Name: Norfolk Southern CEO is optimistic about 2021 projections
Uploaded: 2021-03-03
Duration: 8 min 53 s
Description: Jim Squires expands on the company's digital transformation.

Jim Squires expands on the company's digital transformation, and crucial leadership lessons he relies on.

Norfolk Southern CEO is optimistic about 2021 projections

Leadership

Jim Squires expands on the company's digital transformation.

Jim, thank you so much for joining us so much. Uh to talk about, you know, you probably heard a lot about Warren Buffett saying that his favorite uh economic indicator is railroad activity because it tells you how the economy is doing. So how's business at your railroad Norfolk Southern business is, is pretty strong right now. Um It it really feels like 2021 is off to a good start for the economy as measured by real car loadings. So our car loadings are trending up versus last year and and this is uh of course, last year, this is before the pandemic really hit. So we think what's happening is that many of our customers are restocking inventories that, that got low during the pandemic. So that coupled with fairly strong consumer spending and underlying demand is is helping to, to broke our loading so far this year, given that so many businesses are still struggling and millions of American consumers are still not working. Why the optimism? Well, increasingly we are a consumer products transportation company. So let, let me give you an example. Yesterday we inaugurated a new service for a food, food products customer in Chicago. It's a, it's a box car service from Chicago to Atlanta and we're hauling palletize mixed nuts, cappuccino cake cops, uh taco seasoning and macaroni and cheese in uh in pallet size quantities. So that's a, that's a part of the economy that remains strong demand for products like that remains strong even during the pandemic, which helped to sustain us last year. And then in addition, you know, our traditional rail freight has started to pick up as well. I know you're so upbeat about the future. But what's on your worry list? What concerns you most, especially since we're still struggling with this pandemic? Well, our number one concern is, is our employees and making sure that our employees are able to continue working safely and relieving the pressure as much as we can as, as their company that they have felt since the pandemic broke out last year was a really tough year for, for our employees, many of them work in the field and they continue to do their jobs as they normally would. And there was just a tremendous amount of anxiety and stress in people's lives as a result of the pandemic. And that's still true. So we want to make sure that we are providing all of the protective equipment, the hand sanitizer and the masks and all of the cleaning supplies that we need to keep our workplace safe. And then um make sure that vaccines are, are as available as possible across our 22 state network for our employees once that time comes. Well, I actually wanted to talk to you about a vaccine in terms of how critical is it that uh recovery plans and growth plans that people get vaccinated. It's important. I think a lot is riding on the, the, the rollout of, of, of vaccination programs across our network. So it's, it's state by state and we are monitoring closely the state's implementation plans. And uh that's important, not only for our workforce, of course, but for the, for the general population and for the uh the sustainability of the economic strength we're seeing, I think as we get into the, the latter part of the year and these inventories have been replenished. Uh And uh we've seen stimulus begin to run its course then uh success uh and economic strength will depend on the vaccinations having been successfully implemented and people be being able to resume their normal lives. So let's turn now to the remarkable tech transformation that's going on at your railroad. You know, uh most people think of railroads as old economy, but you refer to Norfolk Southern as a tech company. And in fact, uh you sometimes say it's a digital railroad and a lot of the changes have come about under your watch as CEO five years ago. So tell us about some of the tech changes that you've been making. Well, let me, let me give you a couple, a couple of examples of, of initiatives that are driving the digital transformation of, of our company. And let me, let me start with the fact that we have a multitude of assets that we use in our business and, and by assets, I mean locomotives, I mean freight cars, we have 3000 locomotives we own and operate 40,000 freight cars at any given time. We have 100 and 30,000 freight cars on our 21,000 mile network. So we we use uh a large number uh and and a wide variety of assets in our business. Those assets have to be maintained, they have to be inspected, they have to be managed and that takes technology. So for example, we use machine vision which is cutting edge cameras able to capture images of of freight cars as they're passing by at 50 MPH. There's a camera, a very specialized camera right beside the track that's taking pictures of the freight cars as they're going by looking for uh problems or components, parts of the freight car that may be damaged or or may be malfunctioning. All of those images are then processed using very powerful computers and artificial intelligence, which knows what to look for and can identify automatically a problem that may occur that allows us to stop the train, take care of the situation before there's an incident. How important have these tech investments made a difference? Financially and otherwise for the railroad, you know, the key for me has been to see digital strategy as a pillar of corporate strategy. When I became CEO about 5.5 years ago, I of course understood the importance of investments in information technology, but I saw tech as an enabler of other strategic goals, growth efficiency, uh operational excellence safety. For example, today, I realize that tech is a strategy pillar of its own. Tomorrow's executive will have to have all of the skills that we have needed up until this point, you know, leadership skills, but also specialized skills like being a great conductor or a locomotive engineer, a civil engineer or a mechanic or an accountant or a lawyer. But in addition, our executives will have to be digital natives. So they'll have to know the technology and be able to contribute to software development and technology implementation. This is a little bit different model of talent that we have used up until now, Jim, as you look back on this year that you've been dealing with the pandemic. Uh what's the most important leadership lesson that you learned? And is there any advice that you would share with other business leaders that are going through a crisis? The the lesson that I learned was stay very close to your people in particular, your leaders. During the course of 2020 I had over 300 meetings, one on one meetings with our top 140 leaders. And I have continued that during 2021 as well. I think that's really important because I want them to know that I appreciate what they're doing that I understand what they're doing. I know them as people and that they have a chance to get to know me as well. That is our formula at Norfolk Southern for creating employee engagement, which we think will drive great customer service uh and bottom line value for our shareholders as well. So Jim, let me ask you then, what's the best leadership advice you've ever received from any of your mentors or anyone that you work with in the past? I've been fortunate to have many great mentors over the course of my career since I became CEO three in particular, come to mind first, my lead director, Steve Lear, who's been lead director as long as I've been CEO second, uh Bob Bob Brad, who is the Ceo of Amgen, who was on our board when I first became CEO. Bob taught me the importance uh when communicating with boards of directors of contact and of altitude. So by context, he, he meant always give the board the context within the company's strategy when you're giving them information and make sure it's at the right altitude, not up in the stratosphere where the board can't act upon it, but also not down in the weeds where boards don't belong. And then West Bush, the retired uh chairman and CEO of uh Northrop Grumman also taught me some valuable leadership lessons. What I remember is focus on the things that you don't want to do. So, there are many things that we want to do as business leaders and we have uh we have plans and hopes and dreams. There are also things that we don't want to do, but we know we must so make sure while you're, while you're keeping a list of all the things that you want to do to also think about the things that you don't want to do and focus on those as well.