A long-anticipated decision is imminent on a successor to L. Stanley Crane, the man who led Conrail down an arduous path from government stewardship to financial health.
Crane, the chairman of the Philadelphia-based freight rail system since 1981, said selection of the new Conrail chief executive -- from a field of six serious candidates inside and outside the company -- is likely to be made within the next two months. In a wide-ranging interview aboard a Conrail inspection train rolling through West Virginia and Ohio, Crane expressed confidence that the railroad is in good shape for whatever the competition and the economy can throw at it.
Most industry analysts agree that Conrail, which dominates freight service in the Northeast and Midwest, will be in excellent financial shape when the new chairman takes the throttle.
That judgment is a tribute not simply to Crane, according to the chairman and other observers, but to Conrail's mixture of different types of freight, its skill in marketing, a host of good managers and its proven cost-cutting skill. When Conrail was a ward of the federal government during the late 1970s and early 1980s, it was forced to learn to trim expenses and attract new business.
When Crane retires, it will be the second time in a long railroad career that he leaves a top executive post.
Crane came to Conrail three months after ending a 40-year career at the Southern Railway System. He was chairman of the Southern, which later merged with the Norfolk & Western Railroad to form Norfolk Southern, when he reached its mandatory retirement age of 65.
When Crane arrived, Conrail had been losing huge sums for five years and had far more employes and track than it needed for a shrinking amount of business. The Reagan administration was calling for its breakup.
Crane immediately went to work to persuade Congress and Conrail's labor unions that the company could survive and prosper, but only with dramatic cost-cutting moves. Congress cooperated with passage of the Northeast Rail Services Act, labor made wage concessions and the company's management was inspired to aggressively sell Conrail services and operate the railroad more efficiently.
From 1983 through mid-1986, Crane battled the Department of Transportation over its contention that Conrail could not stand on its own as an independent railroad. Congress eventually rejected the administration's proposal to sell Conrail to Norfolk Southern and supported a public stock offering to return the company to the private sector.
Crane's successor will come on board at a time of economic uncertainty, with many economists saying a recession could occur in 1988.
Although recessions are a concern for railroads, because their traffic -- and especially Conrail's -- follows business cycles, analysts say that Conrail is better-positioned than most other big railroads to weather a downturn.
So despite recession worries, Conrail's stock is on the "buy list" of several Wall Street analysts. The stock sold for $28 a share when Conrail went public March 26 and traded as high as $40 last summer and as low as $19.875 after the October market crash. It closed yesterday on the New York Stock Exchange at $29.62 1/2.
One reason, the analysts say, is that the Northeast, whose industrial decline helped drag down Conrail's traffic for so many years, now is in good economic health.
Conrail also stands to benefit from improved prospects for U.S. manufacturers. The fall in the value of the U.S. dollar against other currencies has made U.S.-made goods much more competitive, both in the United States and abroad. And Conrail's territory is a strong base for manufacturing.
"The Northeast's economy has gained strength relative to other regions, and the shift in the mix of economic strength from the consumer to industry favors rails," Goldman Sachs & Co. analysts said in a recent report recommending purchase of Conrail stock.
"Continued growth in international trade also has helped Conrail's traffic, particularly since the densely populated Northeast is the final destination for a disproportionate share of imports from the Far East and Conrail is the principal connection for western rails that haul imported, containerized traffic from West Coast ports."
In addition, although deregulation of railroads and trucking has increased competition and helped hold down shipping rates in recent years, Conrail has proven adept at pricing its services to make money while still challenging truckers, the Goldman Sachs report noted.