William Vantuono

William Vantuono

With Railway Age since 1992, Bill Vantuono has broadened and deepened the magazine's coverage of the technological revolution that is so swiftly changing the industry. He has also strengthened Railway Age's leadership position in industry affairs with the conferences he conducts on operating passenger trains on freight railroads and communications-based train control.

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By Lawrence H Kaufman, Contributing Editor

larry-kaufman-2007.jpgThe Surface Transportation Board announced Oct. 21 that it will hold a public hearing Dec. 9 to consider whether continued exemption from rate regulation for hundreds of commodities and any boxcar or intermodal service is justified or necessary.

Coming at this time—while railroads are embroiled in a battle with Sen. John D. Rockefeller (D-W.Va.) over his proposed legislation that would bring railroads back under a degree of economic regulation they haven’t seen since the Staggers Rail Act of 1980—an STB administrative action, which would not require Congressional approval, would not be a positive for railroads.

Whether it is good policy or bad, there is no question the STB has the authority under the Staggers Rail Act to undo what its predecessor agency, the Interstate Commerce Commission, did. The commodity and service exemptions were granted initially by the ICC, and the STB can modify or eliminate them—or do nothing.

In embarking on its most significant policy exercise since the Board imposed a 15-month moratorium on mergers between Class I railroads almost a decade ago, the STB is playing things close to its vest. It has not proposed a new rule or specific action. The only thing the Board has done is schedule a hearing.

Washington and transportation industry observers don’t believe for a second, though, that the STB is simply conducting an inquiry. The decision to undertake the December hearing is consistent with testimony by STB Chairman Daniel Elliott III before Sen. Rockefeller in September, in which the Senator suggested that if he couldn’t get his legislation enacted the STB should undertake administrative steps to redress some of the ills he had identified. Elliott indicated then that he was prepared to do precisely that.

The existing exemptions were granted following positive findings by the ICC that continued regulation of rail transportation of the commodities and services affected was not necessary in the public interest. At the time, railroads were in a fierce competitive battle with motor carriers for the commodities, and the ICC action was intended to help the railroads. Most shippers supported exempting the commodities from further regulation.

Before regulation can be reimposed, the STB will be forced to make a positive finding that regulation now is required. That poses the question: What has changed?

One thing that has changed is that railroads are financially and operationally healthy today. Railroads now compete with trucks over shorter lengths of haul. The landscape has changed, and many formerly supportive shippers now contend that they are captive to railroad market dominance and need the reimposition of regulation to level the playing field.

The STB chairman has a lot of latitude and can structure a hearing to reach a predetermined conclusion. There is no evidence that Elliott is doing this, but the possibility that billions of dollars of revenue could be brought back under regulation is a serious concern for the railroad industry.

The scheduling of the hearing presents an interesting contrast between Elliott and Linda Morgan, who chaired the ICC and the STB in the 1990s. Where Elliott clearly is following the lead of Sen. Rockefeller, Morgan, on the other hand, was consistent in her regulatory approach. When she was accused of favoring railroads in her decisions, she maintained that Congress knew exactly what she and the Board were doing and could change the law whenever it chose, and she and the Board would follow whatever legal mandate was given.

There are short- and long-term aspects of the re-regulation issue. Will the hearing feature a parade of shippers seeking regulatory change that will serve their short-term interests? With rail rates increasing faster than inflation, shippers can be expected to argue that railroads have market dominance that they clearly did not have three decades ago, and that they should be given access to the regulatory redress procedures of the STB.

Will the STB consider longer-term issues like railroad access to capital markets, necessary if they are to have the funds required to add capacity that will be required in the years to come? Rail capacity is relatively tight now, one reason why some shippers are willing to sign longer-term contracts, trading service and rate certainty for guaranteed volumes.

Any action seen as increasing regulation is likely to force rail rates down, and if earnings are affected, capital will become harder and more expensive to obtain.

Commissioner Charles Nottingham, himself a former STB chairman and the only Republican on the Board, recently announced that he will not seek reappointment to another term when his current term expires at the end of the year. A lobbying battle can be expected over the appointment of his successor.

By Tony Kruglinski, Financial Editor

anthony-kruglinski-web.jpg

In this industry you become famous—or infamous—as a result of the way you conduct yourself in business. Railroaders have long memories for those who have helped and hurt them in business dealings over the years.

