Ben Heinemann

http://www.chicagobusiness.com/article/20120808/NEWS07/120809821/ra...

(Crain's) — Ben Heineman, a seminal figure in Chicago business after World War II — and one who knew how to run a railroad — died Sunday. He was 98.

The lawyer-turned-executive was a captain of industry when that phrase was in vogue — a local pioneer of the industrial conglomerate and a headstrong bank director during a tumultuous time at First Chicago Corp.

He was politically adept, fostering a working relationship with Mayor Richard J. Daley and chairing a White House task force in the Johnson administration. Yet he wasn't afraid to buck the establishment: In 1975 he was the rare big-business man who supported Bill Singer's insurgent and unsuccessful mayoral campaign against Mr. Daley.

As a Chicago Symphony Orchestra trustee, Mr. Heineman played a behind-the-scenes role in dousing efforts in the early 1990s for a performing arts center with the CSO and Lyric Opera of Chicago as joint tenants. Instead, the institutions pursued separate building plans.

His main job was heading the Chicago & North Western Railway, which had the distinction of being the city's first railroad but was plagued by nepotism, poor management and decrepit facilities when he took over in 1956. He was an unlikely railroad baron — a Jew in an industry dominated by unwelcoming WASPs, according to railroad historian Roger Grant.

But Mr. Heineman was undaunted by adversity. At just 22, he earned a law degree at Northwestern University after growing up the grandson of German immigrants in Wausau, Wis., where his father, bankrupted by the Great Depression, committed suicide.

Mr. Heineman's entrée to railroads was through his legal practice, representing shareholders seeking a dividend from the Chicago Great Western Railway in the early 1950s. After battling management as a shareholder in another railroad, he joined C&NW and set out to revive its commuter lines — retiring its steam engines — and rationalize its route structure.

That he did — to an extent. Although Mr. Heineman's efforts to merge with the Milwaukee Road and the Crown family's Rock Island Line failed, he was able to block the Union Pacific from acquiring the Rock Island and, with it, much of C&NW's traffic. He later allied with UP to improve C&NW's competitive position against Burlington Northern.

“Mr. Heineman avoided fighting regulatory authorities, especially when it came to branch line abandonments,” says Mr. Grant, a Clemson University professor whose history books include one about the C&NW.

By 1963, Mr. Heineman had acknowledged roadblocks to change in a then-heavily regulated and unionized industry. He began diversifying C&NW's assets, utilizing tax losses to offset earnings of newly acquired units and becoming one of Chicago's pioneer conglomerate builders as chief of Northwest Industries Inc.

Between 1965 and 1968, Northwest bought two chemical companies and another firm whose holdings included Fruit of the Loom, Acme Boot and Lone Star Steel. In 1969, a bid for rubber company B.F. Goodrich was rebuffed. Not long after that, C&NW was spun off to employees, and Northwest was sold in 1985 for $1.4 billion to Farley Industries Inc., later renamed Fruit of the Loom Inc.

“Ben Heineman was fair, but he was tough,” William Farley told Crain's in 1988. “He said, 'Bill, my price is $60 and that's that.' And I said to him, 'Well, you know, I'm really concerned about (chemical unit) Velsicol. It's got all these potential liabilities, and I am going to inherit them.' And he said, 'Well, that's up to you. If you don't want to do it, don't do it.' He said, 'I've done the homework. I've lived with these problems for over a decade, and I'm telling you that you should feel comfortable.' I said, 'Well, I'd feel more comfortable if we reduced the price.' He said, 'Bill, my price is $60 per share.' "

Mr. Heineman also was an unyielding presence on the board of First Chicago, one of the predecessor banks to JPMorgan Chase & Co. He led a move to oust Robert Abboud as CEO in 1980 when First Chicago's performance, amid management infighting, lagged that of local rival Continental Bank.

For a few months until Chase Manhattan Corp.'s Barry Sullivan arrived as Mr. Abboud's successor, Mr. Heineman essentially ran First Chicago as chairman of the executive committee.

“If you're a director, you have a duty to be a director,” he told Crain's at the time.

Mr. Heineman died at Waukesha (Wis.) Memorial Hospital, according to his daughter, Martha Heineman Pieper of Chicago.

In addition to his daughter, a Chicago author and psychotherapist, Mr. Heineman is survived by a son, Ben Heineman Jr., a former general counsel of General Electric Co. who is a senior fellow at Harvard University's John F. Kennedy School of Government; six grandchildren, and two great-grandchildren.

Services will be private, Ms. Pieper said.