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This chapter focuses on Union Pacific Railroad's merger with Western Pacific Railroad and Missouri Pacific Railroad. The merger of the three railroads marked a milestone in John C. Kenefick's career and opened a new era in Union Pacific's history, one that ended its historic role as a bridge carrier. Even while undergoing the long and tedious process of getting the merger approved, Kenefick began planning how best to put the two systems together. Meanwhile, C. Barry Schaefer created a team of four to oversee the merger process: himself, Paul Conley, Charley Eisele, and Tom Watts. By the time the Interstate Commerce Commission granted approval, it had long since sanctioned the other proposed major mergers in the railroad industry, including Burlington Northern Railroad's acquisition of the Frisco and the union of the Chessie and Seaboard systems into CSX.

This chapter describes 1979 as the year of decisions for Union Pacific Railroad. In July 1979 Andras R. Petery of Morgan Stanley conducted an in-depth analysis of Union Pacific and liked what he saw. He thought its diversity of businesses provided a unique ability to withstand a recession, and its decentralized operating responsibility, coupled with centralized financial controls and planning, made it “one of the few transportation-based concerns with a truly integrated approach to management.” Petery also praised the forward-looking leadership of company president John C. Kenefick that had made the road “an industry leader in strategic planning, marketing, and development of modern information systems.” As 1979 opened, planning continued to hold center stage at Union Pacific headquarters. The management also continued evaluating opportunities for mergers.

This prologue recounts the merger of the Union Pacific Railroad and Central Pacific Railroad on May 10, 1869, a historic union that would allow Americans to travel from one end of the continent to the other by rail. By directly connecting the distant West Coast to the rest of the United States, the new entity brought a new era of progress and created the great national myth of the Golden Spike. The Union Pacific Railroad sank into bankruptcy in 1893 and languished in receivership for five years until the arrival of E. H. Harriman, who transformed Union Pacific into the strongest and most efficient railroad in the West.

This chapter examines Union Pacific Railroad's evaluation of opportunities for mergers and acquisitions as part of its new strategy under president John C. Kenefick. Ben Biaggin proposed a merger between Union Pacific and Southern Pacific Railroad. Kenefick notified New York of the offer and directed John Rebensdorf to study whether Southern Pacific was worth acquiring. Both the Interstate Commerce Commission and the Department of Transportation were in favor of mergers as one solution to the railroad industry's woes. For Union Pacific Corporation, the issue was whether to move aggressively to expand its position or play it safe by clinging to the status quo as long as possible.

This chapter describes the operation of Union Pacific Railroad following its merger with Western Pacific Railroad and Missouri Pacific Railroad. No railroad in America traversed a more varied or challenging landscape than Union Pacific. Its trains braved the ferocious Wyoming winters and the stifling desert heat of Nevada, crossed the Rocky, Wasatch, and Blue mountains as well as the Continental Divide and the flatlands of the Great Plains. The addition of Western Pacific and Missouri Pacific extended Union Pacific's reach to the Sierras, the Gulf Coast, and the barren steppes of West Texas, where temperatures ranged from 120 degrees above to 40 degrees below zero. Aside from the merger, Union Pacific had to take into consideration three other major factors: deregulation, a severe recession, and a wholesale transition in its own management.

This chapter examines the changing of the guard at Union Pacific Railroad following its merger with Southern Pacific Railroad. The first major piece of business for the new Surface Transportation Board was the Union Pacific–Southern Pacific merger. The size of the two railroads ensured that it would be a complicated process. Although Burlington Northern Santa Fe had been appeased with trackage rights, other railroads wanted a piece of Southern Pacific as a condition for not opposing the merger. The Texas Railroad Commission voted 3–0 to oppose key provisions of the merger. Meanwhile the return of Union Pacific Corporation to its roots in transportation took another major step in September 1996 when the company completed its spinoff of Union Pacific Resources by distributing the remaining 83 percent of its stock to Union Pacific stockholders.

