Foundation Forum

Duane H. Cassidy (USAF, ret.)
Vice President, Sales and Marketing
CSX Corporation
Global Presence--The NDTA Perspective
Mid-America AFA Symposium
St. Louis
May 3, 1996

Thank you, John and it is nice to be back here. This symposium was started while I was at Scott [AFB] some years ago, and there are a few people in the audience who worked on the original symposium. Congratulations on another great forum.

Global Presence is so terribly important and it s becoming more important. Now that I am in civilian life, I see how more important than anything else is the Presence of this great country of ours all around the world.

There are a couple of things that are important as we look at Global Presence. One is certainly defining our role our role as a country, our role as services, our role in the transportation business and our individual roles. I am in a very old business, the railroad business and guess what? For 145 years, we are still trying to define the role of what the conductor does and what the locomotive engineer does and what the train master does. Large organizations are always that way because new things creep into the organization, and we forget why we are here.

This symposium is a very good forum to redefine our role.

When I was a navigator on a C-121 Super-G Constellation, at Charleston, South Carolina, one of the earliest lessons I learned as a crew member was that too many people in system attempt to do the job we last had and forget to grow into the job that we now have. We as transportation people need to understand that we need to grow up and take responsibility for exactly what our role is in this business of Global Presence.

The other thing I want you to remember is to make your friends before you need them. Transportation Command wouldn t exist if it hadn't been for those sorts of notions. The C-17 wouldn t exist without some friends that many of us had over the development period for the airplane. Each day you should attempt to establish relationships and a credibility that will make sure when you take on an important role for our nation, you will be prepared to do it, and you will have established a relationship that takes you there.

The National Defense Transportation Association (NDTA) is the classic example of making your friends before you need them. It is the organization that spearheaded, spawned and nurtured the Civil Reserve Air Fleet. The CRAF really understands the notion of making your friends before you need them and understands what your role is in this business of transportation.

The Civil Reserve Air Fleet was started by our predecessors in the Military Air Transport Service (MATS). Several airline executives were sitting in the Wings Society in New York , and they decided that if the military really did need some help from the transportation world, they ought to figure out an arrangement before hand and avoid relying on statute or law. It should be based instead on a handshake. That discussion began the Civil Reserve Air Fleet.

For many years, NDTA had one committee, the airlift committee. Twice a year, it brought together the giants of the airline industry and the senior people of government at a small business meeting to get to know each other and establish a relationship so that if somebody needed something, they'd know who to call. They also established a relationship clarifying whose job it was to do what their roles.

Out of that was spawned a study a definition of MATS in War and Peace. It said the military probably ought not to be in the people transportation business because there is a whole airline system that does that better than anybody else in the world. It said, the military should take on the business of moving cargo really seriously. Instead of just converting a bunch of old people airplanes into cargo airplanes, the military should build an airplane that is meant to haul cargo; put a beefed up floor in it.

The airlines, through organizations like NDTA, set up the CRAF with the notion that MATS would buy 90 percent or more of the passenger business from the airlines. We identified how much that would be in a year, and the airlines used that with the banks to get enough capital to order airplanes. That order permitted the airplane manufacturers of our country to start building airplanes. In essence, the study MATS in Peace and War underwrote the Boeing 707 and the airplanes that followed. It provided the guaranteed business and guaranteed capital that took our aviation industry to - absolutely a new level.

The National Defense Transportation Association is still a strong organization, getting stronger each day, and I am proud to be the National Vice Chairman of an organization that helps people like us in the transportation world to make friends before we need them.

I've thought about Presence a lot. For awhile, one of our services, the Navy, implied global presence was their job and other services should get out of it. However, the Commission on Roles and Missions of the Armed Forces, which convened recently, said, "The only constant in the future is constant rapid change and unknown challenges." It says Presence is a job for all of us.

The world is different than it was, and it is changing more rapidly than any of us can keep up with. Technology today is changing so fast that predicting tomorrow is simply impossible. In fact, I have a think tank of people in sales and marketing who analyze the future marketplace. We need to know what is happening with our customers, what do they need, and what is happening with our competition. Then, we can beat those guys to the punch and price it better than they can. Our team is even looking at who will be the competitor ten years from now because we don't think he exists today.

With the rapid change of technology and the way transportation is moving, we don t know what will be our competition for the many businesses of our corporation. Therefore, we must be flexible in taking on a future that is unknown to us.

The world is also changing. The U.S. economy is increasingly intertwined with the global economy. That will have an impact on conflict. As somebody said earlier today, the economics of the world may well drive us into the next conflict. I don't know a company that we deal with whose principle growth is not external. We are the largest trading nation in the world. We will be even larger as time goes on. The relationships between ownership and production in the world are so blurred that it is almost impossible to define who you are doing business with.

For instance, 85 percent of the cement business in this country is owned by foreign enterprises and most of that British. It just shows how we are intertwined in many ways. Our SeaLand company has just developed a "vessel-sharing" arrangement with a Danish company. We can provide twice the ports of call, twice the frequency, and twice the throughput using not only our own ships but other ships as well. Therefore, we bring to our customers an entirely new set of solutions to their problems more sailings and more capacity. Our business in SeaLand is moving away from operating ships and more into what we have now defined as core competencies - moving stuff and knowing where the stuff is.

The politics that influence the definition of our national interest today are much different than they were when I was on active duty. For example, what are our national interests in Bosnia-Hercegovina? They are so convoluted and so subtle, but they are all there, and we need to understand them better. There is no longer the stabilizing influence of a bipolar world. We are the only great power, but what right do we have to have global presence?

Well, we have a right based on 40 years invested in it. We have enormous dollars invested in the stability of this world, and we have a right to be every place we please. We have to find some way to articulate that.

