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December 2012



Amtrak Article
Amtrak reorganization outlined during House Transportation and Infrastructure Committee hearing



Amtrak

by Angela Cotey, Associate Editor

On Nov. 28, the House Transportation and Infrastructure Committee held the fourth in a series of Amtrak oversight hearings since early 2011. Titled, "Getting Back on Track: A Review of Amtrak's Structural Reorganization," the hearing was just that: a discussion of how the railroad's top executives are rearranging the management structure and focusing on customer service, safety and cost controls.

Committee Chairman John Mica (R-Fla.), who in August held a hearing at which he was highly critical of Amtrak's food and beverage service, seemed to soften his stance this time around.

"The purpose of this hearing is to be constructive and move things forward in a positive fashion," Mica said. "Almost all public transportation is subsidized in some fashion, and while we may not be able to eliminate that, we can lessen [the subsidy]."

Filling The Gaps

In October 2011, Amtrak released a strategic plan that calls for dividing the company into six business lines and appointing general managers for each. In recent weeks, Amtrak has filled a handful of key management positions. Those managers and others will be held accountable for performance, cost controls and budgets for their respective business lines.

"One of the issues at Amtrak was a lack of accountability and understanding of what a budget was," Amtrak President and Chief Executive Officer Joseph Boardman said during his testimony. "A lot of the strategic plan is about how are you going to measure metrics, what are your goals, what are you looking for in terms of organizational and financial excellence, and how do you optimize your operating ratio."

While Boardman said it was too early to discuss in detail Amtrak's progress on the strategic plan — which won't be fully implemented until fiscal-year 2014 — there are signs that a renewed focus on customer service and cost controls are taking hold. In FY2012, Amtrak posted record ridership. And, the railroad has been requesting — and making do with — lower federal operating subsidies, he said.

Amtrak Inspector General Ted Alves backed up Boardman's claims that the railroad is on a better management track.

"Over the last couple of years, the board and Amtrak management have been focused on improving Amtrak's operational, financial and customer service performance," he said.

For example, the Amtrak board, which in the past had a handful of vacancies, now has filled seven of its nine positions. That's enabled the board to reconstitute the audit and finance, and personnel committees, and therefore provide stronger oversight, Alves said. Amtrak has addressed other inspector general concerns, as well, such as: appointing a human capital officer to address workforce needs; consolidating the departments involved with food and beverage activities; recovering more than $20 million in overpayments to freight railroads; and improving the risk management framework.

"The company is focused on operating more like a profit-making business and is in the early stages of implementing these improvement initiatives," Alves said. "We believe sustaining these initiatives over the long term ... will be the key to Amtrak's success."

For the most part, the railroad's rank and file appears to be on board with Amtrak's new strategy, too. The United Transportation Union (UTU) has received no complaints from members about the railroad's reorganization, according to UTU National Legislative Director James Stem. Employees are "encouraged" by the steps Amtrak execs have taken to streamline the management team and realign priorities, he testified.

The hearing wasn't without criticism. Committee members raised concerns about workforce development issues, financial oversight and, of course, Amtrak's ongoing federal subsidy. But all in all, the point of the hearing was to learn about Amtrak's strategic plan progress and ensure managers continue to operate the railroad with the bottom line top of mind.

"There's no one who is a stronger supporter of passenger rail in the United States than this guy," Mica said, pointing to himself. "But we have to [operate] it with the least amount of subsidy, and God forbid there should be a profit."



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