Wednesday, January 25, 2012

Norfolk Southern increases capital spending

Written by  Luther S. Miller, Senior Consulting Editor

Norfolk Southern has announced a $2.4 billion capital improvement program for 2012, 12% higher than 2011 spending. 

"As in prior years, the majority of our capital spending is targeted towards strengthening the franchise," Deborah H. Butler, Executive Vice President and Chief Information Officer, told a Norfolk Southern fourth-quarter 2011 earnings conference on Tuesday. "Replacement and core spending represent about $1.6 billion or 67% of our total capital budget. If we include in the core spending category $247 million budgeted for the continued implementation of Positive Train Control, the total is in line with our historical average of about 75% core and 25% growth spending." 

She said the growth portion of the budget, totaling $545 million, is for track and terminal expansions and for projects to improve asset utilization, workforce productivity, and fuel efficiency. 

On the equipment side, locomotive spending will total $242 million in 2012 or 10% of the total budget. It covers the purchase of 35 new units, as well as continued investments in alternative power programs. Also included is funding to rebuild and upgrade existing locomotives and full installation of emissions kits to meet government requirements. 

Freight car spending in 2012 will total $346 million, 14% of the total capital budget. "We're continuing a multiyear investment in new coal cars as our existing fleet ages out. And in addition, we're ramping up the coal car re-body program in 2012. Freight car funding will also be used to purchase," said Butler.