Research Paper
Fred A. Graff
Baker College

Purpose Statement The topic I chose for this research paper is the National Railroad Passenger Corporation, Amtrak. This was due to the fact that I believe this is the direction America needs to take to reduce demand on oil supplies and cut down on emissions. Mass transit railway systems are cheaper and more efficient than airplanes and automobiles. The problem that exists right now with going to mass railway transit is the fact that many of the railroad tracks have been abandoned, removed or turned into trails for hiking or biking. To reach the rural population is going to be the biggest obstacle facing this much needed service in the United States. This is the area I am going to focus on in this paper. Addressing the problem of reaching rural America with mass transit will be tough but not impossible. My solution would be two-fold, and would entail laying new tracks to old places of service and making hubs that people can travel to with ample (and cheap) parking for their vehicles. The second part would be to invest in busses and start small-town bus routes to pick up passengers in areas where running train tracks would be too inefficient. These busses would run only to and from the train hubs connecting them to small towns and rural bus stops. This plan of reinvesting in the railway system would solve several issues: our reliance on foreign oil, our need to reduce emissions and creating new, long term jobs. Trains can move one ton of cargo, 500 miles using only one gallon of diesel fuel. This will lower oil consumption as well as reduce emissions. It would also create jobs as we would need bus drivers, more railroad engineers, and laborers to lay railroad tracks and keep them maintained. It would also create factory jobs with the increased need for new rail cars and new improved locomotives, some of which use hybrid electric engines. Good paying jobs, reduced dependence on fossil fuels, and lowered emissions, now that is a plan!
Company History On October 30, 1970, Pres. Nixon signed the rail passenger service act which created Amtrak and set its start-up date to May 1, 1971. This set the stage for Amtrak to become the premier passenger railway service provider in the United States. As the 1970s progressed so did the improvements in service that Amtrak offered from establishing new routes between cities such as New York, Washington DC, and New York Penn Station to obtaining new contracts for areas such as the Northeast corridor in the Southern Crescent service between Washington DC and New Orleans. During this time Amtrak also ordered 11 train sets with turbine powered cars, over 200 Metro liner type cars and begins a contract to design new bi-level cars later called super liners. Amtrak also opened new stations in cities such as Cincinnati as well as revitalizing 61 stations currently in use. By the 1980s Amtrak's fleet included 1436 new or rebuilt all electric passenger cars and a fuel-efficient locomotive fleet with an average age of four years. Amtrak service continued to grow from Pennsylvania and Illinois to Oregon as well as from Chicago to Oakland and Los Angeles California. By 1989 revenue on Amtrak's Northeast corridor grew by more than 15% following their move into the restored Washington Union Station. In the 1990s Amtrak unveiled new lounges for its first-class sleeping car and club service passengers. The 90s also saw eight more states increase their financial support for Amtrak partnerships which helped bring their passenger revenue to over $1 billion for the first time in their history. Amtrak started testing high-speed trains during this time on its Northeast corridor, operating at speeds up to 162 mph. Even with increased passenger use and reintroduced routes, early 2000 saw Amtrak having to reorganize and prioritize, skirting a looming bankruptcy in 2002, which ultimately led to one of the best decades Amtrak has had to date. Amtrak has moved forward with the times by installing wind powered generators and solar panels in their train yards to help power their signal systems to committing to higher efficient electric cars and rail systems throughout their corridors. This led to a $7.92 billion dollar award from Congress for high-speed intercity passenger rail service in 31 states. By 2010 Amtrak operated a nationwide rail network serving more than 500 destinations in 46 states and three Canadian provinces on more than 21,200 miles of track.