On Sept. 6, Lawrence Beal, one of the most memorable rail professionals in North America and President of National Railway Equipment Company, passed away after a short illness.

He will be remembered by thousands of rail professionals—the way Jimmy Dean put it in that song about “Big John,” as a big, big man in our industry.

The funny thing is, he could have been remembered quite differently. You see, Lawrence spent a lifetime in the rough and tumble business of buying and selling used locomotives and their components. And that is a career rife with opportunities to teach the guy on the other side of your deal the real meaning of caveat emptor!

But that’s not the way Lawrence did business. Lawrence built a career on customer service and satisfaction. That’s not to say that he didn’t make money. He did. It’s just that he never made it by doing a hatchet job on the people with whom he was dealing.

When asked a direct question, Lawrence always told the truth. And when he gave his word on something, if a problem developed, as can occur with used locomotives and used components, he stood behind that word and made things right. As a result, Lawrence Beal had more friends in the rail industry than anyone else I know.

I first met Lawrence when he was running Chrome Crankshaft in the 1980s. A few years later, when I was financing the Wisconsin Central, Lawrence and NREC were in the process of selling some rehabilitated SD45 locomotives to this new regional railroad. The problem was that the WC had been delayed in starting business by regulatory issues and was about to lose the 45s because they had no money, pending the closing of my financing upon the start of operations, to pay for them. Lawrence arranged a quick short-term lease to a Class I to bridge the time gap and as a result the WC had locomotives to start business when they received the go-ahead to begin operations.

There are literally hundreds of stories like that about Lawrence in the North American railroad industry. If you have known him and worked with him, you probably have your own.

Readers who have attended one or more of Railroad Financial’s Rail Equipment Finance Conferences will remember Lawrence as the folksy fellow with the “down home” southern Illinois accent who, whenever he was asked the value of a particular type of used locomotive, always responded by smiling and asking: “Am I buyin’ or am I sellin’?”

He was a beautiful man. He was also an innovator. Lawrence led the industry in building “new” locomotives out of existing locomotive components. I don’t have any stats, but I believe NREC has built and delivered more genset locomotives to the industry than any other builder. When he wasn’t happy with what was available in the marketplace—for instance, train control computer hardware and software—he developed his own product.

There is a saying that the guy that dies with the most “stuff” is the winner. Well, if you measure Lawrence Beal’s achievements by the amount of non-railroad North American locomotive and locomotive component rebuilding capacity he controlled upon his death, he was certainly the winner. In fact, I don’t think anyone else in the industry even comes close.

For those of you who did not have the benefit of knowing Lawrence Beal and of doing business with him, let me tell you what he taught me: There is always a way to make something that appears impossible, work. You might have to take the transaction’s structure apart and reassemble it countless times, but unless someone or something is completely off the wall commercially, there is always a way to close a deal that appears impossible. It just takes some hard thinking, and, perhaps, some compromising, to get it done. Finally, you can wring every nickel of profit out of a deal and still do it honestly and ethically.

If you think and plan ahead, as Lawrence did regularly, investing in used locomotives when the market for them was a horror story, you can ride the markets up and down to a significant gain. You just need to have steel in your backbone and an unwavering confidence in your own view of the marketplace—something Lawrence had in spades.

Lawrence, we are going to miss you. We know your son Steven and his team at NREC and its affiliates will continue to do business in the way you taught them and that everyone you touched professionally recognizes that they are better off for having known you.

I know I certainly am.

Friday, 06 February 2009 11:27

Flash Video: Matt Rose interview

Editor William C. Vantuono's interview with Railroader of the year, Matt Rose, sponsored by Western-Cullen-Hayes and Plasser American

 

Friday, 06 February 2009 11:27

Video: Matt Rose interview

Editor William C. Vantuono's interview with Railroader of the year, Matt Rose, sponsored by Western-Cullen-Hayes and Plasser American

Wednesday, 08 December 2010 18:00

Video: Wick Moorman interview

Editor William C. Vantuono's interview with 

Railroader of the Year, Wick Moorman

SPONSORED BY:

www.amstedrail.com

 wch-color-logo.jpg  

By Keith T. Borman

keith-t.-borman.jpgLegislative “cures” to improve railroad safety act just like medicines on human populations: Drugs developed for one group can be disastrous when given to another for whom they were not intended. In the Rail Safety Improvement Act of 2008, Congress concocted a powerful cocktail of safety remedies enacted primarily for Class I railroad consumption. As the Federal Railroad Administration begins to dispense the implementing regulations, serious operational and financial side effects are starting to appear among small Class II and Class III carriers.

