Efforts by local groups to turn back a proposed streetcar line for Cincinnati fell short at the ballot box Tuesday. By a 56%-to-44% margin, voters rejected Issue 9, a proposed charter amendment that would have given public opinion the ultimate say on proceeding with the streetcar and other regional, statewide, and national rail systems involving Cincinnati.
Backers of the measure said it was designed to better reflect the "will of the people." Pro-rail advocates, including elected officials such as Mayor Mark Mallory, opposed the measure, claiming it provided a “double standard” for transport improvements that road and highway projects have not been subject to, and that decisions for all modes should be made by elected representatives.
But another referendum in 2010 may seek a direct vote on building the proposed 7.9-mile, $185 million streetcar line, also backed by private-sector interests and being advanced as a public/private partnership effort. The project still seeks $60 million in federal funds.
"The other side kept saying this wasn't about the streetcar, so we'll make it about the streetcar," said Cincinnati NAACP President Christopher Smitherman, who led the drive to get Issue 9 on the ballot, and h as claimed that any streetcar operation would be utilized mostly by "downtown Yuppies."
NAACP was joined by the Coalition Opposed to Additional Spending andTaxes (COAST) and the group WeDemandAVote in advocating Issue 9.
Countered Bob Maly, co-chairman of Cincinnatians forProgress, “Issue 9 lost because it was too broad and too confusing.” He added, "Also, I think people tend to like rail and didn't want to see Cincinnati left out." Other pro-rail advocates noted the streetcar plan would tie inwith the proposed 3-C high speed rail route linking Cincinnati with Columbus and Cleveland by intercity rail.
Pro-rail voices also included the Cincinnatus Association, Cincinnati USA Regional Chamber, AFL-CIO, and the Cincinnati League of Women Voters.
The streetcar proposal would link the city’s Downtown riverfront with Uptown neighborhoods and the University of Cincinnati.
Genesee & Wyoming Inc. Tuesday reported third-quarternet income of $21.7 million, up from $21.2 million in the third quarter of 2008. The company’s third-quarter diluted earnings per share slipped to $0.53 with 41.2 million weighted average shares outstanding, compared with diluted EPS of $0.58 with 36.6 million weighted average shares outstanding in theyear-ago quarter.
The results factored in GWI’s sale during the quarter of both its Mexican operations and Bolivian investment, which netted $2.2 million ($2.4 million after-tax, or $0.06 per diluted share) in discontinued operations.
Total revenue fell $23.0 million, or 14.4%, to $136.4 million, compared with $159.4 million in the third quarter of 2008. But the company's operating ratio held firm at 79%.
GWI President and CEO John C. Hellmann said, "Despite an extremely weak economic environment, we continue to manage our costs well and to generate strong free cash flow. In the third quarter, we maintained an operating ratio of 79% despite significant volume declines, and we are focused on ensuring that our productivity improvements remain intact when the economy improves. Meanwhile, we believe that the 5% increase in our revenues from the second quarter to the third quarter is indicative of a growing degree of economic stability."
Atlanta-based software provider RMI Tuesday said it has acquired ExpressYard, a Flint, Mich.-based provider of SaaS software applications that support the billing of railcar repairs for contract shops and railroads in North America.
Financial terms of the transaction were not disclosed. ExpressYard will relocate its Michigan operations to RMI’s headquarters in Atlanta.
RMI said that ExpressYard has provided SaaS software solutions since 2002 that enable contract repair shops and railroads to manage the billing for railcar repair work. The ExpressYard CRB solution allows repair facilities to manage all aspects of railcar repair and billing activities, ensuring that all repairs are billed in compliance with industry standards and regulations. More than 200 repair facilities throughout North America use ExpressYard CRB for data capture and billing, RMI said.
ExpressYard Chief Software Architect Robert Wojciechowski and fellow founding partner Mark Knapp will assume new roles at RMI’s corporate headquarters and will continue to lead the product road map and development of ExpressYard products. Justin Gillam, ExpressYard’s current Sales and Marketing chief and third founding partner, will continue to work from his base in Michigan representing ExpressYard.
“We are all looking forward to joining the RMI team. RMI is a quality organization that will bring its resources and experience to help us introduce new and improved solutions to the market,” said Gillam.
