The CTA Doomsday Plan

[southsider2k5]

This isn't Daley's bluff - its the CTA's. And in any case, no one at the state or federal level is going to take on Hizzoner in a pissing contest. There would be no contest.

 

I do agree with you, though, that the CTA is (and has been) a clearly, badly managed agency.

 

So let me add this to my earlier proposal - the CTA only gets their share of the money if all upper management is changed over, and then any periodic funding in the future must be earned via efficiency and production measures. Have a consulting firm dig into their practices, and make sure the new management team is actually doing something positive.

 

But even with better management, CTA and the other transit agencies need more money. SS2K5 is right, we need a real push for viable, safe and reliable mass transit if we want to get people out of their cars.

 

Well Rich Daley does have a significant say in what the CTA does. The RTA board which runs the CTA, as well as Metra and Pace, has 4 people being appointed directly by the Mayor, and 4 more by Cook County, of the 13 total members. Pretty much that is eight out of the 13 people being in Rich Daley's pocket. With the way this city works, that means that Rich Daley is the one who is pulling the strings here, and no one else.

[NorthSideSox72]

Well Rich Daley does have a significant say in what the CTA does. The RTA board which runs the CTA, as well as Metra and Pace, has 4 people being appointed directly by the Mayor, and 4 more by Cook County, of the 13 total members. Pretty much that is eight out of the 13 people being in Rich Daley's pocket. With the way this city works, that means that Rich Daley is the one who is pulling the strings here, and no one else.

Actually, part of that bill was going to change that RTA board mix. More suburban reps.

 

[Rex Kickass]

If I recall, the way that Metra/PACE has been funded in comparison to CTA over the last several years has been a much higher dollar amount per rider for Metra/PACE rather than CTA, despite the fact that the infrastructure for their needs is considerably newer.

 

The CTA system is an old system, with many of the tunnels and elevated bridges rapidly approaching 100 years old. They need more money to be maintained. And they haven't been getting it.

[NorthSideSox72]

If I recall, the way that Metra/PACE has been funded in comparison to CTA over the last several years has been a much higher dollar amount per rider for Metra/PACE rather than CTA, despite the fact that the infrastructure for their needs is considerably newer.

 

The CTA system is an old system, with many of the tunnels and elevated bridges rapidly approaching 100 years old. They need more money to be maintained. And they haven't been getting it.

That was part of the bill as well - more money to CTA. But, the CTA would have a smaller percentage of control over the RTA board.

 

[southsider2k5]

That was part of the bill as well - more money to CTA. But, the CTA would have a smaller percentage of control over the RTA board.

 

Well good. Hopefully both of those things happen, because they need it. All you have to do is take a CTA bus or El to know that.

[NorthSideSox72]

Well good. Hopefully both of those things happen, because they need it. All you have to do is take a CTA bus or El to know that.

Well, that bill passed, but not with a super-majority to get past Blago's veto. So things are still stuck.

 

The Illinois House doesn't reconvene until this Monday (9/17) I believe, which is the same day that CTA enacts the Doomsday plan, as they call it. So even if they can craft a new bill that Blago will actually sign (or that they can get through with a super-majority), you will undoubtedly still have at least a week of CTA nightmares.

 

[Cknolls]

Real reform would include reforming the cushy union contracts and pensions that are not only ruining the CTA but also the state budget and county budget. These people should have to pay for their healthcare like everyone else. Retired CTA workers get 100% healthcare for their entire families for life. Major problem.

[Jenksismyhero]

Real reform would include reforming the cushy union contracts and pensions that are not only ruining the CTA but also the state budget and county budget. These people should have to pay for their healthcare like everyone else. Retired CTA workers get 100% healthcare for their entire families for life. Major problem.

 

 

How dare you! Free healthcare is a right, not a privelege!

 

Oops, wrong thread.

[Gregory Pratt]

Real reform would include reforming the cushy union contracts and pensions that are not only ruining the CTA but also the state budget and county budget. These people should have to pay for their healthcare like everyone else. Retired CTA workers get 100% healthcare for their entire families for life. Major problem.

 

If that is true -- I've asked around -- that is remarkable and bad,.

[Balta1701]

If that is true -- I've asked around -- that is remarkable and bad,.

