One on One with Burlington Northern CEO, Matthew Rose
Tuesday, November 03, 2009
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SUSIE GHARIB: I talked by phone with Burlington Northern CEO Matthew Rose. I began by asking him why he did the deal with Warren Buffett.
MATTHEW ROSE, CHAIRMAN, BURLINGTON NORTHERN SANTA FE (BY TELEPHONE): Well as you know, Warren has been a shareholder in our company for, since 2007. And we've gotten to know each other. And when he presented the offer, we felt like it was compelling value to our shareholders.
GHARIB: What are the advantages of being part of Berkshire Hathaway as opposed to Burlington Northern going it alone?
ROSE: In many regards, there won't be a lot of change because we have a very long-term focus, because all of our assets when we buy something, they're 20, 30, 40-year assets. It's the association with a larger conglomerate, great balance sheet like Berkshire has. And that will be helpful, but not necessary. And I think it really just comes down to that our long-term vision and the way he runs his companies, there's a tremendous amount of similarity there.
GHARIB: Matthew, do you think that with this new corporate structure for Burlington Northern that you will be freer and more aggressive about pricing and about taking market share from your competitors?
ROSE: Well, certainly in a wholly owned subsidiary you won't be subject to the ebbs and flows of the capital markets, the equity markets and so we will see where all that takes us. Not committing to any of those things you mentioned. But it is a different structure, there's no doubt about it and I won't be meeting with shareholders on a quarterly basis and doing annual shareholder meetings and things like that. We'll be -- we'll have more time to focus on the railroad and getting more freight to the railroad.
GHARIB: With Warren Buffett buying Burlington Northern, it's a huge public endorsement of the railroad industry. Do you think this is the beginning of a railroad renaissance so to speak?
ROSE: Well Susie, if people have in some cases they've said that we've been in the railroad renaissance since the late 90s. You put the railroad industry in perspective and the 80s, the early 80s the railroad industry was in chaos. Bankruptcies, it really looks a lot like the airline business does today in many regards. I do believe that the industry is better positioned now for the future and if that classified as a renaissance, then I'm all for it.
GHARIB: As we know though, there's a lot of talk about Washington re- regulating the railroad industry. If that were to happen, how would that change the growth outlook for the rails?
ROSE: Within every industry you've got a plethora of customers and they all have different needs and while the Staggers Act that was put in in 1980 isn't perfect, it's generally done a great job for the industry and our customers.
GHARIB: There is always a lot of talk about Berkshire Hathaway and who is going to succeed after Warren Buffett is no longer running the company. You're the right age. Did you and Warren Buffett have any conversation about succession?
ROSE: No. I'm focused on BNSF.
GHARIB: Would you be interested in running Berkshire Hathaway if Warren Buffett asked you?
ROSE: Did I mention I'm focused on BNSF?
GHARIB: OK, we'll leave it there. Congratulations on the deal. Thank you so much.
ROSE: Thank you. Have a great day.
