Why are so many PA operations foundering?

The state of PA is having a summer of poor tourist railroad developments. Strasburg, Kempton, New Hope and a few others seem to be doing OK. Then you have the aslo rans including:

EBT fiasco
SteamtownÂ’s late season start
Stourbridge LineÂ’s near death experience
AltoonaÂ’s fall
K-4 boondoggle

The common theme of all five, as reported in the media, is a lack of cohesive management and marketing. In other words: lack of common business sense.

In all five examples, the people receiving the MOST negative impact are the visitors. ThatÂ’s what really scares me. ItÂ’s one thing to have contractor issues, slow orders, substitute equipment or a lame duck director. ItÂ’s an entirely other animal when these things add up to impacting the people who come or want to come. Railfans get over things quickly. The general public may not. If Clark Griswold shows up at Steamtown and doesnÂ’t get a steam engine, well, thatÂ’s a problem.

WhatÂ’s more is that these operations do not seem to be marketing themselves in a manner that will draw the family trucksters into the parking lot. For all the GriswoldÂ’s of the world there needs to be a benefit statementÂ… a promise of entertainment, education or both.

They want Clark's money. Clark wants something worth paying for. It's that simple.

All operations, and especially these troubled operations, need to take the risk and truly develop an experience that they want visitors to have. Then they have to sell it AND deliver it. Management needs to watch the bottom line and make sure the P&L is going to allow the promise to be delivered.

The second there are storm clouds, the management needs to fix the P&L, seek funding, and do whatever it takes to still deliver the promise.

Clark Griswold and his family will judge the attraction by how much they market a promise and how much they live up to it.

Steamtown is back in the railfan-bashing news again. I still canÂ’t figure out if this is because anything is really different, or if the recent tremendous progress downstate (and on both sides of the road) in Strasburg is helping it seem like Steamtown is slowing down. Railpace rips the NPS a newer new one in the most recent editorial. Is it deserved? I donÂ’t know. I am way too far removed from Steamtown to offer a opinion worth its weight in coal.

I do agree with the Railpace editorial that SteamtownÂ’s marketing has not been visible as of late. Of course, I donÂ’t judge a museumÂ’s ad campaign by what the railfan market sees. We are too tiny a segment to really matter at the turnstiles. That said, I have not seen much of a tourist-oriented push.

I humbly offer that on the five PA examples, there has been no “benefit plan” for the public, nor has there been a business plan tight enough to build long-term planning on. In the business world, not pleasing the customer and not having a P&L plan is a death knell.

Should we be surprised when those same rules apply to railroad museums?

Rob Davis
Vice-President of Opinions


Ahead of the Torch
trains@robertjohndavis.com

> Why are so many PA operations foundering?

> EBT fiasco
> SteamtownÂ’s late season start
> Stourbridge LineÂ’s near death experience
> AltoonaÂ’s fall
> K-4 boondoggle

It doesn't suffer from quite the same ills, but to this list you can add the closure of Kinzua Viaduct, which pretty much knocks out the "unique selling proposition" of the Knox & Kane. Whether it can be repaired at reasonable cost will certainly have a bearing on the long-term prospects for the K&K.

Dan Cupper
Harrisburg, Pa.


cupper@att.net

Moreso than in any other state as we learned at the convention at Steamtown a couple years back. The genius of getting 19 (I think) railroad based attractions together to market through a single sell as the Pennsylvania Railroad History Trail hasn't been done in any other state to my knowledge.They even got the state to print and distribute brochures for them!

Unfortunately that seems to be where the management skills stopped regarding many of the examples you reference. We do need to provide the public what they demand or we deserve to go out of business.

Dave



irondave@bellsouth.net

> Why are so many PA operations foundering?

> The state of PA is having a summer of poor
> tourist railroad developments. Strasburg,
> Kempton, New Hope and a few others seem to
> be doing OK. Then you have the aslo rans
> including:

> EBT fiasco
> SteamtownÂ’s late season start
> Stourbridge LineÂ’s near death experience
> AltoonaÂ’s fall
> K-4 boondoggle

Agreed with all, but I'd also point out that in this list we really have two different phenomena at work.

