Union Pacific's Dick Davidson: managing a 33,000-mile factory—with no roof - Railroader of the Year - Company Profile

Railway Age, Jan, 2003 by William C. Vantuono

In late 1997, a concerned yet confident Union Pacific Railroad Chairman and CEO Richard K. Davidson stood before a collection of Wall Street analysts and journalists at a quarterly earnings presentation in New York City and pledged that the UP, which had recently through merger become the nation's largest railroad, would pull itself out of a service meltdown of major proportions. The meltdown, which followed UP's acquisition of Southern Pacific, was being called one of the worst transportation crises in U.S. history, one that was affecting the entire railroad industry. Peppered with probing questions, Davidson stood firm, stating that UP operations would within short order return to normal. He then went a step further by predicting that revenues and profits would begin to grow as the company and its customers started to realize the benefits of the merger.

By mid-1998, Davidson's promises of recovery were fast being fulfilled. Service did indeed return to normal.

It didn't take long for the growth to kick in. In 2002, in the face of a sputtering economy, the Dick Davidson-led Union Pacific posted one of its best years ever in its 140-year history.

The "33,000-mile factory--with no roof," as Davidson likes to describe it, is thundering along like a finely-tuned high-horsepower locomotive pulling a trainload of premium commodities. The track ahead is clear: The network is running more fluidly than it ever has by many measures, not the least of which is customer satisfaction. UP's financial results show consistent, steady growth, and those Wall Street skeptics that once questioned whether UP would be permanently weakened by the post-SP crisis are now betting on the railroad's future (sidebar, opposite). Capital expenditures in 2003 will again be the highest in the industry--between $1.8 billion and $2.2 billion. The railroad that once had idle freight trains clogging up key main lines has good reason to say that it's "Building America."

A steady hand on the throttle--a hand with over 40 years' experience in railroading--and the remarkable job he has done positioning UP for growth and gaining back customer confidence are why Dick Davidson is Railway Age's 2003 Railroader of the Year. The Railroader of the Year award hasn't been presented to a UP railroader since 1991, when Mike Walsh--whom Davidson credits as a mentor who helped shape his career--earned the honor.

Rising through the ranks

Dick Davidson began his railroading career as an 18-year-old brakeman at the Missouri Pacific's Council Grove, Kan., yard in 1960. He didn't come from a raifroading family. His father had passed away in 1948, when Davidson was just six, "and we didn't have a lot of money," he says. "That's why I went to work for the railroad--so I could afford to go to college."

Davidson went to work fulltime for the MoPac after college, and set a goal for himself of becoming a superintendent by age 29. "Failing that, it was my intention to go to law school. I was fortunate enough to have achieved the goal of superintendent, so I saved the world from another lawyer!" he says.

What happened soon after was one of those defining moments that helps shape a career. In 1966, Davidson accepted a position as a Texas & Pacific (which was majority-owned by MoPac) trainmaster in Fort Worth, Tex. The railroad had embarked on plans to turn the old, retarder-controlled Lancaster hump yard into a modern, computer-controlled flat-switching operation. MoPac Chairman Downing Jenks was freely interchanging management between the MoPac and T&P, integrating the two railroads prior to merger, and that's how Davidson got to Fort Worth. "Downing Jenks was one of my earliest mentors," he says.

The changeover to new technology at Lancaster Yard was a difficult exercise, says Davidson.

He was promoted to acting yard superintendent and then superintendent after his predecessor fell ill. "I had been there long enough to understand the yard, and I knew the people," he says. "I probably was no more qualified than anyone else, but I had been there a while, so management said, 'You're it.' Upgrading the yard was a huge project, and I learned a lot in a short time. We finished the conversion on time and on budget in 1971, and it became a showplace--Jenks would bring his guests and the board down to see it. So it was rather fortuitous from a learning standpoint, and because I was constantly being exposed to senior management. I've always considered that a watershed event."

The next watershed event in Davidson's career occurred soon after, when he transferred to MoPac's St. Louis headquarters as an assistant to Vice President-Operations Jim Gessner. In January 1976, at 34, he was tapped to head the operating department when Gessner left. "It was a huge responsibility for me, but we had a lot of good people," he says. "So, again, I learned on the job."

In 1982, Union Pacific acquired the MoPac, and Davidson found himself working under John Kennefick. "He was a wonderful railroader, and I had the opportunity to learn from him," he says. "He and Downing Jenks were the two people I had the opportunity to learn the most from in the business.