Friday, November 12, 2010

Financial Edge: Lawrence Beal, 1938-2010 (November 2010)

Written by 

By Tony Kruglinski, Financial Editor

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In this industry you become famous—or infamous—as a result of the way you conduct yourself in business. Railroaders have long memories for those who have helped and hurt them in business dealings over the years.

On Sept. 6, Lawrence Beal, one of the most memorable rail professionals in North America and President of National Railway Equipment Company, passed away after a short illness.

He will be remembered by thousands of rail professionals—the way Jimmy Dean put it in that song about “Big John,” as a big, big man in our industry.

The funny thing is, he could have been remembered quite differently. You see, Lawrence spent a lifetime in the rough and tumble business of buying and selling used locomotives and their components. And that is a career rife with opportunities to teach the guy on the other side of your deal the real meaning of caveat emptor!

But that’s not the way Lawrence did business. Lawrence built a career on customer service and satisfaction. That’s not to say that he didn’t make money. He did. It’s just that he never made it by doing a hatchet job on the people with whom he was dealing.

When asked a direct question, Lawrence always told the truth. And when he gave his word on something, if a problem developed, as can occur with used locomotives and used components, he stood behind that word and made things right. As a result, Lawrence Beal had more friends in the rail industry than anyone else I know.

I first met Lawrence when he was running Chrome Crankshaft in the 1980s. A few years later, when I was financing the Wisconsin Central, Lawrence and NREC were in the process of selling some rehabilitated SD45 locomotives to this new regional railroad. The problem was that the WC had been delayed in starting business by regulatory issues and was about to lose the 45s because they had no money, pending the closing of my financing upon the start of operations, to pay for them. Lawrence arranged a quick short-term lease to a Class I to bridge the time gap and as a result the WC had locomotives to start business when they received the go-ahead to begin operations.

There are literally hundreds of stories like that about Lawrence in the North American railroad industry. If you have known him and worked with him, you probably have your own.

Readers who have attended one or more of Railroad Financial’s Rail Equipment Finance Conferences will remember Lawrence as the folksy fellow with the “down home” southern Illinois accent who, whenever he was asked the value of a particular type of used locomotive, always responded by smiling and asking: “Am I buyin’ or am I sellin’?”

He was a beautiful man. He was also an innovator. Lawrence led the industry in building “new” locomotives out of existing locomotive components. I don’t have any stats, but I believe NREC has built and delivered more genset locomotives to the industry than any other builder. When he wasn’t happy with what was available in the marketplace—for instance, train control computer hardware and software—he developed his own product.

There is a saying that the guy that dies with the most “stuff” is the winner. Well, if you measure Lawrence Beal’s achievements by the amount of non-railroad North American locomotive and locomotive component rebuilding capacity he controlled upon his death, he was certainly the winner. In fact, I don’t think anyone else in the industry even comes close.

For those of you who did not have the benefit of knowing Lawrence Beal and of doing business with him, let me tell you what he taught me: There is always a way to make something that appears impossible, work. You might have to take the transaction’s structure apart and reassemble it countless times, but unless someone or something is completely off the wall commercially, there is always a way to close a deal that appears impossible. It just takes some hard thinking, and, perhaps, some compromising, to get it done. Finally, you can wring every nickel of profit out of a deal and still do it honestly and ethically.

If you think and plan ahead, as Lawrence did regularly, investing in used locomotives when the market for them was a horror story, you can ride the markets up and down to a significant gain. You just need to have steel in your backbone and an unwavering confidence in your own view of the marketplace—something Lawrence had in spades.

Lawrence, we are going to miss you. We know your son Steven and his team at NREC and its affiliates will continue to do business in the way you taught them and that everyone you touched professionally recognizes that they are better off for having known you.

I know I certainly am.

William Vantuono

With Railway Age since 1992, Bill Vantuono has broadened and deepened the magazine's coverage of the technological revolution that is so swiftly changing the industry. He has also strengthened Railway Age's leadership position in industry affairs with the conferences he conducts on operating passenger trains on freight railroads and communications-based train control.