EBT's situation is unique, but in general it can be classed with Knox and Kane and Stourbridge as operators confronting the increasingly challenging economics of the small tourist railraod trade. Equiptment, inherited in more or less good order 40 years ago, is now thoroughly depreciated. Insurance costs are way up. For steam operators, part 233 compliance is a must. Competition for the overall discreationay tourist dollar is hot, and the economy is slowing.

Factors like these are calculated to winnow the filed, and I expect to see a lot more culling in the months to come, and not just in PA. Unless a tourist operation can earn its operating costs and its costs of capital reinvestment (Strasburg) or unless it can earn its operating costs and some of its costs of capital and strike a relationship with a frieldly government agency or agencies for the rest of its capital needs (Valley RR as J David illuminatingly explained a few threds down), eventually the numbers will catch up with it.

Altoona and Steamtown are in a different class of problems and opportunities. Here in each case you have ambitious goals, strong access to public funds, but also expensive and expansive facilities which need to draw at a pretty good rate to be economically viable. THe economic challenge is more similar to that of any other large cultural attraction (a symphny hall or an art musemum for example) than the economic challenge facing the day to day small RR operator.

In either case, however, all the same things Rob lists as requirements apply--in a nutshell, leadership. A coherent vision, an attractive visitor experience, good (though not necessarily expensive) marketing, and a hawk eye on the P&L and finances.

eledbetter@rypn.org

> Agreed with all, but I'd also point out that
> in this list we really have two different
> phenomena at work.

I would agree with Erik's comments, and add that Pennsylvania probably has more major rail attractions than any other state and thus it is not suprising that, statistically, it would also appear to have more that are in some sort of trouble.

Altoona, the K4, and Steamtown all had vast amounts of public money invested. There are both benefits and burdens that come with such dollars, including (especially in Pennsylvania) a tendency towards political meddling.



AMaples@aol.com

Dave,

You are right... PAorganizations have a history of publishing great "trail" brochures. There used to be a wonderful one for remaining coal breakers (this was about 15-20 years ago).

Not many states have had a brochure for abandoned industries!

As you say, a coordinated brochure is nice, but it does not pay the bills or cure management ills. It should be element 25 of 25, not element 1 of 3.

Rob

> Moreso than in any other state as we learned
> at the convention at Steamtown a couple
> years back. The genius of getting 19 (I
> think) railroad based attractions together
> to market through a single sell as the
> Pennsylvania Railroad History Trail hasn't
> been done in any other state to my
> knowledge.They even got the state to print
> and distribute brochures for them!

> Unfortunately that seems to be where the
> management skills stopped regarding many of
> the examples you reference. We do need to
> provide the public what they demand or we
> deserve to go out of business.

> Dave


Ahead of the Torch
trains@robertjohndavis.com

Good points, Erik. It would be very interesting to actually see what the stated goals of Altoona and Steamtown are for next year and were for last year. That might be a real eye opener.

Rob

> Altoona and Steamtown are in a different
> class of problems and opportunities. Here in
> each case you have ambitious goals, strong
> access to public funds, but also expensive
> and expansive facilities which need to draw
> at a pretty good rate to be economically
> viable. THe economic challenge is more
> similar to that of any other large cultural
> attraction (a symphny hall or an art musemum
> for example) than the economic challenge
> facing the day to day small RR operator.


Ahead of the Torch
trains@robertjohndavis.com

Alan,

The political atmosphere Steamtown lives in is very strange, to say the least. City politics in Scranton would make for a great Sopranos story line, while the federal side might appear on a new show "Without Law & Order."

It certainly has impacted the good people at the park that have worked so darn hard all these years. And it's 15 years or so now since the park became an NPS property.

Scranton is still trying to decide if it wants to market its past, or forget about it. The wanton demolition of historic buildings still takes precedent over rehabilitation. By far, Scranton has had more historic structures willingly destroyed in the past 20 years than any other northeastern city (and perhpas more than any other US city).

Many times, the nepotisim and handshake dealings have had the smell of impropriety, though charges and convictions are few.

Sad part is, more has been carried out this year and more is planned, including the headquarters of the gravity rr and coal pioneer Pennsylvania Coal Company (which technically is next door in Dunmore).

Steamtown has to bear the burden of saving the past while its host city buries it. It is not an enviable position.

