On why he buys Burlington Northern Santa Fe
“Well, I felt it was an opportunity to buy a business that is going to be around for 100 or 200 years, that’s interwoven with the American economy in a way that if the American economy prospers, the business will prosper. It is the most efficient way of moving goods in the country. It is the most environmentally friendly way of moving goods, and both those things are going to be very important.
“But the biggest thing is the United States is going to do well. I mean, we can’t move the railroad to China or India. They haven’t figured out how to do that. So you know, it’s sort of like if you remember that song about New York— we have to make it here or we can’t make it anywhere.
“But it does move 400 — it moves a ton of goods 470 miles on one gallon of diesel. It replaces — a train replaces 280 trucks on the road. It emits far less into the atmosphere that’s damaging than trucking, and it moves— I’m talking about the whole rail industry— it moves 40 percent of the goods.
“And we’re going to have more people in this country and they’re going to be using more goods over time. And sure, there’s a bad year from time to time. In the next 100 years, there will probably be 15 bad years, and I don’t know what order they’ll appear, but I also know the railroads will be essential to the country.
“It was unionized. You spend money in this business regularly every day. You’re spending a lot of money to repair track, add rolling stock, whatever it may be. So it’s capital-intensive, and it is regulated, and it will continue to be regulated, and it will continue to be capital-intensive.
I think that what the service provided by railroads is so important in many ways. I mean, it’s the right way to move goods around the country to the extent that you can do it. And it’s far, far more attractive in terms of global warming than using trucks, for example. So it will be here, and if we get a reasonable return on the added capital investment— because it will take added capital investment— we’ll do OK.”
On “Reasonable return is good enough?” for Berkshire Hathaway
“Reasonable return is good enough, Charlie. I mean, 50 years ago, I was looking for spectacular returns, but I can’t— I can’t get them. We have— we have eight or $10 billion to invest every year. And we’re in the utility business, and it’s the same thing there. When we build electric generation or something of the sort, we shouldn’t expect a spectacular return. We’re building things that are essential to society, and people need our services. They really don’t have any choice in the case of the electric utilities, for example, and sometimes in case of rail. And we should get a decent return on that. Enough to encourage us to keep putting money into the business, but we’re not entitled to spectacular returns.”
On the economic moat of Burlington Northern Santa Fe
“If they wanted to reproduce the Burlington Northern Santa Fe, it might take $100 billion or so.
“They’d have to be a real sport.”
On valuation attractiveness of Burlington
“Yeah. And you don’t get bargains on things like that. It’s not cheap.”
“No, it’s not a bargain.”
“No, but it’s a good asset to own for Berkshire over the next century.”
Buffett and Rose talked about a lot more than just the Burlington deal. Watch the video:
Rate This Article: |
  |