The days of our large garrisons overseas are gone so Global Presence takes on a whole new meaning. We all ought to understand our roles in this Global Presence, and we had better establish the relationships that take our roles forward in some meaningful fashion so we can execute our responsibility. Transportation has always been a support role in national defense.

Since we established the U.S. Transportation Command, it also has developed a defining role. We may be in a support role because we are transporters, but we are in a defining role for this notion of Presence. We made Global Presence possible through all of the work that we've done and the systems we developed. It is now our job to make it work in the future.

Let me tick off a couple of issues to show a relationship between the private sector and what you are doing. First of all, outsourcing and privatization trends in the world are alive and well and will be defined more and more. MATS in Peace and War defined the core competencies of military transportation and the core competencies of civilian air transportation. This is not a new notion. Nonetheless, the trend to outsourcing and privatization is very important.

Private industry does this all the time because we realize you don't have to own something to control it. There are those in the Air Force and the Department of Defense who have missed that point. For example, the C-130 allocation shows that this issue is not understood in today's Air Force. You can operate it better, probably in another way. Nonetheless, it is something we are doing in private industry and you ought to think about it.

Transportation has pioneered this model of strategic partnerships because we interface with everybody. The Civil Reserve Air Fleet was a pioneer for outsourcing and privatization. What is the next step? There is no single model that is going to cover all situations. You must find a model that permits you flexibility. You don t want to be in the "You call, we haul" game. But, you want some flexibility to take on all sorts of things, even with your partners.

For instance, in 1973 for the Israeli airlift during the Yom Kippur War, at MAC headquarters, we were trying to define who would support the plea for help from Golda Meir. It took us two days to figure out who was going to do the airlift. The private sector, the civilian airplanes, could do it, but they had contracts with the Arab world and were afraid to. They said to us, "Please don't ask because we don't know how to say no." Instead, we used C-5s, C-141s and some El-Al airplanes.

How to balance the overlapping and competitive roles has to be taken on, and it can only be done by people who really understand each other's role.

You have to understand how much of our capabilities should be contracted out and how much should be organic. You need to undrstand the balance between the reserve and active mix. But my question is, "Is it the right mix today and in the future?" I don't know and neither does anybody here, but we should always be asking ourselves, "What is the right role for each of the organizations represented here and what is that role definition?" Symposiums like this can help define roles.

What are your challenges for the future? Well, costs matter. Look around and see the things you do which are unnecessary and are wasting money. You can't do that. We don't do it in private industry so we reduce the numbers of people. We catch hell for that, but we are efficient. Eight years ago, our railroad had 70,000 people. We have only 22,000 people today but move more freight. We have reduced the car fleet in our railroad by over 35,000 cars and still move more freight.

You better start looking for efficiencies with innovation or you are going to eat yourself up in costs. Somebody needs to retire airplanes where the direct costs of operating them are so expensive that you simply can't afford to do it. Six, seven, and eight-man crews are too many. Use the technology you've got today.

I would offer that 120 C-17s is not nearly enough. The number 210 is the right number to grow from, not to grow to. Somebody better take that issue on, too. Everything we said about that airplane is correct its performance criteria, what it would do for the nation, and how it would be needed someplace that had yet to be defined. We couldn't even spell Bosnia-Hercegovina back then. The point is, 120 is not enough. It hurts me to hear everyone to say, "Thank God we got 120 C-17s." The number is at least 210.

Innovation requires you to be thinking about how you are going to use these things. Public policy is something that affects all of your challenges and goes hand in hand with innovation. It involves looking at the role for the highways, for the fast ships, and for the MAGLEV train? I saw a picture of a balloon the other day that was carrying containers. It sent a shudder through my SeaLand patch, but it is not a bad idea. We need to look at all those things.

My point is, we don't have the foggiest notion what tomorrow will bring. At the same time, we've got to run today. I always described running MAC as milking cows. They never stay milked. When I was a wing commander, I'd get the six o'clock locals off, I'd launch 15 missions, then I d get the air drop missions off in the afternoon and heave a great big sigh of relief. Then we d turn around to do the whole thing again the next day. It always works that way. There is a degree of boredom to this business and if you don't innovate and have fun with it, that boredom will make you lethargic and stifle your initiative. Be careful of that.

Find ways to move the flag pole every day and figure out why the other fellow made a change? That is good advice.

It is nice for me to get a chance to say, "Here is what we've got to do," and then skip out and go back to running a railroad and expect you guys to do it. It is a good position to be in. I do hold you accountable because my generation did our thing on our turn and now it is your turn. I think us older guys ought to hold you younger guys accountable. I say that with a great deal of love and affection for this business. The business is such a great business to be in.

At this time, I'd like to leave you with just one other thought. Don t lose heart when people say, "We can t do it because budgets are tough." Hell, they've always been tough. When I was Director of Personnel for the Air Force, we had 706,000 people, and now there are 400,000. I hope you could do with less budget than I did. We had a whole lot more people. Yeah, times are tough, but the budgets have always been tough. That is just the way life is.

We have to find organizations like the Air Force Association that support our people even more now than before. There is a tendency for our friends in the civilian world, to say, "Well, times are really tough, and we're not getting the business we used to have so we can't support organizations as we did in the past."

I hope those people didn't join the AFA only because of the business they got from us. I hope they did it because when our nation is at risk, somebody like the AFA and NDTA are indeed worrying about it. I've got life memberships in those plus the Association of the U.S. Army and the Navy League. These organizations give us a forum to understand what we need to do to take care of people in the future.

Thanks very much for the invitation to join you today and I'm glad to be here.

GEN. SHAUD: General Cassidy, thank you very much. That was right on, and I particularly appreciate the words about AFA and how the cows don't stay milked.

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