Strengths
The first and foremost thing that Amtrak has going for it is the fact that it's the biggest dog in the pound, and it's owned and operated by the US government. Amtrak owns 30% of the tracks that it runs on while the other 70% are owned by host railroads (mostly privatized) such as BNSF railway, Union Pacific Railroad, CSX Transportation, Norfolk Southern Railway, Canadian national Railway, and Metro-North Railroad. Amtrak has been performing passenger rail service since 1971 and has since built itself up to be the premier passenger train service in the United States, so it knows what it is doing and has been doing it well. In this day and age when we need to reduce emissions and our reliance on fossil fuel and foreign oil, rail service makes perfect sense. With their higher efficient diesel engines that can move a ton of product or people 500 miles on 1 gallon of diesel fuel or with the use of their highly efficient, extremely fast electric engines, the future looks extremely favorable for rail service. Moving more towards passenger rail service would also reduce the use of automobiles. This in turn would reduce noise pollution, congested traffic, and air pollution. It would also be monumental in reducing the millions of tires that end up in landfills or “tire fills” every year, thereby reducing the chance of tire fires that burn for days and weeks, letting off all sorts of caustic and environmentally hazardous fumes.
Job creation would be the next best thing that would come out of expanding the passenger rail system. The creation of jobs would be widespread ranging from workers laying new tracks to new areas of service, train yard workers, to train engineers. They would also have to expand internal operations such as, management, marketing, dispatching, security, and maintenance to name a few. It would also extend to building, running and maintaining new stations, along with firing personnel to work at the stores and kiosks that Amtrak would maintain in and around its train stations. Jobs would also be created in the development of bus routes from the smaller rural cities and towns to the train hubs this again would create employment opportunity for bus drivers, dispatchers and employees to work at stores and kiosks around the bus stops. It would also create manufacturing jobs to create new engines and passenger cars as well as bring a resurgence to the US steel market.
Weaknesses
The number one weakness to this concept is the fact that we are Americans and we like our cars and our individuality. This would be the biggest obstacle to this plan is to convince rural America that mass transportation is the future that we need to survive. Granted, we would still need vehicles as there would be places too far in the boonies to service even with bus routes, but the reduction in the use of vehicles could be dramatic with the positive impact on our economy and ecology. The other big obstacle would be financing the initial building of these new train routes and bus services. It would have to be a combination of private investors, municipalities, local, state and federal funding to make it work. Americans would have to come together as a whole and see the greater good that this endeavor would serve. Another obstacle would be lobbyists for car manufacturers, tire manufacturers, oil and fuel producers/distributors, as well as the Department of Transportation/highway. These sectors would take a large hit in demand for their products along with the Department of Transportation's Highway division getting funding cuts in favor of the new railway system. Ultimately though it would just be a shift in production and departments but, unfortunately, we are a country of “I’s” and “me’s” and not one of “We”.
Market Structure The market structure of this proposed business venture would be a type of monopolistic competition. Since it involves transportation, essentially all forms of transportation could be in competition with this plan. The main focus of this plan though is to bring mass transit to the more rural areas of the United States. While air flight would be considered a competitor on longer runs from one major city to another, or cross-country, it would not be so from big cities to the outlying rural areas. Walking, bicycling, horseback, or any other type of transportation other than cars or trucks could also be considered in competition but in reality, the distances and routes that are covered in this plan would be too far for those types of transportation to be logical. This basically leaves automobiles (cars, trucks, and motorcycles) as the sole source of major competition. With only two major players in the market, the market structure would then be that of a monopolistic competition.
Opportunities
One of the most forward thinking opportunities that the future holds for Amtrak and this plan for building mass transit throughout rural areas of the United States derives from the fact that oil prices are constantly in flux. Add to this the rising price of gas at the pumps and working-class America will no longer be able to afford to drive to work. As stated earlier, trains can move 1 ton of cargo 500 miles using 1 gallon of diesel fuel (CSX, 2012). With the continued advances in technology towards building full electric locomotives, moving people and goods around the country by train could be the cleanest, most fuel-efficient and cost-effective method available. This trend is made apparent in the following excerpt from Amtrak's fiscal year 2013 General and Legislative Report, submitted by Amtrak's President and CEO Joseph Boardman, to the Senate and House of Representatives on February 1, 2012:
The concurrent long-term rise in fuel prices has become an economic fact of life for many Americans. According to Department of Energy data, the average retail price for motor gasoline for all U.S. cities has not been below $1.50 since December 2003. That trend translates into a permanent loss of disposable income for all Americans. It’s apparent that people are responding to these trends, and the result has been a remarkable cultural shift. People are responding to congestion and fuel costs by redefining their ideas of how communities should look, and embracing the transportation modes that provide them with choices and alternatives suited to these new environments, many of which are served by Amtrak or connecting commuter rail services. (p.3) Another opportunity that comes with this plan is that it allows Amtrak to expand their operations into the busing service. This alone would create opportunities such as contracting with schools to bus students, thereby helping schools lower their yearly expenditures by privatizing busing. By owning and operating the busing routes to and from the train hubs both rurally and inside the cities, Amtrak would have an easier time integrating the busing schedules with the train schedules. Monetarily, Amtrak's funding and future growth is moving in the right direction. The following quote is taken from the Inspector General of the National Railroad Passenger Corporation, Ted Alves, in his testimony before the Subcommittee on Transportation, Housing and Urban Development on April 29, 2010:
Today, I would like to discuss the significant opportunities that Amtrak has to provide increased levels of high quality passenger rail services.