The forthcoming new hours-of-service rules illustrate why small railroads are starting to feel queasy. The Rail Safety Improvement Act created a new 276-hour cap on the number of hours train service employees may work in any calendar month, and mandated two days rest after six consecutive days of train service and three days rest after seven consecutive days of train service. These and other provisions throughout the new law reveal a consistent intent by Congress to address perceived safety issues arising from train crew fatigue. For example, in the legislation Congress imposed for the first time ever limitations on so-called “limbo time,” the hours spent in tasks other than operating a train, such as waiting for transportation back to the terminal before marking off duty or attending training classes. Further, Congress was so concerned about train crew fatigue that it expressly prohibited railroad managers from any form of communication with a train crew employee during a statutory rest period that “could reasonably be expected to disrupt the employee's rest.”

Certainly the demands of Class I operations create potential opportunities for fatigue. Big railroads operate 24 hours a day, seven days a week. Their train crews operate over long distances and often that requires them to work longer than the typical eight-hour day, and at the end of their run they often must check into hotels far from their home terminals to get their required rest. Crew schedules are sometimes unpredictable, and crew members can be called for service at odd hours with only a few hours notice.

Small railroad train service employees inhabit a different world. They don't have to lay over at remote, away-from-home terminals. Their routes are short and at the end of the workday they go home, not to a hotel. Most work exclusively during daylight hours, and while some may work six or seven days in a row, it is often because their workday is five or six hours, and they want and need the extra days to put in a normal 40-hour workweek. In other words, six-or seven-day workweeks on short lines are not the fatigue issue Congress had in mind when it mandated two days' rest for six days work and three days off for seven consecutive days on the job. For short line employees, six-and seven-day workweeks are a lifestyle choice, not a fatigue problem.

Tasked by Congress to deliver the medicine, FRA has been sympathetic to the small railroads' claim that fatigue is not a short line problem. But FRA sees no alternative to imposing the new rest requirements on short lines as well as Class I's. When ASLRRA cried, “Stop! These medicines are meant for huge 24/7 railroads only!” FRA responded, in effect, “Doctor's orders! Congress didn't expressly exempt small railroads; now open wide!”

So the small railroad industry must swallow a bitter pill that will have painful side effects. The short lines that seasonally work seven days a week to bring in the wheat harvest will tell their customers that they just don't have the crews available, and moving the grain will have to wait. Other small carriers serving shippers once a day six or seven days a week will reduce their service levels. Hiring more employees is no antidote: Small railroads work on thin margins and are unlikely and often unable to increase their operating expenses to maintain the same level of service.

The side effects will be contagious as well. Small carrier train crews will begin to feel cramps in their paychecks as the days available to work diminish. Some may even experience job losses as the smallest carriers succumb, because they can no longer serve the customer adequately with their existing crews and cannot afford to hire more.

One way to remedy this malady is to go back to Congress for a new “prescription,” to exempt small railroads who do not suffer from fatigue related safety issues. But by the time Congress finds time to take a second look, it may be too late for some short lines. Seeking relief from the FRA under its limited statutory authority to grant waivers is another possibility which ASLRRA will explore. Meanwhile, public policy makers would do well to recall the ancient advice given to all healers who prescribe medicines: primum non nocere: First, do no harm.

Keith T. Borman is Vice President and General Counsel of the American Short Line & Regional Railroad Association.

By Douglas John Bowen, Managing Editor

doug_bowen.jpgWords matter, so the overall talk is encouraging: Believers in passenger rail’s potential, and its worth within the larger realm of railroading, have every right to think their trains may have finally arrived. It’s an attitude reinforced at many venues, like the annual rail conferences hosted by the American Public Transportation Association.

Those words and attitude matter when APTA members and others get their points across to various media. Print and other media talk more often about reliance on “public transit” instead of the more pejorative-sounding “mass transit.” And, in a switch that at times is almost total, “dependence” is now applied to auto drivers and not (just) rail riders. (I think of myself as “rail reliant.”) At last month’s APTA Rail Conference, President Bill Millar alluded to this shift, part of the “choice” rail transit gives a nation starving for options. It’s hard for Americans of any ideology to denigrate “choice”; Millar was on target.