This book traces the history of the Union Pacific Railroad from 1969 to the present. It explores how Union Pacific remained a prosperous company despite the emergence of newer forms of transportation—the automobile, truck, airplane—and the steady decline of railroads. Unlike other landmark companies in many industries that disappeared as their time passed, Union Pacific not only endured but increased in size and strength through mergers. This book examines how the company was able to reconfigure itself in an age of rapid change without losing touch with its roots.

This chapter examines Union Pacific Railroad's merger strategy, with particular reference to transcontinental mergers. The vision of a transcontinental railroad has floated through railroad history at least since Jay Gould and Collis P. Huntington put forward plans for the One Big Railroad in 1888. The merger movement unleashed by the Staggers Act gathered momentum as the number of players in the railroad industry dwindled. Chicago & North Western Railroad had become indispensable to Union Pacific, but the issue was whether to insure ensure the connection through acquisition or rely on mutual need to sustain it. Union Pacific Corporation and the railroad undertook a round of studies, dubbed “Project Lincoln,” on Conrail, CSX, and Norfolk Southern Railroad based on two scenarios: each railroad remained independent or merged with Union Pacific. Both chairman Mike Walsh and chief executive officer Drew Lewis had worked actively to convince the industry and Wall Street that they had no interest in a transcontinental merger.

This chapter examines the impact of the merger between Burlington Northern Railroad and Santa Fe Railroad. The merger triggered yet another shaking out of the railroad industry that ultimately boiled the so-called Super Seven Class I railroads down to the Final Four—two in the West and two in the East. Formally created in September 1995, the Burlington Northern Santa Fe became the nation's largest system. However, Union Pacific Railroad was already at work to reclaim that title. It struck an agreement to merge with Southern Pacific Railroad even as it continued to digest the Chicago & North Western Railroad acquisition.

This epilogue focuses on the remarkable turnaround of Union Pacific Railroad, the next railroad. So far Union Pacific has thrived under its new management. From 2005 onward service improved steadily to record levels even as the company achieved record low operating ratios. Despite the crash of 2008 and its aftermath, the railroad's earnings and service remained strong. Investment in the infrastructure and capacity expansion continued as well. Even with reduced traffic the railroad set new records in safety, service, and financial performance. Whether Union Pacific absorbed the lessons of the past well enough to maintain its outstanding performance remains to be seen. Jim Young, now at the helm of the railroad, has vowed that it will.

This chapter describes the changes in Union Pacific Railroad's corporate relationship during the 1970s. The worlds of the corporate boardroom and the railroad's management were each insular in its own way and largely separate until the most profound transformation of the railroad industry in history pushed them toward convergence. By 1970 the structure of their relationship had been formalized in the form of Union Pacific Corporation. Each of its operating companies had its own management team and ran its own operation except for treasury and tax functions, which remained with the corporate staff. The railroad was no longer the entity; it was one among several within the corporate umbrella.

This chapter examines how Union Pacific Railroad's merger with Western Pacific Railroad and Missouri Pacific Railroad came together. The merger of two major railroads is a complex task because it means meshing two different cultures together and integrating departments, not to mention changes in personnel. Furthermore, two different sets of rules and procedures must be combined. For modern railroads a merger also means combining two separate computer systems on which operations depend. Putting Union Pacific and Missouri Pacific together required careful thinking and delicate diplomacy.

This chapter examines how Union Pacific Railroad's merger with Southern Pacific Railroad dissolved into a nightmare in which anything that could go wrong did go wrong. The arrival of Jerry Davis put Union Pacific in a unique position. For the first time experienced railroad men headed both the corporation and the railroad. In Art Shoener they had one of the best operating officers in the nation. With Dick Davidson moving quickly to strip away the remaining subsidiaries, the future looked bright. Earnings in 1996, boosted by a full year's contribution from Chicago & North Western Railroad and three months' worth from Southern Pacific, set new records of nearly $8.8 billion operating revenues and $1.53 billion operating income. The troubles began with the weather. Beginning on December 29, 1996, a series of storms blasted the West Coast and wreaked havoc with both Union Pacific and Burlington Northern Santa Fe. Then the accidents began and kept coming—a dozen by October on Union Pacific alone.

