s — commitment are beginning to surface. Lost work days due to employee injuries have dropped; BNSF has reduced by one-third the frequency per million train miles of accidents and incidents since 1995.
Other signs aren’t as apparent. But Krebs sometimes sees them at town hall meetings. He also sees them in employees’ resolve to be better railroaders.
“[You want employees to say],’ Here’s a place with a future. They’re trying to grow the business,” Krebs says.