The delicious irony now, too, is hearing oil junkies demand some kind of government action or protection (“Drill! Drill! Drill!” and/or “I need my car!”) with the same gusto and reverence they once reserved for “free market” transportation. They got the “free” part down; the automobile has had a decades-long subsidized trip, and it won’t end soon, but at last it’s in the glare of the taxpayer spotlight, just like “subsidized trains.” 

Words matter, and I say this not just as an editor but as a believer in the product. So can we now also shun “commuter rail” as a label, and seek something better?

Too many North American “regional rail” systems, old and new, must still overcome the ephemeral but all-too-real obstacle of “commuter rail” mentality, a tag applied not just by average citizens but by the industry itself. It’s damaging and it’s limiting, even if at times a true “commuter rail line” exists within a system, used for the classic “citybound by morning, homebound by night” rider that makes up an important part of many rail networks.

It’s 1950s thinking at its best—half a century out of date.

“Commuter rail” is damaging because it gives aid and comfort to its adversaries. Preposterous? Here’s a test: Substitute “those people” for “commuters” next time a press release crosses your desk from any source—rail authority, rail advocacy group, anti-rail partisans. Hear the problem now? “Those people” may want a choice, but since “I” don’t commute by rail, what do I get out of it? Why should I care? Why should I pay?

“Commuter rail” is also limiting. In one swipe, we, as an industry, discourage other potential riders from trying the product. Day trippers, shoppers, vacationers, and others aren’t bidden, encouraged, to ride when the equipment (and often the crews) are available and the capacity is more plentiful.

Ridiculous? Why, then, is Amtrak’s Northeast Corridor, of all things, often referred to as a “commuter railroad,” when the parallel New Jersey Turnpike isn’t a “commuter highway” in turn? Lots of commuters use the Turnpike, or Chicago’s Dan Ryan Expressway, or California’s I-5, right? But the media persist with a false distinction. In part it’s our fault as a passenger rail bloc to not object.

Some passenger players already see this (though not enough, in my view). MTA Metro-North Railroad dropped the “Commuter” out of its name more than a decade ago, and actively seeks (and talks about!) other passenger market niches. Chicagoland’s Metra, another top-flight regional railroad, continually plays with weekend and off-peak service options and price packages that are outright admirable. And, no surprise to this observer but still a pleasure all the same, at one of APTA’s sessions in Chicago last month, Eugene Skoropowski, managing director of California’s Capitol Corridor Joint Powers Authority, offered ideas on attracting more riders from all walks of life as one way of “Coping with Increased Ridership in the Face of Rising Costs.”

Even some political players get it. It took the governor of Connecticut to knock on nearby New Jersey’s proverbial door asking for regional rail access to and from New York Giant football games in the Meadowlands. To their credit, New Jersey officials, along with New Jersey Transit, belatedly caught on to the potential. True, the tri-state run (through Manhattan) is initially aimed just at sports fans and only on Sundays. But that still transcends “commuter rail.”

And so should we all, whether we’re a big rail transit property or a small one-line startup that, indeed, is counting on commuters to initially justify its existence and (one hopes) future expansion.

If “regional rail” doesn’t fit a given property, seek something else, something better, something (more) accurate—ideas welcome! But perception is part of the industry’s potential (and potential woes) just as high speed turnouts and positive train control issues are, and “commuter rail” is jargon, an albatross around our collective necks that needs to be shed. We should be focusing, and espousing, passenger rail’s potential across the rider spectrum. The words matter.

Comments? Email dbowen@sbpub.com.

richard-timmons-web.jpgBy Richard F. Timmons, President, American Short Line and Regional Railroad Association

No organization that prides itself on performance and measurable results can expect to grow and prosper without dedicated training—for employees, staff, and management, as well as the education of its customers. This is fundamental to team building as well as sound and profitable railroading. Of course, productivity is an important outcome as well, and one unquestioned benefit to any training program is that worker productivity significantly improves following training.

With the passage of HR. 2095, the Railway Safety Improvement Act of 2008 (RSIA), the world of railroading as we have known and understood it for decades has changed. This is a more far-reaching collection of changes than the Staggers Act of 1980. Staggers laid the foundation for the dramatic resurgence of freight railroads during the past 25 years, but the RSIA will have a much greater impact on a broader range of areas.

