Cubic Transportation Systems has won a contract valued at nearly $20 million to deliver new smart card-capable fare gates and ticket vending machines in nine San Francisco Municipal Railway (MUNI) subway stations in San Francisco. MUNI is partially funding the project with federal stimulus money. The new fare collection equipment is to be fully operational by the spring of 2011.
The company said it will install the equipment and software necessary to fully integrate the MUNI stations into the regional TransLink smart card network managed by the Metropolitan Transportation Commission (MTC). TransLink allows riders to use one convenient card to travel on MUNI and other public transportation systems in the Bay Area. Cubic also manages the TransLink system for MTC.
Cubic installed MUNI's existing bus fare collectionequipment 18 years ago.
L.B. Foster Co. of Pittsburgh has joined Covington, Ky.-based Lally Pipe & Tube and industry veteran Jim Legg to form LB Pipe & Coupling Products, LLC, to manufacture couplings and accessories for the waterwell, oil country tubular goods (OCTG) and American Petroleum Institute (API) markets.
LB Pipe & Coupling Products will occupy a manufacturing facility currently under construction in Magnolia, Tex.
"L.B. Foster is pleased to team with Lally in building this exciting joint venture. This will be the beginning of developing new opportunities in the future," said L.B. Foster Vice President Tubular Products Merry Brumbaugh.
MTA New York City Transit President Howard Roberts resigned Wednesday morning after 2 1/2 years as the chief executive of the largest U.S. subway and bus system. Roberts will step down November 30.
Roberts’ departure was not wholly unexpected, given the recent arrival of Jay Walder as MTA chairman; Walder has indicated he planned to revamp MTA corporate leadership during his tenure.
Some transit advocates credit Roberts for a series of reforms, including the reorganization of subway operations through assigning general managers to specific subway routes and giving those managers more responsibility and decision-making authority for those routes.
Detractors included some MTA directors who voiced frustration with ongoing subway delays and service disruptions. Others accused Roberts of being too comfortable with labor. Still others disparaged the general manager assignments to specific subway lines as thinly veiled cronyism.
The Greater Cleveland Regional Transit Authority Wednesday gave ProTran1 LLC a Notice to Proceed to install ProTran1’s ProTracker Alert System on all GCRTA’s transit vehicles. Blue Anchor, N.J.-based ProTran1’s contract with GCRTA is worth $750,000.
The regional authority already has put in place the supplier’s ProTracker system for Track Worker Safety. The Alert System is expected to be completed within six months.
Wabtec Corp.'s Vapor Rail unit has won a contract worth about $30 million to supply electric, sliding plug doors for 440 subway cars to be built by Hyundai Rotem for the $14 billion Marmaray project in Istanbul, Turkey, which will connect the European and Asian sections of the city when completed in 2012.
The Marmaray project, which includes construction of the world's deepest tube tunnels, consists of a new, 8.5-mile section and the upgrading of 39 miles of existing suburban lines.
"We're pleased to be working with Hyundai Rotem on this high-profile program," said Albert J. Neupaver, Wabtec's presidentand chief executive officer. "We have taken important steps toward building a global rail door business, and this contract represents significant progress in our efforts."
In 2009, Wabtec created a global Center of Excellence for rail doors, with headquarters at Vapor Rail's Montreal office, and manufacturing facilities in Plattsburgh, N.Y., and Sassuolo, Italy.
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.