July 29, 2013

'My mission failed': Rail chief admits mistakes in disaster's wake

Ed Burkhardt's missteps after the deadly July 6 train explosion in Lac-Megantic made him one of the most reviled people in Canada.

By Tom Bell tbell@pressherald.com
Staff Writer

As a boy growing up in Queens, a borough of New York City, Ed Burkhardt would sneak onto the trains in the nearby rail yards and ask engineers for rides in the cab. In high school, he worked one summer driving spikes with a sledgehammer with a track gang with the Great Northern Railroad in Washington state.

Ed Burkhardt
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Ed Burkhardt was jeered when he spoke in Lac-Megantic on July 10.

Reuters

Ed Burkhardt
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Ed Burkhardt, chairman of the Montreal, Maine & Atlantic Railway, is surrounded by media representatives after arriving in Lac-Megantic, Quebec, on July 10. Burkhardt, the head of the company whose oil-tanker train killed 47 people when it exploded in the small Quebec town, heard cries of “murderer” from furious town residents.

Reuters

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After college, he became a railroad executive. By the time he turned 60, Burkhardt was praised as a leader of the renaissance in small and regional freight railroads in the United States and the privatization of state-owned railways around the globe.

One magazine called him "Railroader of the Year" and another "one of the 16 Railroaders of the Century."

Recently, another Burkhardt success story was in the works in Maine. A struggling little railroad that he had been trying to revive for the past decade had finally begun making money thanks to its new cargo: crude oil.

On July 6, one of the company's trains, a riderless "ghost train" as it is now known, rolled down a hill and crashed in a terrible explosion in a small town in Quebec near the Maine border.

Although not all the bodies have been found, authorities believe 47 people are dead, making it the worst train disaster in Canada in more than 100 years.

Now age 75, Burkhardt is fighting to save a railroad that stands on the edge of financial ruin and at the center of a criminal investigation.

His critics say his response has been so tone-deaf that he has managed to turn Canada's 35 million people against him.

In an interview with the Maine Sunday Telegram late Friday, Burkhardt defended his management of the railroad, the Montreal, Maine & Atlantic Railway, and controversial cost-cutting measures, saying safety has always been his top priority. But he also for the first time admitted to mistakes in his public handling of the disaster.

While he understands that people are angry and need to vent, Burkhardt said, the public has turned him into a caricature that is all wrong.

"I don't think that's me," he said. "People are painting me as some sort of Jack the Ripper. I don't think that fits, and I don't think people who know me think that it fits."

CELEBRITY STATUS

After graduating from Yale University, where he studied industrial administration and rail operations, Burkhardt worked as an executive for the St. Louis-based Wabash Railroad and then for the Chicago & North Western, one of the largest railroads in the country at the time.

His celebrity status in the industry came after he purchased a network of rundown tracks from the Canadian Pacific in 1987 and turned it into a thriving regional railroad he called Wisconsin Central. He was ousted 12 years later after losing a power struggle with other board members.

That's when he formed Rail World Inc., a railroad consulting company, which despite its grand name consists of Burkhardt and four employees at a modest office in Rosemont, Ill.

Over the past two decades, Burkhardt has been involved in the privatizing of railroads in New Zealand, England, Australia, Estonia and Poland.

In 2003, he led a consortium of investors in buying the Montreal, Maine & Atlantic Railway, which operates in Maine and Quebec and also serves customers in Vermont just south of the Quebec border.

Although Burkhardt last year gave up all ownership stakes in the company, he is still chairman of the board. He said the company is owned by about 20 anonymous shareholders and operates as an independent company based in Hermon, outside Bangor.

The railroad's fleet of 21 locomotives must roll through long stretches of empty forests to reach its scattered customers. Like most short-line railroads, its margins are tight. But this railroad faced plummeting revenues right from the start. In 2003, shortly after Rail World bought it out of bankruptcy, one of its biggest customers, the original Great Northern Paper Co., which ran mills in Millinocket and East Millinocket, declared bankruptcy.