With the new law comes a wave of regulatory requirements that compel significant changes from many of the current procedures now in place, as well as unprecedented new technologies and equipment to be phased in during the next several years. Other federal government policy and equipment developments unrelated to HR. 2095 also are under way. These momentous changes bring to railroad management serious issues related to preparing its work force for the future to insure employee safety and professionalism while on the job.

The most effective and profitable organizations have traditionally embraced some form of structured employee training that focuses on worker education and skills to enhance knowledge, understanding, and the execution of job tasks to specified standards. The object, of course, is to make certain the employee is safe, productive, and well aware of required performance standards while serving the long term interests of the company and its’ customers.

However, for management, the balancing act of beneficial employee training while accepting costs and an absence during this training is a difficult tradeoff. The old on-the-job techniques are not going to do the job in this new era simply because much of what we are working with today is too new to rely on seasoned railroaders to cover all the bases. There is little question that the most successful process for educating and training a workforce is through dedicated instruction. This only succeeds, however, if senior management has employee development and competence as a priority, and invests the resources to pursue training programs that improve employee skills and professionalism. This training approach is not a one-shot concept, but a progressive year-in, year-out program for each employee aimed at steadily building worker expertise and mastery of his field.

Today the railroad industry is beginning to capitalize on new educational technologies that make training our work force achievable without divorcing the employee from his job for an extended period of time. Online training modules prepared with short lines in mind are available that can prepare the employee for many of the job demands of the future. Webinars now address specific aspects of the industry that need clarification or introduce wholly new subjects or equipment. Class I railroad schools provide the options of attendance or online training, and some sponsor specialized training at state-of-the-art facilities. A number of universities now offer railroad certificate or diploma programs that are structured for short stays at the university, a return to work followed a month later by another session at the university. Mobile training classes sponsored by the Class I railroads, ASLRRA, AREMA, and the FRA make available short, high-intensity programs across the country to get railroaders up to speed on the most current and important topics and procedures. A prime example of this is the wide range of bridge inspection and maintenance classes being provided in numerous forums in response to HR 2095. DVDs are now becoming an important component of training and can be shipped easily to railroads or individuals for their home station use. In recent months HazMat and Security DVDs have been provided to ASLRRA members.

Excellent educational opportunities that are inexpensive and convenient are at hand for those managers that are committed to safety, competence, and professionalism for their workers. Training lays the foundation for the future and develops railroaders with the correct attitudes, knowledge, and skills to adapt to the changing workplace. Many visionary railroad leaders have committed to this progressive training approach. Now is the time for all of us in management to focus on employee professional development to meet the demands of the future.

No organization that prides itself on performance and measurable results can expect to grow and prosper without dedicated training—for employees, staff, and management, as well as the education of its customers. This is fundamental to team building as well as sound and profitable railroading. Of course, productivity is an important outcome as well, and one unquestioned benefit to any training program is that worker productivity significantly improves following training.
With the passage of HR. 2095, the Railway Safety Improvement Act of 2008 (RSIA), the world of railroading as we have known and understood it for decades has changed. This is a more far-reaching collection of changes than the Staggers Act of 1980. Staggers laid the foundation for the dramatic resurgence of freight railroads during the past 25 years, but the RSIA will have a much greater impact on a broader range of areas.

With the new law comes a wave of regulatory requirements that compel significant changes from many of the current procedures now in place, as well as unprecedented new technologies and equipment to be phased in during the next several years. Other federal government policy and equipment developments unrelated to HR. 2095 also are under way. These momentous changes bring to railroad management serious issues related to preparing its work force for the future to insure employee safety and professionalism while on the job.

The most effective and profitable organizations have traditionally embraced some form of structured employee training that focuses on worker education and skills to enhance knowledge, understanding, and the execution of job tasks to specified standards. The object, of course, is to make certain the employee is safe, productive, and well aware of required performance standards while serving the long term interests of the company and its’ customers.

However, for management, the balancing act of beneficial employee training while accepting costs and an absence during this training is a difficult tradeoff. The old on-the-job techniques are not going to do the job in this new era simply because much of what we are working with today is too new to rely on seasoned railroaders to cover all the bases. There is little question that the most successful process for educating and training a workforce is through dedicated instruction. This only succeeds, however, if senior management has employee development and competence as a priority, and invests the resources to pursue training programs that improve employee skills and professionalism. This training approach is not a one-shot concept, but a progressive year-in, year-out program for each employee aimed at steadily building worker expertise and mastery of his field.