This chapter focuses on some of the new officers at Union Pacific Railroad following its merger with Western Pacific Railroad and Missouri Pacific Railroad. The new faces include Art Shoener, Robert G. Flannery, Jerry Davis, and Dick Davidson. The question was who would succeed John C. Kenefick as company president. Although both Davis and Davidson had shown they had the right stuff to lead, they were young and new at their positions. No one else in the ranks of either company seemed a likely candidate. To complicate matters, Union Pacific Corporation was also undergoing changes at the top level. The outcome of that process would determine the final decision on who would lead the railroad.

This chapter examines Union Pacific Railroad's transformation into a business empire in the railroad industry in the United States after a sweeping reorganization. By 1990 no one could doubt that Union Pacific had shed from many of its traditional ways. Every year chief executive officer Drew Lewis acknowledged as much in the company's annual report. “At the Railroad,” he said in 1988, “the cost-cutting, consolidation, work force reduction and reorganization programs of the past two years have brought about a complete transformation.” In 1990 he boasted that “at Union Pacific Railroad we have achieved a cultural change of sweeping proportions...Underlying this achievement is a total commitment to change.” Lewis knew that the railroad remained the heart and soul of Union Pacific Corporation.

The Western Pacific Railroad no longer exists. Years before, it had been taken over by the Union Pacific Railroad. The engine repair shops had been torn down. Only the mainline track and a few sidings remained. Many rows of track had been pulled up. Gone was the boneyard where Dale Maharidge met a hobo named No Thumbs (real name: Thomas Jefferson Glenn). Those acres of former rail yard were thick with overgrown grasses and weeds. The icehouse had been razed and was now a parking lot for a community college. There weren't even any hobos around. Up the line, a mile or so north, was the Sacramento Bee building. The newspaper still published good work, but both the staff and the physical size of the paper had shrunk. The odds would be against an editor sending Dale Maharidge and Michael S. Williamson out to ride the rails for six days to do a story on today's hobos and hard times.

This chapter focuses on candidates who might succeed John C. Kenefick as president of Union Pacific Railroad. Bill Cook's promotion to chief executive officer did not represent a major shift because he belonged to the old guard, the second generation of leaders since the corporation was formed. C. Barry Schaefer made no secret of his desire to run Union Pacific Corporation one day. Bill Surette, the chief financial officer, thought he was being groomed for the top post, as did some others. The obvious candidates for the top job were Jerry Davis and Dick Davidson. Union Pacific's merger with Missouri Pacific Railroad had also thrown into the mix the whole group of Missouri Pacific officers besides Davidson, such as White Matthews. Kenefick had recommended Robert G. Flannery as his successor, but Cook had grave doubts about him.

This chapter examines the changes at Union Pacific Railroad following its merger with Southern Pacific Railroad and its acquisition of the Chicago & North Western Railroad. The fall of 1995 proved to be one of the busiest and most fateful seasons in Union Pacific history. The merger with Southern Pacific required yet another mountain of paperwork and time expended in dealing with those who objected to it. Hearings commenced on the fate of the Interstate Commerce Commision and what would replace it. Union Pacific took a keen interest in the outcome because the Southern Pacific merger would be the first order of business for whatever entity resulted. The Union Pacific–Southern Pacific merger announcement sparked renewed debate over whether too much power was being concentrated in too few hands throughout the railroad industry.

This chapter focuses on Union Pacific Railroad's reorganization in the early 1970s under the leadership of Frank E. Barnett. In 1972 Union Pacific and several other railroads responded to the threat of nationalization by forming holding companies. Barnett emerged as the railroad industry's most forceful voice against nationalization or even partial government ownership. Together with chief counsel Bill McDonald, Barnett devised a plan that became the basis for the Regional Rail Reorganization Act of 1973. Union Pacific's relationship to its subsidiaries gradually took shape. Barnett also recognized that the management's relationship to New York had to be redefined. The scandal involving Edd Bailey and Tedd Richardson provided a sad coda to the end of the old regime on Union Pacific.