Book Review: EHH, a lean, mean street fighter

If ever there were a human equivalent to liver and onions—hated or loved, but no in-between—it was the late Ewing Hunter Harrison III, a chief executive of four major North American railroads, personally synonymous with the term “Precision Scheduled Railroading,” and whose mention invokes often disquieting debate on theories of management and how best to deliver shareholder value in the short- and long-term.

Say “Hunter,” and contemporary railroaders know precisely of whom you speak—a most complex disrupter of the status quo, equally identifiable in his bold pinstriped suits and excessive displays of rock-star-like bling conceivably masking a personal insecurity or simply an extension of his childhood infatuation with sequin-festooned showman Elvis Presley.

In a new and engaging biography, entitled Railroader: The Unfiltered Genius and Controversy of Four-Time CEO Hunter Harrison, Canadian broadcast journalist Howard Green presents Harrison as an “unfiltered genius.” Beginning on page one, there is validated a notion of Harrison as the embodiment of the Robert Louis Stevenson fictional character of dual personalities, Dr. Jekyll and Mr. Hyde.

Former Canadian National (CN) chairman and Harrison overseer Paul Tellier years ago quipped to this reviewer, in more seriousness than frolic, that he struggled to keep Harrison separated from the railroad’s customers, chary of Harrison’s tendency to “bite them.” Harrison boasted to Green of once having angrily walked out of a negotiation with a shipper after telling the shipper he wouldn’t cut freight rates. “You’re not a customer anymore, so I don’t have time to fool with you,” Harrison claimed to have told the shipper before slamming the door behind him.

“Early on, Harrison developed the ability to use a powerful two-letter word: No,” writes Green. “He didn’t just use it with employees, but with customers, a counter-intuitive approach in an industry that had always let the customer dictate railroad schedules.” Green writes that after Burlington Northern (BN) pasted stickers on office walls that “the customer is always right,” Harrison, then a vice president, ripped them down. “He’d come to the conclusion that if you said yes to everything the customer wanted, you wouldn’t make any money.”

Notwithstanding the bullying and boasting—perhaps because of it—Harrison is pronounced by Green as “an unsentimental efficiency wizard who’d risen to the top by lopping expenses, maximizing the use of assets, and creating enormous value for shareholders [by] making the trains run on time. Investors came first,” writes Green. “For him, the game was capitalism, pure and simple.”

Indulgent investors—particularly hot-money hedge funds with short-term financial objectives—so prized Harrison’s managerial talent that no personal compensation demand seemed too immense. Activist investors goaded the CSX board to place some $300 million on the come line—including some $150 million in direct compensation and stock options—to wrest Harrison out of retirement from CP and impose Precision Scheduled Railroading on CSX.

Ignored was that train and engine workers in Harrison’s employ on CN had labeled the Tennessee native “the ugly American,” while epithets vocalized by many U.S.-based train crews superintended by Harrison are mostly unprintable. In 2015, upon accepting from Railway Age his second Railroader of the Year award—this one at CP; the previous at CN—Harrison said employees “sometimes … need a kick in the ass.” Labor takes a reasonable position that while management is not a popularity contest, it shouldn’t be an unpopularity contest.

Customers of Harrison-run railroads assert a separate litany of grievances, primarily service-related, that they have marched with regularity before rail regulators.

No matter, because at the end of each fiscal quarter, managers dutifully report to shareholders, and few have done so with such aplomb as has Harrison. At Illinois Central (IC), CN and CP, he improved the profit margins from worst to among the best of Class I railroads. At CN, with no evidence of skimping on maintenance, Harrison shaved millions of dollars in costs. At CP, he handled more traffic while parking 600 locomotives, improving operating ratio from last place (77%) to second (61%) among Class I railroads.

In 2017, CSX wanted him, and wanted him badly, discounting his 73 years of age and predictions by skeptics that unlike IC, CN and CP, CSX’s spaghetti-like network and greater diversity of traffic would be Harrison’s professional undoing. Yet upon his arrival, CSX stock seemed to levitate even as service unraveled, causing Harrison to pen an uncharacteristic apology to customers, although he placed blame on employees.

Nine months following his March 2017 arrival at CSX, Harrison died unexpectedly from a respiratory illness whose severity was kept under wraps—and the stock price impersonated a Bitcoin free fall. While Harrison’s preferred successor and Precision Scheduled Railroading devotee James M. Foote has righted the CSX ship—including decisions to reverse or retard some of Harrison’s initiatives—it may be years before accurate assessments are made of Harrison’s short tenure.

One need not spend scarce dollars on this book to learn of Harrison’s accomplishments, self-promotion and bank balances—all well documented on Railway Age’s website and in its print editions.

What Green delivers in “Railroader” is insight into Hunter the man, and his paradox, beginning with an unhappy childhood in Memphis, acting out as a juvenile delinquent, chumming around for a short time with an older Elvis Presley, two failed attempts to earn a college degree, entry-level work as a carman-oiler, lower and mid-level managerial assignments tinged with interpersonal conflict, a divorce and a year later remarriage to the same woman. “Lean, mean street fighter,” wrote a psychologist whose notes on Harrison were shared with his BN supervisor.

Self-actualization is a psychological theory that drives many human beings toward fulfillment of their highest needs. Surely Harrison could have retired before moving from CN to CP, and he had no financial reason to scrap subsequent retirement from CP for employment at CSX. “Between CN, CP and IC, he tabulated that he was paid approximately $500 million,” writes Green. “Had he lived to see CSX play out the way he expected, there was the possibility of another few hundred million.”

Harrison used some of that purchasing power for another manner of bling—three horse farms and three homes, including “a main home” of 15,000-square feet that Green describes as having an “indoor and outdoor kitchen, cinema room, golf simulator, a putting green, a trophy room and a wine cellar.” Yet Harrison spent much of his time on and about the “high iron”—much like a railfan, but with the significant difference he was barking orders rather than snapping photos.

Observing that Harrison “had few close friends,” Green quotes Harrison’s sister, Mary, that he had “no life,” that it was “nothing for him [at a family gathering] to spend hours pacing on a conference call … There’s no day off. There’s no vacation. There’s no downtime.”

It is not a risky suggestion that what consumed Harrison as he confronted his own mortality was that there was a final missing piece at the apex of his needs hierarchy—effectuating a merger to create the first truly U.S. transcontinental railroad. Surely, he possessed the ego, perhaps fueled by sharing initials with one of history’s most notable railroad barons—Edward H. Harriman. That Excalibur of railroading remains for another visionary.

For sure, Howard Green has written a Jim-dandy of a book. It’s available from Simmons-Boardman Books.

Frank N. Wilner is author of six books, including Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and Railroad Mergers: History, Analysis, Insight, all published by Simmons-Boardman Books. Wilner earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Change (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.