Today the railroad industry is beginning to capitalize on new educational technologies that make training our work force achievable without divorcing the employee from his job for an extended period of time. Online training modules prepared with short lines in mind are available that can prepare the employee for many of the job demands of the future. Webinars now address specific aspects of the industry that need clarification or introduce wholly new subjects or equipment. Class I railroad schools provide the options of attendance or online training, and some sponsor specialized training at state-of-the-art facilities. A number of universities now offer railroad certificate or diploma programs that are structured for short stays at the university, a return to work followed a month later by another session at the university. Mobile training classes sponsored by the Class I railroads, ASLRRA, AREMA, and the FRA make available short, high-intensity programs across the country to get railroaders up to speed on the most current and important topics and procedures. A prime example of this is the wide range of bridge inspection and maintenance classes being provided in numerous forums in response to HR 2095. DVDs are now becoming an important component of training and can be shipped easily to railroads or individuals for their home station use. In recent months HazMat and Security DVDs have been provided to ASLRRA members.

Excellent educational opportunities that are inexpensive and convenient are at hand for those managers that are committed to safety, competence, and professionalism for their workers. Training lays the foundation for the future and develops railroaders with the correct attitudes, knowledge, and skills to adapt to the changing workplace. Many visionary railroad leaders have committed to this progressive training approach. Now is the time for all of us in management to focus on employee professional development to meet the demands of the future.

Editor’s note: Since 1909, Simmons-Boardman’s Railway Educational Bureau has been providing training courses and materials to the railroad industry. For more information, see www.transalert.com

By Tony Kruglinski, Financial Editor

anthony-kruglinski-web.jpgI would like to use this month’s Financial Edge to comment on the standards of honesty and ethical behavior that we have come to expect in our industry as well as to say goodbye to GATX’s Jeff Riley (pictured, below), who retired at the beginning of August. Jeff was the ultimate practitioner of what could be model professional standards for anyone in our business. I would like to use Jeff’s professional life as a bit of a primer for anyone new to our industry and seeking to succeed.

Honesty and ethical behavior: When Jeff Riley and I were in this business (buying, selling, leasing, and financing rolling stock) in the 1980s, there were a lot of people running around trying to put together deals for what was then a market of significantly surplus rail equipment. The problem was that many of those seeking to broker transactions were dishonest about having an agreement with the owner to represent the equipment. It was like the Wild West! If they could secure employment for unemployed cars or locomotives, they could go to the owner or and pitch the deal. Unfortunately, they came to the owner purporting to represent the end-user. No one knew who was legitimately representing who or what! This caused a huge amount of wasted time and effort on everyone’s part when deals that should have come together crashed and burned!

Eventually, the market for rolling stock picked up and the marketplace identified many of these “operators” for what they were and either tossed them or legitimized them by putting them back on corporate payrolls where somebody could exercise some ethical control over them.

jeff-riley-2009.jpgJeff Riley never had these issues. In the nearly 30 years that we have worked together, he has never misrepresented a situation. Even beyond that, he has never even allowed me to misconstrue a situation without setting me immediately straight. Because of this honesty and ethical behavior, my partners and I have come first to Jeff and GATX with many transactions, knowing that we could get a quick and honest reaction from Jeff as to GATX’s interest in the deal. As a result, my firm, Railroad Financial Corp., has closed more transactions with GATX as a counter-party than any other single entity.

Ability to deliver the institution: When you are representing a mix of people seeking to buy, sell, lease or finance equipment, some of them are well known to you and some are new relationships. Where our engagement is with a new customer, there is a premium on our ability to quickly understand what the client is willing to do and is not willing to do as we interact with the market for their benefit.
This, in turn, puts a premium on our finding the right counter-party. Our client is counting on us not to waste its time with dead-ends or unsuccessful market initiatives and overtures.