Congress passed the Passenger Rail Investment and Improvement Act (PRIIA) in October 2008. PRIIA recognized that passenger rail services, particularly connecting large cities, can provide significant public benefits, including road and air congestion reductions, environmental benefits, fuel usage reductions, and increased mobility choices for the travelling public.
PRIIA not only reauthorized Amtrak; it fundamentally changed Amtrak’s role within the national passenger rail system. PRIIA also contains many provisions aimed at spurring Amtrak to operate more efficiently and to improve services on its existing routes. In addition, the Recovery Act provided $8 billion through PRIIA grant programs to States to assist in improving Amtrak’s national network and begin developing new High Speed Rail corridors. Amtrak also received $1.3 billion through the Federal Railroad Administration (FRA) to improve its infrastructure, facilities, and security. (p.2)
Threats
The main threat to the success of this plan would be America's long-lasting love affair for its automobiles. Convincing Americans to give up their cars, trucks, and motorcycles will be a difficult task considering their 125+ year history together (Jeanes, 2011). Competing against the automobile and tire manufacturers lobbyists will also be quite the challenge. The political regulations and red tape could prove to be a monumental obstacle to overcome. Another threat would be the acquisition of land for the expansion of the railroad’s network of tracks and repurposing the rails-to-trails bikeways and walkways. There would be a lot of people that would be against giving up their peaceful and quiet surroundings to a train barreling through several times during the day and night. This would definitely create a negative externality that would almost have to be dealt with on an individual basis.
Summary
Bringing mass transportation to rural America and increasing it in the bigger cities is an idea long past due. With the rising cost of oil and fuel, and considering the amount of both that is used to build, operate, and maintain an automobile, mass transportation makes perfect sense. With the reduction in pollution, traffic congestion, the use of fossil fuels and the dependence on foreign oil, trains are the wave of the future. The economy would again be thriving as jobs would become plentiful not only in the railroad sector but in many other service areas such as hotels, shops, and restaurants. These would be built up around the new bus and train stations which would also increase construction jobs.. Manufacturing jobs would also escalate as the need for new locomotives and train cars increased. This is a perfect example of what Adam Smith was envisioning when he talked about the invisible hand helping to promote many benefits out of a single goal (Krugman, Wells, 2009). The positive externalities would far outweigh any negative ones initiated by this plan.
Situational Analysis - Strengths/Opportunities Amtrak has been in business since 1971 which makes it the forerunner in the mass transportation sector. With its experience and government backing, including regulations and funding, Amtrak is in a strong position to move forward with America's much-needed mass transportation system. This makes them the strongest contender against personal vehicles which means they would be in a competitive monopoly against each other. If Amtrak was permitted to buy and operate bus routes throughout bigger cities and in outlying smaller towns and villages then they could merge these operations with their train schedules making their overall service more timely and cost effective. This would also make them competitive with businesses such as FedEx and UPS. The U.S. Postal Service could then use Amtrak as their bulk delivery service to these smaller towns and outlying areas, thereby saving money by integrating their post offices with the train and bus stations. With the continued success of electronic locomotives and higher efficient engines, Amtrak leads their competition in the reduction of emissions and fossil fuel use. This would also make moving cargo and people more fuel efficient while decongesting traffic on the highways and cutting exhaust emissions. With the rising and the ever fluctuating costs of gas at the pump and the constant talk of global warming due to pollution, smog, and exhaust emissions, Amtrak is the best choice that America has to catch up with the rest of the world when it comes to mass transportation.
