Amtrak's Chief Wants To Put Line On A Service Track He Wants To Cut Down On Management. "The Railroad Needs To Be Managed From The Train Level," He Says.

Posted: October 03, 1994

Shortly after he became president of Amtrak last November, Tom Downs realized just how much his company needed a complete management shakeup.

He was riding the Lake Shore Limited between New York and Chicago. He talked to the conductor, who's in charge of collecting tickets and keeping the train on time, and to the on-board services director, who's responsible for keeping passengers well-fed and comfortable. They told him how hard it is to solve even little problems aboard trains because of the multiple layers of management.

"They asked me, 'Do you know who the first common supervisor we have is?' " Downs recalled. "They said, 'It's you.' At first, I couldn't believe it, but they were right."

Reporting up different chains of command all the way to Amtrak headquarters means there is no one on a train who can quickly resolve the issues, such as making sure the train's coffeepotworks, that make for good service and ensure loyal customers, Downs said.

That's the reason Amtrak's board last week approved a thorough reorganization of the company proposed by Downs. The key changes include giving far more responsibility for decision-making to people actually working on board the 200-plus trains Amtrak runs daily around the country.

The shake-up will mean elimination of 600 of Amtrak's 2,100 management jobs by year's end, and moving numerous management functions out of Washington.

Philadelphia could have a major role in the reorganization if the headquarters of the Northeast Corridor is moved here, Downs added. The city is in competition with New York to be the place from which all trains running in a region from Montreal to Richmond, Va., are managed.

Under the reorganization, the Northeast Corridor, another division operating long-distance trains and a third running California service will each become a "strategic business unit." Earlier this year, Downs named George Warrington, the former executive director of the Delaware River Port Authority, to be chief executive of the Northeast Corridor.

The reshuffling is designed to make Amtrak similar to other transportation companies that have a good reputation for pleasing customers. British Airways is the best example of another passenger-transport company organized along the lines of strategic business units, each with autonomy to run its part of the company as it sees fit, Warrington said.

Although some managers now working in Philadelphia could lose their jobs in the reorganization, it's just as likely that employment here will increase if it becomes the Northeast Corridor headquarters, Downs and Warrington said. Most of the job cuts are expected to be in Washington, they said.

Amtrak now has 11 layers of management between Downs and the people who actually serve customers aboard trains. That means Amtrak is ripe for a reorganization that would push decision-making and problem-solving "down to the (train) platform," Downs said. "The railroad needs to be managed from the train level, not from Washington."

Over the next year, the layers of management will be trimmed to about five, and responsibility for the complete operation of every train given to a train manager. In other words, Metroliner No. 100, which leaves Washington for New York at 5:45 a.m. each weekday, will have its own manager, and all employees on the train will report to him or her.

That manager, in turn, will report to a Metroliner service manager, who will report to Warrington. Now, the train's engineer and conductor report to a transportation manager. Snack-bar attendants report to an on-board services manager. Responsibility for making sure everything on the train works belongs to a mechanical department. Providing services in stations and marketing the train are jobs of yet other departments.

"Amtrak is a classic stovepipe organization," Warrington said. "The structural responsibility for lots of decisions winds up being pushed along down the line. No one can say yes. . . . It blurs responsibility for the final product, which is the train."

The way Amtrak is now organized, it's hard to respond quickly enough to give customers what they really want, the officials said.

"People think of us as a railroad, with trains and locomotives and mechanical shops," Downs said. "We're really a service company . . . like a retail store. Like any service industry, we have to be able to respond to changes in customer preferences, or to do things to make them happy."

There is an urgency to overhauling the organization, too, Downs added. Unless the railroad cuts its operating expenses, Amtrak will have a $195 million deficit in fiscal 1995, which started Saturday. That's despite the railroad's 1995 federal subsidy of $393 million.

Revenue for the passenger railroad is down because of stiff competition

from low-fare airlines and a spotty record the last year or two for providing reliable, on-time trains, Downs said.

Even if the Northeast headquarters isn't in Philadelphia, the city will continue to be one of the key points in Amtrak's system, Warrington noted. Each year, either Philadelphia or Washington is the second-busiest station in the system, with New York number one. Philadelphia's proximity to other major cities in the region served by Amtrak means that it has some of the nation's best and most frequent service, he said.

"Philadelphia is very good to Amtrak in terms of market share" versus airlines, Warrington said.

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