Former Kansas City Southern CEO Ottensmeyer Dies

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Former Kansas City Southern CEO Patrick Ottensmeyer — who led the cross-border railroad through the turmoil of free trade, the transition to the Precision Scheduled Railroad operating model and its historic merger with Canadian Pacific — died over the weekend. He was about 65.

Ottensmeyer, a native of Vincennes, Indiana, began his career in investment banking. His railroading career began with work on the financial aspects of the proposed Santa Fe-Southern Pacific merger. Then-ATSF CFO Dennis Springer hired Ottensmeyer, who became vice president and treasurer of BNSF Railway. But he left the railroad shortly after the merger rather than move his family from Chicago to Fort Worth, Texas. Ottensmeyer later taught finance at DePaul University and worked at a start-up company.

Ottensmeyer returned to the railroad business in 2006 when then-KCS CEO Michael Haverty hired him as executive vice president and chief financial officer. Ottensmeyer helped turn the railroad’s finances around and in 2008 was named executive vice president of marketing and sales, a key position at a railroad that was poised for rapid growth as cross-border traffic in Mexico began to pick up steam. KCS became the fastest-growing Class I railroad.

Ottensmeyer was named KCS president in 2015 and took over as CEO in July 2016. When Donald Trump was elected president five months later — after repeatedly criticizing the North American Free Trade Agreement as the worst trade deal in history — the railroad’s shares fell 11% after the market opened, losing $1 billion in value.

That morning, Ottensmeyer walked into KCS headquarters and wrote a note to employees who were understandably concerned about their jobs after the election of a president who promised to tear up NAFTA, a trade agreement that was crucial to the future of the cross-border railroad. “My commitment to the employees and the board was that I would do everything in my power to engage, to try to influence, to educate and to stay engaged,” Ottensmeyer said. Trains.

He kept that promise and became a free-trade diplomat, spending a lot of time in Washington and Mexico City, talking to lawmakers and decision-makers—anyone who would listen—about how NAFTA had benefited both countries.

Ottensmeyer served as Chairman of the U.S. Chamber of Commerce’s U.S.-Mexico Economic Council from 2019 to 2023. In that role, as leader of the U.S.-Mexico CEO Dialogue, he played a key role in representing business interests as NAFTA’s successor, the United States-Mexico-Canada Agreement (USMCA), was developed from 2017 to 2020.

“We were probably more active on both sides of the border than any other company in the U.S.,” he said. Trains in 2018. “I can look back on a lot of those conversations and meetings and feel like we made people — lawmakers, decision-makers — more aware of what was at stake.”

In late 2018, KCS began its first steps toward implementing the low-cost Precision Scheduled Railroading operating model that was dominating America’s Class I public railroads at the time. As part of its transformation, KCS sought to balance growth and customer service on the one hand, with cost reduction and better utilization of locomotives, cars and crews on the other. “For us, PSR is all about improving the integrity, reliability and resilience of our network, and it’s really about service and growth,” Ottensmeyer said in April 2019.

Ottensmeyer played a key role in the merger talks that began in the summer of 2020 when KCS emerged as an attractive takeover target.

On July 31, 2020 “Wall Street Journal” reported that a pair of infrastructure funds were preparing a $21 billion offer for KCS. On August 17, 2020, KCS received an unsolicited proposal from Blackstone Group and Global Infrastructure Partners to acquire KCS for $195 per share in cash. KCS rejected the offer and continued to consider competing offers from Canadian Pacific and the Blackstone-GIP Group. KCS ultimately accepted CP’s offer, which was valued at $275 per share, and the railroads announced their merger proposal on March 21, 2021.

CP’s rival, Canadian National, had been waiting in the wings and made an unsolicited offer of $325 per share on April 20. On May 21, KCS terminated its merger agreement with CP and accepted CN’s offer. But the KCS-CN merger fell apart after an unfavorable regulatory ruling by the Surface Transportation Board in August 2021. A few weeks later, KCS and CP finally agreed to a merger valued at $300 per share — or $31 billion. The deal received regulatory approval and became effective on April 14, 2023.

William Galligan, retired head of investor relations at KCS and author of the KCS history book “Vision Accomplished,” praised Ottensmeyer for his role in the merger talks and the ultimate outcome.

“Pat Ottensmeyer was a key contributor, at times the most important and influential contributor, in developing the KCS merger transaction strategy. First, he helped formulate the process the transaction team used to evaluate the offers received from three different potential acquirers. Then, he was an integral part of the interpersonal negotiations that followed the offers. He kept the dialogue and negotiations fluid, collegial, professional and productive. The strategy proved sound, and its execution by management and the transaction team was flawless,” Galligan wrote.

After the merger, Ottensmeyer served on the boards of the U.S. Chamber of Commerce, railcar manufacturer The Greenbrier Companies, shortline holding company Watco, and intermodal supplier J.B. Hunt. Ottensmeyer also served as co-chair of the Brookings Institute USMCA Initiative and chairman of the Truman Library Institute.

Independent railroad analyst Anthony B. Hatch named Ottensmeyer a Hall of Fame inductee. “Pat was a great leader, a great mediator and a very good friend,” he said. “He will be greatly missed.”