Situational Analysis -Weakness/Opportunity Americans may love their vehicles and independence, but with the ever rising cost of gas and the poor job market, mass transportation is going to be the only option for low and middle class wage earners to get back and forth to work. With the federal minimum wage at $7.25 an hour (United States Department of Labor, 2012) and gas prices topping $4.22 per gallon (GasBuddy.com, 2012), workers will be trading their first hour or two of work just for gas to drive back and forth. Add to this the stress of driving on congested highways and the other costs of owning and operating a vehicle, mass transportation makes perfect sense. Financing the expansion of railroad service, the buying of land and building of stations, both bus and train, and manufacturing the train cars and locomotives could be the second biggest weakness to this plan. Selling bonds for expansion into bus routes and laying tracks to rural cities would be a good investment that the American population could get behind (similar to war bonds). This way, we, as Americans, would have an investment in our own future. This would also give us more reason to utilize the mass transit system.

Situational Analysis -Strengths/Threats Acquiring land rights for the expansion throughout rural America could also be a tricky situation but one that could have several solutions. Since the funding of Amtrak is through the government, fair prices would be offered to land owners for right of ways along with some kind of tax break or similar perk for letting the trains come through. This could also be a boon for smaller towns and villages as they could get tax breaks or special government funding for allowing the presence of bus and train stations and the routing of tracks through their towns. Slow-moving government bureaucracy could be another threat to making this plan work. Along with this, Union labor wages could drive the cost of manufacturing and expansion too high to recoup any cost, let alone make any profit. Hopefully, with the increased need for something other than gas guzzling, smog emitting, vehicles, perhaps the government will act quickly in laying out a plan, along with having oversight committees to make sure greed and union corruption does not interfere with much needed progress.
Situational Analysis -Weakness/Threat Fighting the lobbyists for car and tire manufacturers as well as oil and fuel suppliers in Washington is another weakness in threat to the implementation of this futuristic goal. Perhaps the first law to be passed before any of this takes effect is one to eliminate, for good, the status and use of lobbyists in Congress. This would perhaps cure many of the other problems that we see being passed by Congress such as the bridge to nowhere, corporate welfare, and other nonsensical spending. Getting Americans to give up their cars and use mass transportation will be another obstacle. Perhaps people who won’t need their vehicles anymore could turn them in for transportation bonds or credits to be used towards the use of the mass transit system. Any money owed the bank for the vehicle could also be transferred as a use voucher. These vehicles could then be crushed and the steel used for the production of new locomotives and train cars. When it comes to union labor wages driving up the cost of manufacturing the equipment, operating the trains, and building the stations and laying the tracks, perhaps their time has also passed. Time may be upon us to clean out the unions and turn back their clocks to when they cared more about employee safety then money and politics. Paying a fair market wage is one thing, but they don’t need to pay someone $30.00 /hr. to be a wheel borrow operator or broom pusher. Having a 401/403 voluntary retirement accounts would also be a way to reduce costs, with 100 percent vestments after 5 or 10 years of employment.
Recommendation
The need for mass transportation in the United States is long past due. The rising cost of oil and fuel prices along with the poor economy and declining middle class, makes mass transit a necessity. Add to this the inflated price of automobiles, the rising cost of car insurance, and the constant cost of repair and maintenance of vehicles, makes Amtrak's combination of busing and train service a perfect solution.
Americans need to believe and invest in America again. We can do this by building up our transportation system to meet or exceed that of other countries, while reducing emissions and our dependence on foreign oil and fossil fuels. This would also be an investment in jobs as the need for construction and manufacturing workers, train and yard operators, and service personnel would grow exponentially, as well as all of the stores, shops and restaurants that would grow up around the bus and train stations (the invisible hand analogy). This could make the United States the leader in innovation, technology, and jobs once again.

