CHICAGO -- The Illinois Central Gulf was one of those railroads that inspires songs. Casey Jones was an Illinois Central engineer and the legendary streamliner City of New Orleans inspired Steve Goodman to write the song of the same name.
In the years after World War II -- before it became ICG in the merger with the Gulf, Mobile & Ohio in 1973 -- the Illinois Central was the "Main Line of Mid-America," with its 100-mph "speedway" south from Chicago to New Orleans and a web of east-west lines that hauled coal from Kentucky, meat from Iowa and chemicals from Shreveport, La. The IC was a model for the industry.
But the sons of Pullman porters and the sons of engineers woke up one morning to discover that the passengers had long since taken to the highways and the air, and the freight increasingly was leaving for trucks and other railroads. Profits fell, maintenance was deferred, and the rumor circulated that the ICG was nearing bankruptcy.
Today, it's a different story. The ICG has transformed itself by getting rid of two-thirds of its track, either through abandonment or sales to entrepreneurs who have formed largely successful smaller regional railroads and short lines.
And now, ICG Chairman Harry J. Bruce says that unless he can get sufficient labor concessions, he will sell the rest of the railroad, either in one piece or in several pieces to entrepreneurs or to other railroads.
Bruce likely would find a buyer. And that's a far cry from a decade ago. When the railroad was put on the block in the late 1970s, there were no takers.
"We were a fat girl looking for a dance partner at the prom, and we weren't very attractive," Bruce said.
But just as the Illinois Central set the pace for the passenger train decades ago with the Panama Limited and the City of New Orleans, today the ICG is setting the pace for a restructuring of the railroad system.
The remaining pared-down ICG is in better shape, physically and financially. Essentially, the ICG is selling itself to save itself. In four years, the ICG has shrunk, through sales or abandonment, from a 9,600-mile system to roughly a 3,000-mile core railroad between Chicago and New Orleans.
ICG has divested all of its east-west lines and most of its branch lines into new regional railroads. The first was the Gulf & Mississippi, a 713-mile collection of branch lines in Mississippi, followed by the 686-mile Chicago Central & Pacific from Chicago to Omaha, the 305-mile Paducah & Louisville between its namesake cities, the 418-mile MidSouth Railroad between Shreveport and Meridian, Miss., and finally, on April 28, the most ambitious of the sales -- the 633-mile Chicago, Missouri & Western Railway between Chicago, St. Louis and Kansas City, Mo.
Bruce said that in an era of deregulation and competition, the ICG could not compete for east-west traffic against either the truckers or such newly merged east-west giants as the Burlington Northern and the Union Pacific. So he set about to cut ICG back to its north-south core.
In the process, ICG has earned $390.7 million for its parent company, IC Industries, more than the entire railroad was considered to be worth several years ago. And Bruce has a stronger core railroad.
The question facing Bruce now is whether to continue to operate the Chicago-New Orleans core system or to sell it.
Without relaxed union work rules, he said, the remaining railroad is not only for sale as a whole, but he may split the Chicago-New Orleans core into pieces and continue to sell the railroad out of existence piecemeal. A lot will depend on planned talks with his unions.
"The entire body is for sale. . . . It could be one of the major railroads. Or it could be a very substantial entrepreneur group that would come along," Bruce said. "On the other hand, I may find it useful in talking with the unions that we make an agreement that we do no more line sales if we can get the kind of work rules we need.
"But if I can't get to where I want to go one way or another, I'm going to keep picking away at this until my job is finally completed. We'll just keep selling the core."
So far, all of Bruce's spinoffs are doing well. The MidSouth is doing so well so quickly that Shearson Lehman Bros. Inc. has called it "one of the most efficiently run railroads in the U.S."
Other major railroads are getting into the act. Several weeks ago, Burlington Northern President Darius W. Gaskins said that his railroad, the nation's largest, plans to sell 2,000 miles of line this year to 10 new operators. CSX Transportation also is well into a line-sale program, and the Soo Line just sold a 2,000-mile chunk to one operator, forming by far the largest of the new regional railroads.
Most observers say they do not think that other railroads will go as far as the ICG.
"I don't think we're going back to the 1880s when there's a railroad for every town," said James W. McClellan, director of corporate development for Norfolk Southern Corp., which is interested in only a limited program of spinoffs.
But "I think it's a very powerful trend," McClellan said. "I think it's going to continue." -- Don Phillips