RMI Vice President of Marketing Paul Pascutti said, “With the acquisition of ExpressYard, not only are we elevating the quality of our software solutions in the area of repair billing, but we are also adding a high quality team from ExpressYard to our staff. We look forward to building on the ExpressYard platform to bring even greater innovation to the process of railcar maintenance, billing, and auditing.”
Omaha-based Berkshire Hathaway Inc., the holding company led by well-known billionaire Warren Buffett, announced Tuesday it has reached agreement with Burlington Northern Santa Fe Corp. to purchase the roughly 78% of BNSF stock it does not yet own, for $26 billion.
Berkshire Hathaway, in a press release, said, “Based on the number of outstanding BNI shares (including shares currently owned by Berkshire) on Nov. 2, 2009, the transaction is valued at approximately $44 billion, including $10 billion of outstanding BNSF debt, making it the largest acquisition in Berkshire Hathaway history.”
The deal has already been approved by the board of directors at both companies, with BNSF’s board ratifying the agreement late Monday night. The agreement still is subject to BNSF shareholder approval, and to review by the Department of Justice. BNSF will work with other regulatory agencies, including the Surface Transportation Board, to describe the transaction. The transaction is expected to be completed during the first quarter of 2010.
In a statement, BNSF Chairman, President, and CEO Matt Rose (pictured at left) said, “We are thrilled to have the opportunity to become a part of the Berkshire Hathaway family.” He added, “We admire Warren’s leadership philosophy supporting long-term investment that will allow BNSF to focus on future needs of our railroad, our customers, and the U.S. transportation infrastructure.”
One Washington, D.C. source told Railway Age BNSF's executive team would remain in place at the company's Fort Worth, Tex., headquarters. Berkshire Hathaway affirmed in its press release that BNSF “will continue to focus on providing outstanding service to its customers from its Fort Worth, Tex. headquarters,” while Buffett (pictured at right) lauded the current management, saying, "Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry."
“Most important of all, however, it’s an all-in wager on the economic future of the United States. I love these bets,” Buffett said.
Berkshire Hathaway says it will pay $100 a share in cash and stock for the rest of the company, a 31.5% premium on BNSF’s share closing price Monday on the New York Stock Exchange. Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60% of the deal is cash and 40% is in stock. Berkshire Hathaway will fund $16 billion of the purchase with cash, and the remainder in stock. Of the $16 billion cash share, it will pay $8 billion from its own cash reserve.
Wall Street responded enthusiastically early Tuesday morning, running counter to the Dow Jones Industrial average. Shares of BNSF (BNI) remained up more than 28%, shortly after noon, hovering at $97.55, just below the benchmark, and also below the stock’s 52-week high of $97.98. The stock was still at or near $97.55 one half-hour before the closing bell Tuesday; shares finally retreated modestly, ending the trading day at $97.00, still up an impressive 27.51%.
The majority of the stock in the deal will be Berkshire’s “A” shares, but Berkshire’s board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of BNSF shares who opt for a share exchange rather than cash. Berkshire'’s Class B shares closed Monday at $3,265. With the split, each share will be worth $65.30.
Purchase tackles the energy angles
One analysis suggests Berkshire Hathaway not only is committing to the future of U.S. freight railroading, but is also making a strategic move to bolster support for coal energy despite environmental concerns. Berkshire Hathaway owns MidAmerican Energy Holdings, which controls power companies in the Midwest and Pacific Northwest regions served by BNSF, and which has voiced disapproval over climate change legislation aimed at coal-fired plants.
But Buffett has made it clear he believes rail also has a distinct advantage in energy efficiency over other modes as well. At Berkshire Hathaway’s annual meeting last May, held in Omaha, Buffett noted, “As oil prices go up, higher diesel fuel raises costs for rails, but it raised costs for its competitors, truckers, roughly by a factor of four.”
At Morgan Stanley Research, analysts William Greene, AdamLongson, and John Godyn observe, “Buffett believes rails look cheap: Berkshire’s BNI acquisition is a long-term bet on railroads and the U.S. economy, but also signals there is significant value in rail stocks today.”
Despite skepticism in some quarters that BNSF’s earnings per share don’t justify the premium being offered by Berkshire Hathaway, “Berkshire’s successful investment track record suggests Buffett believes he is likely to enjoy a substantial IRR [internal rate of return] despite the premium. In other words, consensus estimates are far too low for 2010 and beyond given volume recovery, pricing durability, and productivity,” the analysts said.
