He Engineered Longer Life for Amtrak

By Pat Olsen

AS THE NEW VICE PRESIDENT of the central region at Union Pacific Railroad eight years ago, Alex Kummant, MBA ’90, was roused from sleep by a 2 a.m. phone call. The network operations manager told him: “You better get to the airport because this is a big one.” Two coal trains had collided halfway between St. Louis and Kansas City, after which a third barreled into the wreckage and derailed. Seventy-two cars were lying on their sides.

Kummant Luckily the on-board crews escaped with minor injuries, but helicopters were flying overhead and news crews were on the scene. “It was a reminder that the forces and masses are enormous in transportation, and the safety issues are always at the forefront,” says Kummant, who until mid-November was president and CEO of Amtrak, where he also focused on safety, including lowering the risk of terrorism.

During his two years at the helm of the 38-year-old government-owned corporation, Amtrak ridership grew to a record 28.7 million people. With fuel prices on the rise and airlines cutting back service, each Amtrak route saw increases that averaged 11 percent in fiscal year 2007, and ticket revenues rose 14 percent to $1.7 billion. The economic downturn in late 2008 caused ridership to dip a bit on the Northeast corridor, but Kummant was able to help persuade Congress and the Bush administration in October to reauthorize Amtrak for five years, making it eligible to receive up to $14 billion in federal funds for capital and operating expenditures. As he pointed out, the energy and environmental benefits are great: Passenger rail is 18 percent more energy efficient than commercial airlines and 25 percent more efficient than cars.

The reauthorization also expanded Amtrak’s board to nine members, which, Kummant says, would have made him a “lame duck” until new appointments could be made and a new majority was up and operating. In an organization that is difficult to manage anyway because the CEO’s bosses include not only the board but any congressional committee chair who decides to call a hearing, he and the current board chair decided to part company shortly after the November general election. (Some bloggers contended Kummant and the board chair had differences of opinion over how to finance infrastructure improvements, but Kummant would say only that he is a “turnaround specialist” and it was time to move on.)

A longtime supporter of rail generally, he also says he was especially pleased that the reauthorization legislation created a federal-state matching fund that allows the federal government to fund 80 percent of a state project. “This is important because it allows states to leverage their capital dollars by the same percentage that they do for highway projects.”

Two other matching funds also were created, one that would allow the secretary of transportation to mitigate rail congestion for passenger and freight trains that use the same tracks, and another to develop corridors for high-speed rail, defined as trains operating at more than 110 miles per hour. Kummant hopes that any economic stimulus package will include rail infrastructure expenditures because, he says, an improved freight system would help the United States achieve energy independence but needs infrastructure upgrades beyond the resource capability of the freight railroads.

The 48-year-old Kummant, who grew up in Amherst, Ohio, has had trains in his blood since he worked on a track crew for the short-line Lake Terminal Railroad when he was 18. He comes from a family of immigrants who had to start over many times. During the Russian Revolution, three of his grandparents had to leave Russia, after they had emigrated there from Germany. After World War II, both his parents separately fled Europe for a better life in the United States. His father’s career in the steel industry, Kummant notes, might be partly what inspired him to railroading. He earned engineering degrees from Case Western Reserve and Carnegie Mellon before enrolling in the Stanford Business School at age 28.

“Everyone joked about how we got in, and in my case it was that I was a slightly geeky engineer-type from corn-and-potato country in northern Ohio as opposed to the 500 applicants who were working at investment banks at the time,” he says. “I think people who structure these classes are looking for a blend of cultural and geographic backgrounds as well. Many of us probably felt intimidated until we realized that everyone felt that way.”

One of Kummant’s professors was Hoover Fellow John Cogan, who had been associate director in the Office of Management and Budget in the Reagan administration. In Cogan’s course on the federal budget, Kummant learned what appropriators had to deal with and still remembers an assignment to watch how a policy announcement about the budget got spun on the Sunday morning TV shows. Cogan remembers Kummant as one of two “principled and conservative” students in a class where most students had liberal leanings. “They’ve stood out as no other students in my teaching experience at Stanford, and neither of them was a shrinking violet,” he says. “Many students who disagree tend to let something go, but not Alex.”

After Union Pacific, Kummant became vice president of North American operations at Illinois-based Invensys Controls, a manufacturer of smoke alarms, thermostats, timers, and other electronic products. Chan Galbato, company president at the time, says Kummant turned the troubled appliance division around in less than a year. Besides his charisma, “Alex has a real talent in his ability to strategically assess a business and motivate a team, and he’s not afraid to make decisions,” Galbato says.

During his time at Amtrak, Kummant worked on getting new labor agreements and security and marketing improvements. To the Amtrak police department he added a counterterrorism unit and intelligence linkages, and he expanded marketing by launching special event trains to expose more Americans to rail service. Besides physical infrastructure, human resources will be an issue for Amtrak, he says, because it faces an aging baby boom workforce and a brain drain given its lower salaries for technically skilled people.

Now that Americans seem to want more rail service, Kummant said last autumn, “Amtrak is like the dog that caught the car: We have to get the organization in shape and ready to grow, spend capital, and build new services.” Besides adding trains, that means tackling aging tracks, bridges, tunnels, and overhead wiring. As he cleaned out his Washington office in November, he said he was still happy to do anything he could to help Amtrak and rail service generally but it was time to move on to the next turnaround assignment.

Just how technically and financially feasible is an Amtrak expansion, given the high cost? Very, Kummant insists.

“In many cases, we could develop intercity rail corridors in partnership with the freight railroads for less than $1 billion in capital, which is small potatoes compared to highway spending. An interchange alone can cost from $200 million to $500 million. So [with] single-digit billions in single-digit years [to complete projects], we can build meaningful rail corridors.”

Pat Olsen is a New Jersey–based journalist. Editor Kathleen O’Toole contributed to this article.

PDF Version

Stanford Business magazine

Transportation

He Engineered Longer Life for Amtrak