Yeah, they should have to die when they get sick just like everyone else...

 

Just another reason why it's totally insane to have businesses on the hook for the health care for their employees.

[NorthSideSox72]

Real reform would include reforming the cushy union contracts and pensions that are not only ruining the CTA but also the state budget and county budget. These people should have to pay for their healthcare like everyone else. Retired CTA workers get 100% healthcare for their entire families for life. Major problem.

I agree that should stop. But, you can't stop it for those already in the system - in other words, you can't pull a government version of an Enron. I would be all for stopping it for all new employees, though. And for buying out people's pensions if they so choose. In that way, the costs would go down over the years.

 

[NUKE_CLEVELAND]

The airline and auto industries served as a fine examples of what's to come for union members in the not too distant future. Simply put, companies and governmental agencies can no longer afford the lavish benefits given to its union workforces anymore. This will result in very painful reductions in benefits for those involved.

[Rex Kickass]

At the airlines?

 

Look at what happened at Northwest and United? They asked the unions to take huge paycuts to survive, and when the airline exits bankruptcy, the same execs threatening to shut the airline down take multimillion dollar bonuses as they exit the company and Jane Flight Attendant? Working for 30% less than they were three years before.

 

The airlines are a bad example of blaming the unions, because labor has been generally extremely flexible with management to keep people working and moving.

[southsider2k5]

At the airlines?

 

Look at what happened at Northwest and United? They asked the unions to take huge paycuts to survive, and when the airline exits bankruptcy, the same execs threatening to shut the airline down take multimillion dollar bonuses as they exit the company and Jane Flight Attendant? Working for 30% less than they were three years before.

 

The airlines are a bad example of blaming the unions, because labor has been generally extremely flexible with management to keep people working and moving.

 

The airlines are a good example actually. The unions didn't have much choice to comply or not, because if they didn't they were going to be liquidated. The choice between 70% of your pay and nothing is usually pretty easy.

 

If you want another good local example, you can look at the steel industry.

[Rex Kickass]

Except, look at what happened after - the people "managing" the bankruptcy walked away with multi million dollar deals and the flight attendants/pilots/mechanics who don't really make that great money to begin with, walk away with 30% less.

 

Workers concessions might have saved the company at that moment, but that wasn't the cause of the poor financial performance of most of these airlines. That had a lot to do with a combination of poor customer service (usually off aircraft), poor route management, an increase in fuel, a downturn in travel following Sept 11.

[southsider2k5]

Except, look at what happened after - the people "managing" the bankruptcy walked away with multi million dollar deals and the flight attendants/pilots/mechanics who don't really make that great money to begin with, walk away with 30% less.

 

Workers concessions might have saved the company at that moment, but that wasn't the cause of the poor financial performance of most of these airlines. That had a lot to do with a combination of poor customer service (usually off aircraft), poor route management, an increase in fuel, a downturn in travel following Sept 11.

 

I know that you keep mentioning the MULTI MILLION DOLLAR DEALS, but I don't think you realize that these kind of things are pretty standard bonuses for companies emerging from bankruptcy. For management teams to stay on board during a bankruptcy, there has to be some kind of incentive. Bankruptcies, while sounding quite sexy by TV lawyer standards, are pretty much hell on earth for a companies management team. They lose all financial control of their company and are pretty much at the mercy of lawyers, judges, and creditors. The big payoffs are offered to management to not leave the company during the proceedings, otherwise there would be no one running a company in bankruptcy, because it isn't worth it otherwise. Without these carrots to management, all of these employees would be walking the unemployment lines, instead of just some of them.

 

FWIW, I did a google search on "management bankruptcy bonuses" and got Delphi, Delta, Dana, Tweeter, a hospital in Brooklyn and Ernon all on the first page. As I said it is a pretty standard thing used to keep key people around.

[Balta1701]

Just because it's a standard thing doesn't make it the right thing, nor does it mean that those folks actually deserve it or have actually earned it.

[NUKE_CLEVELAND]

Just because it's a standard thing doesn't make it the right thing, nor does it mean that those folks actually deserve it or have actually earned it.

 

 

Well, if you want top talent to stay then you have to pay them. Why would they want to stay on a sinking ship when they can quit and join a company that is actually doing well?

