When someone asks me how or why I got to where I am today, I have a short answer: poverty. I hated being broke, which is what my family always was when I was growing up.
I was born and raised in Boise, Idaho, in the 1950s and ’60s. Ours was a large Catholic family with seven brothers in a row — I was the eldest — and a sister at the end of the line. My mother, who was 19 when I was born, claims she had all of us so we could entertain each other. Our father worked two full-time jobs, every day and night, as an accountant and billing clerk, although I think he was motivated as much by a desire to escape the pandemonium of a bunch of squabbling boys as by the need to feed all those mouths.
After my sister entered first grade, Mother went back to college for her degree and became a medical technologist. But even then the family budget provided for only the bare essentials. Our upbringing was heavily punctuated by all sorts of paying jobs we did to acquire necessities like candy, sodas, model planes and 10-speed bicycles. I wanted desperately to escape from that hand-to-mouth existence and often would review the family budget with my mother, trying to figure out why, for instance, we didn’t have a late-model car. Being driven up to high school with seven kids in the old, 1953 Buick Roadmaster with two kids lying on the rear package shelf didn’t enhance my social status. Maybe money couldn’t provide happiness, but the lack of it didn’t seem a lot better.
For fun without money, we used to walk up to the Union Pacific Railroad depot in Boise and watch the four to six daily passenger trains arrive and depart from the beautiful mission revival structure on the hill at the other end of the boulevard from the Capitol Building. Many times we would talk with big, bluff Lionel Richardson, the engineer on the Portland Rose, the afternoon mail train to Denver, Omaha and points east. Lionel was a Mormon bishop and senior engineer on the Idaho Division and always had lots of railroad stories for us during the big yellow streamliner train’s 15-minute stop. When he pulled out of the station with those four shiny cars roaring General Motors locomotives and 18 cars at his command he was almost a hero to us. He represented power, romance and mobility — items none of us had, unless you consider riding 100 miles east through a desert packed into an old Roadmaster to see your grandmother romance and mobility.
Boise sits at the edge of a vast western desert that stretches from the Sierras in California to the western slope of the Rockies. North of town, hills and forested mountains being their uninterrupted march to Canada. The closest cities of any size are Salt Lake, Portland and San Francisco. But we didn’t see any of those places until our late teens, when we went on a family vacation in the Buick to California and Oregon. I’ll never forget the night we spent on the Oregon coast, all 10 of us packed into a single umbrella tent — until it collapsed in a howling rainstorm.
In sleepy old Boise, the Union Pacific Railroad and to a lesser extent United Airlines with their DC-6Bs and the major truck lines were our only visible connection to the vast and exotic outside world. Transportation seemed to me a most fascinating aspect of life, and by my teen years, a career in transportation was fixed in my mind as the path to an exciting and prosperous existence. The first step would be to get out of town.
My grandfather, Paul Kohout ’25, was from Libertyville, Illinois, but often spent summers in Boise fishing and camping in the mountains north of town with the Neitzel brothers, Mike ’25 and Frank ’23. When the Depression devastated the family floral business, he pulled up stakes and moved his young family to Boise. My grandmother Rose never forgave him for moving her to the Western wasteland, but he was both content and ultimately prosperous.
Grandpa sent his son, my uncle Mike, to ND. He graduated in 1959, and I conspired to follow in his footsteps if I could both get accepted and find a way to pay for it. I was an uninspired student I high school, thought to be bright but not motivated. So I went to the local junior college for three years and took a smorgasbord of classes that interested me. My grades improved dramatically, and I kept dreaming about Notre Dame and my escape. I was accumulating my financial war chest while working simultaneously as a newspaper boy, local radio announcer and postal clerk during the school year and as a surveyor for the U.S. Department of Transportation in the summer.
I nervously filled out an application to Notre Dame for the 1967-68 academic year, hoping to cobble up a major out of my three years at Boise Junior College and two subsequent years at ND so that I could graduate in 1969.
I received a diplomatic letter of rejection.
I asked them to reconsider, telling them of my dream to do something in transportation, particular railroad freight transportation. In 1966, America’s railroads were perceived to be heading into a financial tailspin, what with the troubled merger of the Penn Central, the decline of the passenger train, and growing truck competition on the newly built Interstate Highway System. My letter was an impassioned plea to give me the credentials to position myself to be attractive to railroads as a manager during the hard times to come.
Somebody in the admissions department must have listened, because I received a letter of acceptance as a transfer student. My brother Greg also was accepted as a freshman.
Those were happy days. Off we went to Notre Dame in September 1966 aboard the Portland Rose to Chicago. On the three-day ride, we passed through all the major facilities of the bustling Union Pacific and saw more railroad activity than we had ever seen in Idaho. But winding our way into Chicago also a rude shock to my brother and me. The rundown buildings and streets that typically line the tracks through industrial areas looked like slums to us.
From Chicago, we rocketed down to South Bend on the South Shore Line “Vomit Comet,” arriving finally at Notre Dame with its gold dome and beautiful tree-lined campus. I moved into Alumni Hall and Greg moved into Fisher.