The "deindustrialization" of Maine -- the decline in the state's paper and lumber mills -- and the overall stagnant economy of the state have made it difficult for the railroad to make a profit, Burkhardt said. The recent boom in oil transportation, however, had boosted revenues enough for the company to make upgrades in its infrastructure, he said.

Until the accident, the Montreal, Maine & Atlantic Railway had been hauling about a half million barrels a month through Quebec and Maine, bound for the huge Irving Oil refinery in Saint John, New Brunswick

Burkhardt's success during his career was built on his attention to his customers' needs, cost-cutting and improving operational efficiency, said George Betke, who lives in Damariscotta and owns three short-line railroads, two in Oklahoma and one in New York state.

At the Montreal, Maine & Atlantic Railway, Burkhardt replaced two-man crews with one-man crews. New remote-control technology allowed an engineer to control a train's movements from the ground.

Although the use of one-man crews has not been identified as a cause of the accident in Lac-Megantic, Quebec, the Canadian government last week ordered that all trains operating in Canada and carrying hazardous cargo have two crew members.

The union that represents Maine workers on the Montreal, Maine & Atlantic Railway is launching a campaign to ban one-person crews in the United States, calling the practice dangerous.

SAFETY RECORD DEFENDED

Burkhardt's critics say he has failed to maintain rail lines elsewhere, and point to an accident in Weyauwega, Wis., in 1996, when a Wisconsin Central Railroad train loaded with propane and gasoline derailed, forcing the evacuation of 3,000 residents and setting off a fire that burned for two weeks.

The National Transportation Safety Board blamed the accident on a broken switch and improper maintenance because the railroad didn't ensure that employees who inspected the line were trained properly.

Burkhardt has dismissed criticism that he skimped on maintenance, explaining that he completely rebuilt the railroad during his tenure as the company's chief executive and president.

Burkhardt said he did his best to promote safe practices at the Montreal, Maine & Atlantic Railway.

"I worked hard in my small way to establish a good safety culture," he said. "Absent this disaster, the results show this effort."

The railroad experiened an average of 27 accidents per year during its first three years of operation, but from 2006 to 2012 the accident rate improved dramatically, ranging from two to eight a year, according to data collected by Canadian and U.S. regulators. Most were relatively minor incidents without spills or injuries.

In Estonia, where Burkhardt oversaw a railroad that was a "pipeline on wheels" because it moved Russian crude oil to seaports in Estonia, Burkhardt began every board meeting with a discussion about any instances of personal injuries, said Henry Posner III, who was a partner in the venture between 2001 through 2007.

He said Burkhardt's approach was to change the culture from the top down. During that period, he said, accidents resulting in injuries declined by 75 percent.

The safety practices of the Montreal, Maine & Atlantic Railway will now come under intense scrutiny. The company already faces a number of wrongful-death lawsuits in the disaster. Quebec police Thursday searched the railroad's offices in Farnham, Quebec, to collect undisclosed evidence for a criminal investigation.

PUBLIC RELATIONS DISASTER

Burkhardt first heard about the catastrophe in Lac-Megantic on a phone message after waking up that morning at his home in a wealthy suburban enclave outside Chicago.

His performance over the next few days will be studied in public relations programs at universities for years to come as an example of how to do everything wrong during a crisis, said Melissa Agnes, a crisis management consultant in Montreal.

Burkhardt created the impression that he didn't care about the devastation his railroad had caused, she said.

"I do believe he cares," she said. "He just wasn't prepared to deal with the magnitude of the crisis."

Burkhardt's first mistake after the accident, his critics say, was to issue a news release in French that was so poorly translated that many people assumed it was done by Google's online translation service. Burkhardt later explained that his company couldn't immediately find a translator so it relied on an employee whose French "was not very good."

His second mistake was to wait four days to visit Lac-Megantic. While Burkhardt later said he was more effective managing the crisis from his company's headquarters in suburban Chicago, his critics say his absence made him appear heartless.