Recommendation | (O) OPPORTUNITIES: LIST OPPORTUNITIES | (W) WEAKNESSES: LIST WEAKNESSES | (T) THREATS: LIST THREATS | (SO) StrategiesUse strengths to take advantage of opportunities(WO) StrategiesOvercome weaknesses by taking advantage of opportunities(ST ) StrategiesUse strengths to avoid threats (WT) StrategiesMinimize weaknesses and avoid threats | STRENGTHS - S | WEAKNESSES - W | | In business since 1971Funded/run by US governmentMore energy efficient moving cargo and peopleMore environmentally friendly | Americans love their vehicles and independenceFinancing the expansion to rural AmericaFighting the lobbyists for car and tire manufacturers as well as oil and fuel suppliers in Washington | OPPORTUNITIES - O | SO STRATEGIES | WO STRATEGIES | To be the forerunner in the mass transportation sectorTo obtain, schedule and operate corresponding bus routesTo be the leader in reducing emissions, traffic congestion, and reduction of fossil fuel use | In business since 1971 which makes it the forerunner in the mass transportation sectorObtaining bus routes and merging these with train schedule would make moving cargo and people more fuel and time efficient along with being more cost effectiveWith the continued success of the electric locomotive and higher efficient engines puts Amtrak in the lead of reducing emissions and fossil fuel use | Americans may love their vehicles and independence but with the ever rising cost of gas and the poor job market, Mass transportation is going to be the only option for low and middle class wage earners to get back and forth to work Selling bonds for expansion into bus routes and laying tracks to rural cities would be a good investment that the American population could get behind (similar to war bonds) | THREATS - T | ST STRATEGIES | WT STRATEGIES | Acquisition of land rights for expansion throughout rural America Slow moving government bureaucracy Union labor wages driving cost of manufacture and expansion too high to recoup | Since funding is through the government, fair prices would be offered to land owners for right of ways along with some kind of tax break or similar perk for letting the trains come throughWith the increased need for something other than gas guzzling vehicles perhaps the government will act quickly in laying out a plan along with having oversight committees to make sure greed and union corruption does not interfere with much needed progress | Perhaps people who won’t need their vehicles could turn their them in for transportation bonds or credits to be used towards useThe first law to be passed before any of this takes effect is one to eliminate for good the status and use of lobbyistsClean out the unions and turn back their clocks to when they cared about employee safety. Paying a fair market wage is one thing but they don’t need to pay a wheel borrow operator $30.00 /hr |
References
Alves, T. (2010). Opportunities and Challenges Facing Amtrak in FY 2011 and Beyond (pp. 2). Retrieved from http://www.recovery.gov/Accountability/inspectors/Documents/AMTRAK%20OIG%20-%20April%2029%20Testimony.pdf
Amtrak. (December 31, 2010). Celebrate with Amtrak Historic Timeline. Retrieved from Amtrak40th.com: http://www.amtrak40th.com/amtraks-history/historic-timeline#2000
Amtrak. (January 30, 2012). About Amtrak. Retrieved from Amtrak.com: http://www.amtrak.com/servlet/ContentServer?c=Page&pagename=am%2FLayout&p=1237608345018&cid=1237608345018
Boardman, J. (2012). Grant and Legislative Requests: Fiscal Year 2013 (pp.3). Retrieved from http://www.amtrak.com/servlet/ContentServer?c=Page&pagename=am%2FLayout&cid=1241245669222
CSX. (2010). Environmental leadership. Retrieved from csx.com: http://www.csx.com/index.cfm/responsibility/environmental-leadership/
GasBuddy.com. (March 13, 2012). USA National Gas Price Heat Map. Retrieved fromhttp://gasbuddy.com/gb_gastemperaturemap.aspx
Jeanes, W. (2011). Celebrating America's 125-Year Love Affair with Cars. Retrieved from http://www.saturdayeveningpost.com/2011/06/22/in-the-magazine/features/american-cars.html
Krugman, P. & Wells, R. (2009). Economics (2nd ed.) (pp. 3-4). New York, NY: Worth Publishers
McClure, G. F. (December 1, 2001). Should Passenger Rail Service Survive? Retrieved from Today'sEngineerOnline.org: http://www.todaysengineer.org/archives/te_archives/dec01/pp1.asp
United States Department of Labor. (2012). Fair Labor Standards Act Advisor. Retrieved from http://www.dol.gov/elaws/faq/esa/flsa/001.htm