Once we adjusted to the humidity, a sharp contrast to the bone-dry atmosphere of the western deserts, we once again headed down to the tracks. The almost abandoned depot we walked through had art deco features that spoke of the era of the Twentieth Century Limited and 30 or more passenger trains a day. All that was gone. But we would spend many weekend hours and evenings watching freight trains careen around the curve and through the stations going to and from Chicago. Everything was in a state of disrepair, the Penn Central having just about declared bankruptcy. And this was the business I was going to make my life’s work!
In my second semester at Notre Dame, I worked as a firefighter in exchange for housing in the campus firehouse. Brother Borromeo was responsible for the ND Fire Department, steam plant and the little Notre Dame and Western railroad that moved coal from the Penn Central to the steam plant. He would talk of the days when a dozen or more trains would be parked on Notre Dame’s tracks the weekends of home games. His stories reinforced my feelings about the history and potential of the railroad business.
My second year at ND was marked by the arrival of my brother Mark. We were the only three-brother team at ND that year, and since we all shared an interest in railroads, we regularly marched down Michigan Street to the station to watch the Penn Central and Grand Trunk rumble through with commerce from all over the country. Afterward we’d trudge back to Notre Dame with empty pockets, passing the Dainty Maid pastry shop and the Toddle House coffee shop. I began fantasizing about going to business school for an MBA so I could make myself more attractive to one of these railroads. I was determined to keep from ever being poor again. Or ordinary.
In 1969 I was graduated cum laude from Notre Dame with a B.A. in economics. I was proud of that cum laude, so much so that I had the words pasted on my diploma after somebody forgot to put them on.
With my grandfather’s encouragement, I applied to Boise Cascade, the local forest products conglomerate, for a job in the transportation department. I also took the standardized entrance exam for business schools and was accepted by five schools. But being dead broke, I decided to work for Boise Cascade for a year to rebuild my shattered finances and the reapply to the two best schools, Harvard and Stanford.
I loved the work and the people at Boise Cascade, where my peers called me “boy traffic manager” because I was only 22. But I had to get that MBA. So in 1970 I bought a 1966 Corvette, found a girlfriend and went off to Stanford in warm, sunny California.
While at Stanford, I worked on a consulting basis for the Western Pacific Railroad in San Francisco. The small line operated between San Francisco and Salt Lake City, competing with giant railroads like the Southern Pacific and the Santa Fe. The floundering W.P. was just being reorganized under the direction of Alfred Perlman, former president of the New York Central Railroad and the Penn Central. His new vice president of marketing, Harry Bruce, hired me to help in marketing at first. After business school, I joined the railroad full time.
My responsibilities were in intermodal transportation, which is generally marine containers and truck trailers carried on flatcars. Even with our comparatively little railroad, I had the opportunity to demonstrate that a railroad could increase market share and still turn a profit. Mike Flannery, my new boss and president, encouraged all the new things we tried. He even appointed me president of our motor carrier subsidiary, Western Pacific Transport. I was 25.
We ruffled a lot of feathers in the business as we went against the traditional, team-playing, collegial approach that prevailed in those pre-deregulation days. Our little railroad survived by nipping at the heels of its much larger competitors, and all of us took pride in beating the big boys and trying new ways to either save money or make money. We knew the company’s survival depended on it.
Working for a railroad based in San Francisco but with tracks running out through Nevada and Utah, I met a lot of colorful people, from our bald, cigar-chomping chief mechanical officer, “Bullet Head” Bob Mustard, to Walter Gladstone Trainor, our vice president of law who always goaded me about my latest “challenging itinerary” as I chased around the country for business. After working all week in San Francisco, I would often take a fast freight train into the middle of Nevada and back over a weekend just to see a desert railroading world far removed from the big city.
It was a wonderful group of people. We had a 3,000-employee organization and devised innovations that have become standard operating practice in today’s railroads. Had the world remained the same I would have stayed with Western Pacific forever.
But the world didn’t remain the same. The end came after I’d been made senior vice president of the railroad at the age of 31. Deregulation had spawned a wave of mergers that would have a crushed a small carrier like us, so we sold out to the Union Pacific Railroad.
Suddenly without a job, I began to fear being broke again. I had finally married my lovely fiancée, Frankie, and we had one son with at least one more on the way (her family had a history of twins). Mercifully, I was not offered a job with the Union Pacific in Omaha. We didn’t want to leave beautiful San Francisco and were willing to sacrifice a lot to remain there.
Fortunately, my wife was supportive through my difficult soul search. I was 36 and didn’t want to face losing my job again at 50; I wanted more control of my destiny than a corporate job offered. So I wandered the streets of San Francisco trying to figure out what do to.
Many of my friends were providing various services to railroads. I had a hunch than an opportunity existed for a well-run intermodal terminal operator, one of the operations I’d managed for the Western Pacific.
Intermodal means that trains carry cargo to a certain destination, where it is transferred to ships or trucks. A railroad intermodal terminal is where marine shipping containers and truck trailers are physically lifted on and off railroad flatcars. The railroads traditionally built these facilities with long, train-length tracks running through a huge paved area. The terminal operator provided the huge cranes, the trucks and the personnel to hoist the containers and trailers on and off the trains rapidly and accurately.