Rob

> Altoona, the K4, and Steamtown all had vast
> amounts of public money invested. There are
> both benefits and burdens that come with
> such dollars, including (especially in
> Pennsylvania) a tendency towards political
> meddling.


Ahead of the Torch
trains@robertjohndavis.com

Hi Rob,

I think your post is very thought provoking and begs expansion to the larger context.

As many knowledgable people have pointed out on this very page, the industry - and by that I mean the Tourist RR/Operating RR Museum business - faces many challenges. (Non-operating museums are intentionally excluded from this discusion.)

A partial list includes:

- Lack of affordable operating insurance carriers
- Increased costs associated with Governmentally regulated assets, environmental/mechanical/zoning/etc.
- Shortage of dollars
- Lack of business savvy (finance/planning/marketing/fundraising/collections management/protection)
- Lack of political savvy
- Lack of sophistication/organization in attracting and managing volunteers and projects.
- Increasing obsolescence and deterioration of operating assets.
- Increasing scarcity of critical skills
- Increasing scarcity of critical parts/materials

And so on, and so forth ...

The laws of organizational evolution are constantly at work weeding out those business models that do not work over the long term. It would therefore seem that to survive, an organization must learn to master most - if not all of these skills.

OK, here are my questions -

By 2052 -

Is the "Mom and Pop" (i.e. - "family-run" operation without a large membership base) style of operating RR museum sustainable?

Is the "club" (i.e. - without a formal business plan) form of operating RR museum survivable?

Is the "sophisticated business" model, the only one that can work over the long term?

I eagerly anticipate your thoughts.

Sincerely,
Glenn


Railways of the Far South
christensenge@yahoo.com

> OK, here are my questions -

> By 2052 -

> Is the "Mom and Pop" (i.e. -
> "family-run" operation without a
> large membership base) style of operating RR
> museum sustainable?

> Is the "club" (i.e. - without a
> formal business plan) form of operating RR
> museum survivable?

> Is the "sophisticated business"
> model, the only one that can work over the
> long term?

I would say that the "Mom and Pop" operation is more or less doomed--witness the fate of even a high-class, mechcanically impeccable Mom and Pop like the Kettle Moraine. Most of them are undercapitalized, and will not be able to invest enough in facilities and marketing to draw the patronage which would allow them to earn their cost of capital above operating expenses.

That leaves three models which I think will be left standing in 2052--

1. The well-managed professional model, located in an established tourist area and with access to significant capital (Strasburg, D&S, Grand Canyon).

2. The diesel-powered, all-volunteer club with modest ambitions and the ability to stick to what it does best--offering a short train ride for the local market. Here the Walkersville Southern (the place I volunteered with for three years) is a good example--simple three-40 foot-car train (open flat, troop sleeper, caboose), power from small industrial critters, right of way leased for a nominal fee from the State of Maryland, no paid staff, a continual round of easter-bunny trains and Train Robberies and what have you. Very simple equiptment, very lean operating costs, and very sharp locally-oriented marketing. Could be wiped out by insurance or, god fobid, a single passenger or volunteer accident at any time, however.

3. The government-sponsored enterprise: either outright government ownership, or extensive and fairly prediticable infusions of government or other subsidy money. Steamtown, Cumbres & Toltec (if we are lucky), Railtown 1897/Jamestown, and some small diesel operations like Storbridge or the new Georgia tourist train underwritten by the local Chamber of Commerce or Economic development agency.

eledbetter@rypn.org

> 3. The government-sponsored enterprise:
> either outright government ownership, or
> extensive and fairly prediticable infusions
> of government or other subsidy money.
> Steamtown, Cumbres & Toltec (if we are
> lucky), Railtown 1897/Jamestown, and some
> small diesel operations like Storbridge or
> the new Georgia tourist train underwritten
> by the local Chamber of Commerce or Economic
> development agency.

Let us keep in mind, folks, that the underlying reason for the Stourbridge problem is that the freight business went away. When the railroad was handling 1,000 cars a year of freight, the passenger operation added to the bottom line. But it is awfully hard to justify keeping 24 miles of railroad in place to handle 25,000 passengers on trains that run about 12 weekends a year. If the Chamber of Commerce can't locate a freight customer to "subsidize" the tourist train, and no one else wants to either, this one may be a loss.


K4s1361@hotmail.com