They added, “To make such a large investment, Berkshire must also believe regulatory concerns are unlikely to impact rail economics. If correct, using similar multiples on other rail stocks would imply 30-40% upside across the group.”
Besides BNSF, Berkshire Hathaway also held more modest holdings in at least two other Class I railroads through June 30: 9.56 million shares in Union Pacific Corp., which competes directly with BNSF; and 1.93 million shares of Norfolk Southern Corp.
Norfolk Southern and the Commonwealth of Pennsylvania are investing $11 million to expand track and parking capacity in the railroad's intermodal facility at the Philadelphia Navy Yard.
In an announcement Monday, NS said the project is part of its Crescent Corridor initiative to establish a high speed intermodal route between the Gulf Coast and the Northeast. The $6 million from Norfolk Southern and $5 million from Pennsylvania will create the capacity to handle more than 72,000 containers and trailers annually, said NS.
"Because of its strategic location to Southeastern Pennsylvania, South Jersey, and Delaware, expansion of the Philadelphia Navy Yard intermodal facility is critical to the success of our Crescent Corridor," said Wick Moorman, Norfolk Southern's chief executive officer. "We commend Gov. Ed Rendell for his efforts to provide state funding for our intermodal terminal initiatives in the commonwealth."
"Pennsylvania has invested heavily in rail freight because it is a smart, environmentally friendly, cost-effective infrastructure investment. I will continue to advocate for rail freight investments at the state and national level," Gov. Edward G. Rendell said.
U.S. rail-related fatalities declined 12.4% to a total of 466 in the 12 months ended Aug. 31, according to the Federal Railroad Administration's Office of Safety. Only 12 of these were employee fatalities, down 49.5% from the prior 12-month period.
Trespassing caused 293 deaths, a decline of 8.8%. Highway-rail grade crossing accidents, accountable for 156 lives, also were down 18.3%.
The FRA said 724 large and small reporting railroads recorded 7,019 accidents and incidents in the latest 12-month period, down 18.9% from the prior 12 months.
Train accidents were down 29.1% to 1,222; collisions dropped 28.9% to 91; derailments were off 1.1% to 867. Yard accidents were down 32.7% to 638.
Track causes were blamed for 469 train accidents, down 3.9%; human factors for 412, down 32.2%; signal causes for 28, down 17.8%; and equipment causes for 170, down 17.6%.
HNTB Corp. announced Monday it has hired Eugene Skoropowski as passenger rail services director for its South East Division, based in the firm’s Lake Mary, Fla., office. Skoropowski will step down this month from his position of managing director at the California Capitol Corridor Joint Powers Authority, where he served for 10 years. He will assume his new role Dec. 1.
In his new role, Skoropowski (pictured at left) is responsible for serving clients of HNTB’s passenger rail services and providing management and technical services for the firm’s current and future projects in the U.S. Southeast.
“HNTB is extremely proud to add Gene to our roster of high-speed rail professionals,” said Peter Gertler, HNTB high-speed rail services chair. “His extensive domestic and international experience and talent will add significant value to the services we provide our clients as we continue to lead the industry in bringing high-speed rail to America.”
Prior to arriving at CCJPA, Skoropowski served as director of rail projects for Fluor Corp., where he managed rail construction and operations projects in Los Angeles (MetroRail) and Florida High-Speed Rail (Florida Overland eXpress), as well as public-private partnership for TGV high speed rail services in France. He helped lead Fluor’s successful 25-year franchise proposal to design-build-operate-maintain (DBOM) all track, signals, and other related infrastructure for the HSL Zuid Project in the Netherlands—TGV-type, "Thalys" high-speed trains running from Brussels to Amsterdam.
Skoropowski also served as assistant general manager of Philadelphia's SEPTA regional transit system and was chief railroad services officer for Boston's Massachusetts Bay Transportation Authority regional rail system for five years. While practicing as a private architect and planner, he also served six years on the Boston transit system's budgetary board and regional planning commission.
He is a founding member of the American Public Transportation Association Commuter Rail Committee and is a current member of the APTA High Speed/Intercity Rail Committee and Legislative Committee. He is also a member of the Intercity Rail Working Group supporting the National Commission Study on Transportation Policy and Investment submitted to Congressin 2008.
Skoropowski holds a bachelor of architecture degree from The Catholic University of America School of Architecture & Planning in Washington, D.C.