Traditionally, the railroads operated nearly all the intermodal terminals using their own people and equipment. But a large railroad is less concerned about a sideline like intermodal terminal operations and terminal labor efficiency when there are so many greater opportunities to save or make money in their core activities.
Years before, a friend of mind had remarked that he could get rich on just the toilet paper contract for a railroad because railroads don’t manage small things very well. I had to convince the railroads that if they could not operate their terminals as efficiently as we could — and I was sure they couldn’t — they should out-source.
And so I spent the next six months on the road, begging the major railroads to try me. I even tried to buy a small existing terminal operator, but he wouldn’t sell the business.
Finally I convinced a sympathetic person at Burlington Northern to give me a little terminal in Auburn, Washington, in 1983. It was a modest beginning, to say the least, for my company, which I named Pacific Rail Services. I became the crane operator, and my office was the phone on the wall of the local Denny’s down the street. Meanwhile, the guy whose company I had tried to buy sued me, claiming he could have operated the Auburn terminal.
That only added to the pressure I was feeling. My family was in the Bay Area and I was in Washington. So we sold our house in San Francisco and rented to make ends meet. We caught a break when the landlord for our rented house went bankrupt and we lived in the house for two years rent free.
For extra money, I hired and trained some people from a temporary employment agency to run my little terminal while I began consulting for ports and railroads around the country. I designed a terminal for the Port of Tacoma, helped the Santa Fe Railroad reorganize its marketing department, and worked with equipment suppliers trying to design new products for the intermodal industry. I knew the railroad business, and, thankfully, many people were willing to pay for that knowledge.
At the same time I was constantly on the road trying to get things going for my company before I ran out of money. The Southern Pacific gave me a terminal in East Saint Louis, but it turned out to be no gift, as I was immediately plunged into the middle of a huge fight between two competing unions. Once again I found myself serving as a hands-on crane operator trying to train a new group of people to load and unload from scratch, but this time with picket lines, fist fights and sabotage all around us in the worst part of “beautiful” East Saint Louis. The local cops had far more serious priorities than some squabbling union people.
Every two weeks I’d be in the accounting office of the Southern Pacific in San Francisco waiting for my check so I could make payroll. I got to know every clerk in the accounting department to make sure there were no holdups, such as somebody in the chain becoming sick or going on vacation. I couldn’t hope that the check was in the mail. It was a good lesson in cash management but a gut-grinding experience.
As the railroads put terminals out for bid, I would put my heart and soul into each proposal. If I failed to be selected, which often happened, I was depressed and miserable for days, doubting what I was doing and thinking I should give up and get a real job.
But there were enough positives to keep going, and when a big contract would be awarded to us or when I realized I was starting to make real money I felt on top of the world.
The group of people who worked with me were the key to fulfilling all the promises I would make to our railroad customers. Some of them had been with me at Western Pacific and were recruited when I had some business. Along the trail, I made a 50-50 partnership deal with a private marine terminal operator who had the financial resources to fuel our growth. That finally got the wolves away from the door and saved me from having to chase checks. I felt that half of a large loaf was better than all of a small loaf.
Now, after 15 years on the road, a lot of successes and a few failures, we operate about 70 terminals throughout the country with about 2,000 employees. It’s certainly not glamorous, but it is fast-moving. It’s exciting to witness our people quickly loading and unloading one fast intermodal train after another.
It’s been satisfying to create something from nothing. But just as rewarding for me has been attaining some financial and psychological independence. Not only did I hate being broke, but I always feared being trapped in a situation where I would be dependent on the good graces of one person. I now feel that the management team of my company almost resents my meddling in the operations of the business, as they should.
I will be forever grateful to the many hard-working and creative people who have helped build and manage this company. Because I now have time to do many other things that I never had time for before. I’m the mayor of the little town where we live and vice chairman of the board of trustees of our local college, Dominican of San Rafael, as well as co-chair of a campaign to build a new public school with private funding. It’s a great life shared with a wonderful wife and partner and three great boys. This is success beyond my wildest dreams as a kid in Idaho.
These days when I’m on the road in some gritty railroad yard in the blowing snow, I often think about all I have to appreciate, then I imagine what lies ahead. I’m 50 and no kid any more. How can I direct myself for the rest of my years and remain productive?
I want to use what little available time I have and my somewhat limited financial resources to make a meaningful impact on individual lives, so they may benefit the way I and many others have, through education. And I want to achieve a satisfying balance of work, service and fun.
I think I’m nearing the top of the learning curve with my business. I’ll continue to nurture it and expand it as part of the railroad industry for years to come. But to grow a business or take on a challenging new opportunity is what turns me on. No caretaker role for me.
I would be very surprised if any of our boys wanted to work in this business. I have a huge model railroad that recreates in excruciating detail the railroad I knew in the 1950s. It fascinates me. But my three sons aren’t the least bit interested. Bemused tolerance would be the best description of their attitude about my work and hobbies. That may change, but I doubt it.
And that’s okay. I just want them to become so fascinated about something that they can make it not just a job but their life’s work. And that it takes them wherever they dream of going.