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8/85 MINNESOTA
<br /> MAGAZINE
<br /> 3
<br />
<br />I
<br />
<br />Streamlined railway industry on the'road again
<br />
<br />I
<br />
<br />Land interest revives aging giant
<br />
<br /> ~'hat happens when a giant, stodgy,
<br /> stagnating industry is turned on its ear?
<br /> Competition, that~ what happens.
<br /> America's century-plus-obi railroad
<br />industq, didn't exactly pride it,ll on its
<br />reputation prior to being deregulated by
<br />the Staggers Act of 1980. The Robber
<br />
<br />Baron image of thc 18002~ turned into the
<br />featherbedSing 1900s, thc public per-
<br />ception of the railroads was that of a
<br />dying institution, reinforced by the
<br />elimination of passenger sen'ice and the
<br /> highly publicized Penn Central and
<br /> Rock Island bankruptcies of the 1970s.
<br /> But Staggers changed all that. Sud-
<br />denlv. railroads had to compete to sur-
<br />vive. There was no more collective rate
<br />making. No room for oversize compan-
<br />ies paying inflated wages while provid-
<br /> ing mediocre service.
<br /> Today, thc railroads are born again.
<br /> The industD' is streamlined. Unprofit-
<br />able trackage has been cut and employ-
<br />ment has been reduced more than 30
<br />percent since 1977.
<br />
<br /> Burlington Northern, with track
<br />through 25 states, is considerably larger
<br />than thc Soo/Milwaukee, but the phi-
<br />losophy is the same.
<br /> "We feel strongly that a key factor in
<br />attracting business along our line is to be
<br />the lowest cost rail carrier," said Mi-
<br />chael Karl, BN's senior assistant vice
<br />president for property management.
<br />"We're continually searching for ways to
<br />become more efficient from an operat-
<br />ing standpoint in order to economically
<br />deliver raw materials to an industry and
<br />to move their value-added products
<br />out."
<br /> But BN is not just interested in devel-
<br />oping its own property or that which is
<br />immediately adjacent to trackage.
<br /> "With the advances in intermodai
<br />transportation, it's very easy to move
<br />the goods to the railroad via truck-trail-
<br />ers or containers," said Karl, "so we're
<br />yep,.' concerned with development any-
<br />where in our service area." , r
<br /> While competitors, there are in-
<br />
<br /> stances where lin and thc Soo/Mihvan-
<br /> kee both have vested interest in thc same
<br /> project. An example was Minnesota's
<br /> pro~)sal to General Motors for the Sat-
<br /> urn automobile plant. Both lines serve
<br /> both sites Minnesota proposed for the
<br /> plant. The two transportation compan-
<br /> ies felt there was so much to be gained by
<br /> all concerned parties that representa-
<br /> tives of both firms sat down at the same
<br /> table to cooperate in attracting the
<br /> plant.
<br /> "We're l~klng to get the highest and
<br /> best use of our land and to attract busi-
<br /> ness to our railroad." Karl said, "and
<br /> the recent efforts by Minnesota to lower
<br /> taxes should definitely help."
<br /> Karl says BN isn't concerned about
<br /> the size of businesses attracted to the
<br /> railroad. He says part of the challenge is
<br /> to put together a transportation plan
<br /> that helps a business prosper.
<br />· "It's gratifying to help a small busi-
<br />ness grow. And of co,se, we know ours
<br />will ~ow along with it," he said.
<br />
<br /> Competition is fierce, both between
<br />Ithe railroads themselves and other
<br /> Great Lakes, Mississippi give
<br /> only have to work to get the business,
<br />Ithey have to work to keep it.
<br /> market access to30 states
<br />
<br /> opment.
<br /> Traditionally, the railroads have been
<br />Ilarge landowners. Those serving Min-
<br />nesota are no exception. Both
<br />Burlington Northern and the newly
<br />Iformed Soo/Milwaukee manage sizable
<br />land hoktings. And both have put in-
<br />creased emphasis on bringing industry
<br />t o those lands.
<br /> "g;'e're in the process of reorganizing
<br /> ur industrial development effort as a
<br /> result of our acquisition of the Milx~au-
<br />l.]ee Road." said Al Grascr. Soo's man-
<br />ger of industrial devel.pment. "But
<br />it's safe to say that the acquisition will
<br />lead to an expanded industrial develop-
<br />t ent effort."
<br /> That acquisition gave the regional
<br /> railroad act'ess to several kev rail gate-
<br />,ways. including Kansas City. It also
<br />I
<br /> mmided the Soo with more favorable
<br /> rackage to Chicago.
<br /> The company intends to use its ex-
<br />!l anded size and improved routes to at-
<br />act more businesses along Soo/Mil-
<br /> 'aukee rights-of-~vay. '
<br />
<br /> America's heartland relies on Minne-
<br />sota's diverse transportation system.
<br />Our waterways, alone, provide a key
<br />service to the businesses and consumers
<br />located in the 30 states accessible via the
<br />Great Lakes or Mississippi River.
<br /> Each year, 25 percent of the nation's
<br />intercity freight tonnage moves over our
<br />state's water transportation system.
<br /> But both the river and the Great
<br />Lakes systems have their physical limits
<br />and economic challenges.
<br /> On the positive side, Greg Ganz, fleet
<br />superintendent for Upper River Serv-
<br />ices I formerly part of Twin City Barge}
<br />in St. Paul, said both he and the Army
<br />Corps of Engineers agree that grain
<br />sl,ipments on the Mississippi will be
<br />close to the high levels of 1978-79. "We
<br />do have our concerns, mainly the impact
<br />of the strong dollar and the lingering af-
<br />ter-effects of the 1980 grain embargo,
<br />but this shot,ld be a positive year."
<br /> Another business dependent on the
<br />river has a different perspective. Pacific
<br />
<br />Molasses Co. has a terminal and liquid
<br />dehydration plant in St. Paul and de-
<br />pends on the deliver>.' of materials com-
<br />ing upriver.
<br /> Lar~' Rohn, plant manager, sai~ they
<br />are not having trouble getting ship-
<br />ments, but, "We are seeing a bit of a de-
<br />cline this year. primarily due to the de-
<br />pressed farm economy."
<br /> Rohn added that the length of the
<br />river shipping season also can have an
<br />adverse impact. "We sometimes have to
<br />resort to a different, more costb; means
<br />of getting our goods here."
<br /> The status of water transportation
<br />through the Port of Duluth/Superior is
<br />better.
<br /> Commerce through the port in 19'd4
<br />contributed $233 million to the econ-
<br />omy, up from $216 million in 1983, ac-
<br />cording to Bill Cortes, director of public
<br />affairs for the Seaway Port Authority of
<br />
<br />XX]~,T E R XX AYS
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