Burkhardt also appeared to shift blame around based on speculation. He first said the train was tampered with, then suggested that the engine's brakes may have been released by firefighters who responded to an engine fire while the train was parked outside of Lac-Megantic, shortly before the accident.

When Burkhardt did come to town on July 10, he apologized, but he also fingered the Canadian engineer for apparently failing to set an adequate number of brakes.

Canadians didn't like seeing an American rail baron blaming the disaster on an employee, said Daniel Coulombe, editor of the Sherbrooke Record, a daily English language newspaper in southern Quebec.

"He totally threw him under the bus," Coulombe said.

Burkhardt's missteps have made him one of the most reviled people in Canada, Coulombe said. "He's right below the Grinch."

On the issue of public relations, Burkhardt agrees with his critics that he made mistakes. Even some of his biggest fans agree.

Burkhardt's direct manner of speaking and his upbeat, can-do attitude -- qualities that worked so well for him when running a railroad -- failed him when dealing with the media during the crisis, said Betke, of Damariscotta.

"He has never been a guy to pull punches," Betke said. "Ask him what he thinks, and he will tell you what he thinks. In this instance, he said too much, too soon."

Burkhardt's supporters say he showed a lot of courage when he walked down the streets of Lac-Megentic to apologize to the town's residents.

"That's Ed -- a very upfront, honest, call-it-as-it-is kind of guy," said retired railroad executive Chris Burger, who worked under Burkhardt at the Chicago and North Western.

Burkhardt didn't hide behind public relations experts or lawyers, said Chalmers "Chop" Hardenbergh of Freeport, who publishes Atlantic Northeast Rails & Ports, a trade publication.

"He came to Lac-Megantic and spent three-quarters of an hour answering everybody's questions and was forthright about it," he said.

While some give Burkhardt credit for showing up, he did more harm than good, said Stephen Ewart, a columnist for the Calgary Herald.

"Being honest and being forthright is good," Ewart said. "But speculating wildly if you really don't know is dangerous. Only say what you know. If you assume things, you are really asking for trouble."

Burkhardt now says he had thought that his straight-talking style would be more appreciated in Lac-Megantic than a "slick, don't-say-anything PR attitude."

He said he traveled to the town to express solidarity with the people and tell them how devastated he felt personally about the disaster.

But he said he was unprepared for the rush of reporters who encircled him in the street and the screams and shouts of the residents, some of whom called him a murderer.

It was more like a riot than a news conference, Burkhardt said.

"I was frightened," he said. "I didn't think I could get out of there."

While critics say he visited the town too late, Burkhardt said he may have traveled there too soon. Other top officials from the railroad had been at the scene immediately after the accident. He said he thought he could be most helpful working the phones from his office in Illinois. Considering how badly he performed, he said, he might have done better to stay away for a few more days until people's anger subsided.

"The fact is, my mission failed," he said. "I have a thick skin. I am a big boy. I went up to do my best under a bad situation. It didn't work."

Meanwhile, the railroad is now on a death watch.

While Burkhardt and other railroad officials deal with the insurance company and government officials, they must at the same time oversee efforts to remove wrecked cars from Lac-Megantic and clean up the spilled oil

The company has lost the bulk of its freight business because it's been cut in two. Trains can no longer travel between Maine and Quebec because the rail yard in Lac-Megantic is classified as a crime scene.

Given the reduced cash flow, mounting cleanup costs and huge legal liabilities, some industry observers say they can't see how the railroad can avoid bankruptcy for much longer.

When asked if the the railroad can survive, Burkhardt replied, "That's part of what we are considering right now. I am not prepared to comment. Decisions haven't been made."

Then, reverting to his habit of plain speaking, he added: "I can say this: It's a real hill to climb."

Tom Bell can be contacted at 791-6369 or at:

tbell@pressherald.com

Twitter: TomBellPortland

 

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