The expected $300 million deal between the Los Angeles County Metropolitan Transportation Authority and AnsaldoBreda for 100 light rail transit cars, and a new manufacturing plant to be built in the county, has stalled and appears to have fallen through.
LACMTA officials said the Italian railcar manufacturer had failed to submit suitable financial guarantees linked to an existing initial contract for 50 LRT cars, which has suffered from delivery delays and concerns over overweight cars. That jeopardizes not just the contract for additional cars but also AnsaldoBreda’s proposed $70 million factory.
Los Angeles Mayor Antonio Villaraigosa has counted on the deal to provide the new plant, which was expected to generate $368 million in economic activity, including 650 factory jobs. The Los Angeles County Federation of Labor had lobbied the MTA board in favor of the contract. Disappointed, Villaraigosa said, “"In these tough economic times, it was important to make every effort to bring good jobs to LA and simultaneously exercise due diligence to protect public funds in pursuing this contract." He continued, “Unfortunately after months of negotiations, at the last minute, satisfactory financial guarantees were not provided and the deal was not signed."
LACMTA board member Richard Katz, a Villaraigosa appointee, said AnsaldoBreda had been "unprofessional and so unbusinesslike," and said the company's inability to perform under its existing contract could result in litigation.
AnsaldoBreda officials have defended the company’s product and performance. In a statement, company President and CEO Giancarlo Fantappié said that his company had provided sufficient financial safeguards for MTA and that he regretted a deal could not be reached "despite multiple efforts to negotiate in good faith on both sides."
Fantappié said Ansado/Breda has not given up on the LA market, declaring, "Despite this turn of events, Los Angeles continues to represent a focal point for our strategy in America." AnsaldoBreda is eligible to take part in LACMTA’s renewed bidding process to build the rail cars. LACMTA says it will launch a new bidding process quickly.
BNSF Railway Co. said Friday it leads surface transportation providers in climate change disclosure, according to the Carbon Disclosure Project (CDP), which represents 475 institutional investors with $55 trillion in assets under management.
CDP is an independent not-for-profit organization which claims to hold the largest database of corporate climate change information in the world. CDP gathers data through its annual Information Requests on behalf of institutional investors, purchasingorganizations and government bodies.
BNSF is featured in the CDP’s Carbon Disclosure Leadership Index within both the S&P 500 Index and FTSE Global 500 Index. The indices are key components of CDP’s annual Global 500 Report and S&P 500 Report. These reports highlight the constituent companies within the FTSE Global 500 Index and the S&P 500 Index that have displayed the most professional approach to corporate governance in respect of climate change disclosure practices. Companies are scored on their climate change disclosure. High scores indicate good internal data management and understanding of climate change related issues affecting the company. BNSF was the only railroad to be featured in either CDP Leadership Index.
“BNSF is pleased to be recognized for its efforts in climate change disclosure,” said BNSF Chairman, President, and CEO Matthew K. Rose. “Climate change continues to be a major concern for the global community, and BNSF is focused on both the potential impact of changes in ourclimate and our role in protecting the environment. Railroads are the most environmentally preferred mode of surface transportation, and BNSF is an industry leader. We play a vital role in our nation’s economy while reducing emissions, saving fuel, and relieving highway congestion.”
The indices, compiled by PricewaterhouseCoopers (PwC) on behalf of CDP, provide an evaluation tool for institutional investors. It comprises 50 constituents of the Global 500 Index and 50 constituents of the S&P 500 Index based on analysis of the responses to CDP’s 2009 Questionnaire which focused on greenhouse gas emissions, emissions reduction targets and risks and opportunities associated with climate change.
U.S. carload traffic fell 14.8% for the week ended October 24, compared with the same week a year ago, the Association of American Railroads reported. Carloads in the West and the East both were down 14.8% compared with the same period one year ago. Total volume on U.S. railroads for the week ending October 24, 2009 was estimated at 31.1 billion ton-miles, down 13.4%. U.S. intermodal traffic fell 10.1% from a year ago.
Canadian railroads reported carload volume declined 9.9% from last year, while intermodal traffic was down 13%. Mexico’s two major railroads reported carload volume slipped 2% from the same week last year, while intermodal slid 6.5%.
Combined North American rail volume for the first 42 weeks of 2009 on 13 reporting U.S., Canadian, and Mexican railroads was down 18.4% from the comparable 2008 time span, while intermodal volume fell 16.3% short of last year’s levels.