Using Jeff and GATX as an example, I can remember no situation in all of the years during which I interacted with Jeff Riley when he was not almost immediately spot-on with his appraisal of GATX’s likely interest in participating in a transaction. There were two reasons for this: First, Jeff had been with GATX long enough and was bright enough to have learned what his company was interested in doing. And make no mistake about this, sometimes this changes from month to month in our industry. The other side of this coin was GATX’s confidence in Jeff. He earned the respect of not only GATX’s management, but the company’s credit apparatus as well. Jeff could reliably deliver GATX to the closing table when he said he could. There is a huge premium in our industry for anyone who can do that!

Being a nice guy (or gal): Over the years, I have had to deal with a lot of people who are not nice guys or gals simply because they were stitched into a big deal or important funding needed by a client. However, I (and everyone else I know in this industry) would rather deal with someone with a reasonable temperament. Fortunately for me and my partners, most highly talented people with whom we deal in this industry are also really nice people. The blood-sucking, win-at-all-costs, bait-and-switch types are usually well known and we deal with them only when we absolutely have to. Want to know who they are? Follow the trail of busted deals and you will find them in the debris.

Jeff Riley? He is one of the nicest people on the planet and because of this, one of the most successful in his job as GATX’s Executive Director Structured Finance. He was always ready with a smile, a helping hand, or a joke when tension was about to wreck a deal. He was, in fact, quiet confidence incarnate. When you heard his voice on the line, you wanted to talk to him, no matter what the situation. Jeff, we are most definitely going to miss you!

(Thanks also to Jeff’s wife of 33 years, Jodi, for her support of a guy on whom we all came to count.)

By Richard F. Timmons
President, American Short Line
and Regional Railroad Association

richard-timmons-web.jpgQuestion: How many man-hours  are hired when a short line railroad spends $1 million on upgrading typical short line track?
Answer: 20,800.

Q: How many man-hours are hired when a short line railroad spends the $2 million in company money required to match the $1 million tax credit?
A: 62,400.

Q: What percentage of the ties and rail required to upgrade short line railroad track are purchased from American manufacturers?
A: 100%.

Q: If the short line tax credit extension passed today, when could short line railroads begin hiring those man-hours and purchasing those materials to undertake new projects?
A: Tomorrow.

Q: Why hasn’t Congress extended the short line tax credit as part of its effort to stimulate the economy and create jobs?
A: Good question.

Time is running out for the short line rehabilitation tax credit (45G) which expires on Dec. 31, 2009.  At a time when the federal government is focused almost entirely on stimulating the economy through immediate job creation, extending the short line tax credit should be on everyone’s “to do” list.

I am encouraged that, as of this writing, 167 House representatives and 39 Senators have co-sponsored the extension legislation. That number grows every week. These are among the highest co-sponsor numbers of any bill being considered in this session of Congress.

Even more significant, the co-sponsors are divided almost evenly between Democrats and Republicans, representing the kind of bipartisanship that everyone says is so necessary to get things done in Washington.

While this support is gratifying, it will not mean much if Congress does not enact the extension by the end of the year.

Q: Who are the primary beneficiaries of short line railroad track rehabilitation?
A: Railroad shippers.

When their short lines upgrade track, shippers receive faster, safer, and more competitively priced service. Most important, they can utilize the newer heavier-load railroad cars that are becoming the standard for the Class I industry and that require a much stronger track structure than exists on many short lines today. Absent that ability to handle the new equipment, shippers are cut off from the main line rail network.

As Watco Cos. Inc. CEO Rick Webb recently testified before the House Transportation & Infrastructure Committee, “For small businesses and farmers, the short line’s ability to take a 25-car train 75 miles to the nearest Class I interchange is just as important as the Class I’s ability to attach that block of traffic to a 100-car train moving across the country. My Kansas grain customers cannot make the journey to export markets in the Gulf without Class I railroad service. But they can’t start the journey without short line service.”

Q: When is an investment in railroad track good for the highway?
A: Always.

Improving short line railroad service takes heavy trucks off the highway, and that reduces highway congestion and pavement damage. A single railcar can hold three to four truckloads.
Taken together, the short line industry diverts over 33 million truckloads from the nation’s highways and in so doing saves approximately $1.4 billion in pavement damage. Much of this savings is in rural areas where so many short lines operate and where state and local government is hard-pressed to come up with road repair money for local roads.

Question: If Congress extends the short line tax credit, will railroads put up a green sign beside track being rehabilitated that says “Project Funded by the 45G Rehabilitation Tax Credit?”
Answer: Yes!

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