 

[southsider2k5]

Well, if you want top talent to stay then you have to pay them. Why would they want to stay on a sinking ship when they can quit and join a company that is actually doing well?

 

Seriously. If you were a CEO, or any upper level manager, and were going to get the same compensation at a company in bankruptcy, or a company with solid earnings, where would you go? And please do not tell me that you would take the problematic company!

[Rex Kickass]

Most of the "top talent" didn't stay.

[Balta1701]

Well, if you want top talent to stay then you have to pay them. Why would they want to stay on a sinking ship when they can quit and join a company that is actually doing well?

Here's the question though...if you pulled a bum off the street and offered him $400k, or just at least picked a person at random with an average education...or best yet...picked a person who was moderately qualified but for whom that position was a promotion...could they do well enough that the difference between the performance of the 2 CEO's would be less than the salary difference.

 

I.e. if it costs me $25 million a year including severance packages or something like that for a big name CEO fixer guy, and $500k to just promote someone from upper management who's familiar with the company, is the difference between the 2 worth $24.5 million? (of course, $25 million probably being on the low end of CEO compensation packages these days).

 

IMO, due to the corporate board room mentality, this is something that just isn't considered at all these days. Board members hire people of their own standing because it's developed into such a "you scratch my back, I'll scratch yours" system where everyone knows everyone and protects everyone at the expense of many businesses. Therefore, it's never evaluated whether or not this "top talent" is actually worth what is paid for it, it's just claimed that you must attract "Top talent" without evaluating whether or not it's actually worth it.

[southsider2k5]

Most of the "top talent" didn't stay.

 

Trust me when I say this. When the going gets tough, 99% of people will abandon an organizaiton, if all other things remain equal. I am telling you this from first hand experience from something going on as we speak. The more people that leave you, the harder it is to fix an already failed entity. The more people you can retain or attract, the better your chances for avoiding complete liquidation. If the only attraction to your group is through the good of people's own hearts, you are doomed to failure. If you are not willing to pay much better than another company offering people a much better situation, your company will cease to exsist.

[southsider2k5]

Here's the question though...if you pulled a bum off the street and offered him $400k, or just at least picked a person at random with an average education...or best yet...picked a person who was moderately qualified but for whom that position was a promotion...could they do well enough that the difference between the performance of the 2 CEO's would be less than the salary difference.

 

I.e. if it costs me $25 million a year including severance packages or something like that for a big name CEO fixer guy, and $500k to just promote someone from upper management who's familiar with the company, is the difference between the 2 worth $24.5 million? (of course, $25 million probably being on the low end of CEO compensation packages these days).

 

IMO, due to the corporate board room mentality, this is something that just isn't considered at all these days. Board members hire people of their own standing because it's developed into such a "you scratch my back, I'll scratch yours" system where everyone knows everyone and protects everyone at the expense of many businesses. Therefore, it's never evaluated whether or not this "top talent" is actually worth what is paid for it, it's just claimed that you must attract "Top talent" without evaluating whether or not it's actually worth it.

 

You realize that what you are saying is the baseball equivilent of saying we should bring a random pitcher up from A ball, release Mark Buehrle, and cut the ticket prices for the fans.

 

In reality, I probably should wait for Kap to get back here to take on this subject in a little more detail, because I would be willing to bet that he is the only guy on this site who has actually been through the management side of a coroporate bankruptcy, and more specifically, for an airline.

[Rex Kickass]

Earlier this year, Northwest exited bankruptcy.

 

From it's pilots, it extracted a 15 percent pay cut, followed by a further 24 percent pay cut.

 

Upon exiting bankruptcy, it awarded its CEO compensation totalling $26.6 million. (That's a little over 4% of the total annual concessions that the pilots over the whole airline made)

 

If you were being asked to take a cut in pay to save the company, how would you feel if every 20th dollar you gave up went straight into the wallet of the guy who threatened to take your job away from you if you didn't take a pay cut?

 

If it wasn't "good business," it'd feel a lot like extortion to me.

[BigSqwert]

From the Trib:

UPDATE: The CTA's top officials this afternoon accepted a short-term funding bailout proposed by Gov. Rod Blagojevich to avert fare increases and service cuts set to take effect Sunday and Monday, but unless new funds are obtained the agency's "doomsday" scenario will still take place in November.