Rail giant CSX is the product of a 1980 merger between Chessie System and Seaboard Coast Line. At the time of the merger, CSX controlled a rail network of over 27,000 miles. CSX then proceeded to purchase companies specializing in other forms of transportation while simultaneously selling off unrelated businesses, such as those in communications and natural gas. CSX's major business unit, CSX Transportation, is the third-largest railroad operator in the United States and the largest in the eastern section of the country. Until 1999, the company operated about 18,500 miles of track in the South, Midwest, and East. And with its acquisition of an part of Conrail, CSX's track miles jumped to over 22,000.

The company also owns and operates CTI Logistx, a half-billion dollar a year operation which brings companies such as Goodyear, Compaq, GM, DaimlerChrysler, Ford, and GE in the company fold. CTI provides over 8.5 million-sq. ft of space in its 77 integrated logistics centers, operates nearly 1,000 power units, and employs over 4100 people.

Tied the battle, losing the war

In 1998, after a bitter, monthslong takeover battle, CSX successfully acquired nearly half of Conrail, the railroad company that successfully served New York and Philadelphia markets before its sale. Unfortunately, CSX's victory is not complete. Instead of swallowing Conrail whole, CSX will split its purchase with a rival bidder, Norfolk Southern. And while CSX emerged from its bidding war with 42 percent of its prize, the fight left some scars. In 1997, while deep in the fight for Conrail, CSX announced that it had lost money for the first time in 16 quarters. Norfolk Southern, considered to have a more efficient management scheme and disciplined union workforce, has been outperforming the larger CSX.

Still, the new Conrail routes will position CSX as an even stronger player in the transportation industry. CSX already owns the country's largest barge transportation service (American Commercial Lines) and a prominent container-shipping and logistics company (Sea-Land Service). It even operates two resorts: West Virginia's Greenbrier and Wyoming's Teton Lodge.

Why poach 'em when you can buy 'em?

CSX is also hoping the Conrail employees it lured away with promises of top management spots can improve performance. Conrail executives now control the daily rail and labor-relations units of CSX. A former Conrail exec also runs CSX's intermodal transport business which transports truck trailers and marine shipping containers, and which is seen as an important competitive battleground for the future. CSX hopes prodding by its intermodal business will transform it. Once one of the largest shippers of coal and other low-speed or bulky cargo, CSX wants to become a high-speed, just-in-time transportation company more akin to trucking companies.

Maybe former Conrail executives will also help transform CSX's plodding corporate culture. CSX decentralized many engineering and operating details to local field managers. To thin out the barrier between management and labor, the company recently gave its white-collar employees the choice to wear business casual to work. The company also scrapped its adversarial "investigations" process for rule infractions by union workers, replacing it with hearing committees and warnings.

Back on track