UTU News Digest - Wednesday, July 19, 2000

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, July 20, 2000

CANADA: Canadian Pacific rail earnings soar
GERMANY: DaimlerChrysler May Divest of Trains
ALASKA: America's Gold Rush Railroad Celebrates 100th Birthday July 29
WASHINGTON, D.C.: Rails say they're ready for peak trans-Pacific season
PENNSYLVANIA: West Deer native trying to put historic locomotive back on track

CANADA: Canadian Pacific rail earnings soar

VANCOUVER -- Canadian Pacific Railway on Wednesday reported record second quarter operating income of $204 million, 29% higher than the $46 million operating income in the 1999 second quarter, the Journal of Commerce Online reported.

The report excludes a $501 million unusual charge recorded in the year earlier period.

Net income increased $22 million, or 30%, to $96 million.

Revenue increased $76 million, or 9%, to $904 million in the quarter, while operating expenses increased $29 million, or 4%, to $700 million. As a result, the ratio of operating expenses to income, a key bottom line indicator, improved to 77.4%, a 3.6 point decrease from a year earlier.

Robert Ritchie, CP president and chief executive, said in a conference call that the railroad is on target to reduce its operating ratio to the mid-70s and to the low 70s in the next two years.

The carrier's expenses were up 4%, pushed by a 50% increase in the price of diesel fuel. Ritchie said if it hadn't been for the sharp run-up in fuel prices, expenses would have been flat in the face of an 11% increase in work load in the quarter. Revenue gains were led by improvements in grain, automotive and intermodal volume, Ritchie said.

'Bulks are starting to bounce back after the 'Asian flu' a couple of years ago,' Ritchie said. Grain revenues were up $18 million in the quarter, or 12%, as inventories were available to meet strengthening export demand.

Ritchie said he was 'not happy' with the Canadian government's decision to order an 18% reduction in grain rates, suggesting that it would not be good for grain producers or shippers in the long run. 'The government obviously disagrees,' he said.

Automotive revenue was up $15 million, or 21%, on increased business largely from DaimlerChrysler, Toyota and Honda. Ritchie said the gains did not reflect a market shift between railroads as much as strong shipments by traditional customers. He added that CP's Delaware & Hudson subsidiary in the U.S. Northeast had reopened an auto ramp at Voorhees, N.Y.

Intermodal revenue increased $12 million, or 6%, with half the gain from import-export business.

The improvement in the operating ratio was a direct result of the company's $1 billion in capital investments over the last three years, Ritchie said.

The acquisition of high-performance locomotives allows the railroad to operate longer and heavier trains, improving freight car and locomotive utilization. The average freight car is traveling 12% more miles each day, he said.

Commenting on the U.S. appeals court decision upholding the moratorium on rail mergers, which may halt rival Canadian National's proposed link-up with Burlington Northern Santa Fe, Ritchie said 'We're satisfied with the decision. We'll continue to work our strategy of developing partnerships.'

Ritchie specifically mentioned the connections between CP and Union Pacific, the largest U.S. carrier; the industry investment in Arzoon, an e-business transportation platform, and improved business with Transportacion Ferrovaria Mexicana, the principal Mexican railroad between the U.S. border and the industrial complexes of Monterrey and Mexico City. 'We doubled our sales into the Mexican market, admittedly off a low base,' he said. CP business in the U.S. Northeast continues to improve, particularly with Norfolk Southern, he said, since the break-up of Conrail between NS and CSX in 1999. The D&H unit has haulage agreements with NS that give the U.S. carrier access to New England and eastern Canada.

GERMANY: DaimlerChrysler may divest of trains

STUTTGART -- German-American automaker DaimlerChrysler plans to sell its railroad division to Canada's Bombardier, a German business magazine reported Wednesday, a wire service reported.

Chairman Juergen Schrempp wants to sell off the Adtranz division to concentrate more on the company's core automobile business, according to an advanced summary of an article in the issue of Manager magazine that goes on newsstands Friday.

A company spokeswoman would not comment on the report and called it pure speculation. The magazine did not put a value on a deal but said DaimlerChrysler would not lose money by selling off Adtranz.

Adtranz is a member of the consortium building Germany's high-speed intercity express locomotives and its experimental levitated trains, which race even faster. Besides making subway cars and high-speed train equipment, Montreal-based Bombardier makes snowmobiles, jet skis and aircraft, including the Lear jet.

ALASKA: America's Gold Rush Railroad Celebrates 100th Birthday July 29

SKAGWAY -- One of the country's most historic railroads, the White Pass & Yukon Route, will celebrate the completion of its construction 100 years ago with a day-long centennial celebration on Saturday, July 29, 2000 beginning at 11:00 a.m. (PDT) in Carcross, Yukon Territory, a press release said.

On hand to help the White Pass & Yukon Route Railroad celebrate will be 1,500 people from across Alaska, Canada and the United States, including 12 descendents of the railroad's founder, Michael J. Heney, who will travel from points as far away as Singapore and will include his great nephew Brendan Heney who now works as a tour guide on the White Pass & Yukon Route in Skagway. Also on hand will be Jessie Hislop, great niece of the WP&YR's chief engineer and surveyor, John Hislop.

The "Narrow Gauge Gang," a group of private rail casey car owners, will drive across the country and up the Alaska Highway hauling their nine railcars on flatbed trailers. This unique group of "tourists" will operate them on the unused portion of the line between Whitehorse and Carcross, YT.

The White Pass & Yukon Route, the only international narrow gauge railroad in North America, and offers scenic train excursions to more than 275,000 passengers a year from Skagway, in Southeast Alaska along the first 40 miles of the original 110-mile line. Skagway is a restored gold rush town and headquarters of the Klondike Gold Rush National Historical Park.

Construction of the WP&YR began in 1898 during the height of the Klondike Gold Rush, and was completed in July 1900. At the time, construction was considered to be one of the greatest feats of modern history, and provided a vital link between the tidewater port of Skagway to the gold fields of the Yukon. The WP&YR was designated an International Historic Civil Engineering Landmark in 1994.

Anyone needing more information or wishing to attend should contact Tina Cyr, 907-983-2217. Media space for hotel and train to Carcross is available.

WASHINGTON, D.C.: Rails say they're ready for peak trans-Pacific season

WASHINGTON, D.C. -- As the trans-Pacific peak season shifts into high gear, port officials from Los Angeles and Long Beach have obtained reassurances that railroads will be able to handle what's expected to be a record year, the Journal of Commerce Online reported.

Port officials met this month with the chief executives of the Union Pacific and the Burlington Northern and Santa Fe railroads, and said they came away with the feeling that the railroads are better prepared for this peak season than in previous years. The Southern California delegation included the executive directors of both ports, as well as representatives from some shipping lines.

They met with BNSF Chairman Robert Krebs, UP Chairman Dick Davidson, and both railroads' presidents and top intermodal executives.

The railroads are still smarting from the fiasco in the summer and fall of 1997, when Los Angeles-Long Beach import traffic was snarled by service problems on the UP system. UP and BNSF expressed confidence they'll be ready for this year's peak.

BNSF reported that it has double-tracked all but 300 miles of its main intermodal route between Los Angeles and Chicago. UP said it is adding trains and personnel to its Southern California operations. TTX, the company that is owned by the nation's railroads and supplies them with intermodal railcars, is adding 10,000 railcar platforms this year - an increase of almost 12 percent from last year.

Ports, shipping lines and railroads still haven't been able to work out how to develop accurate cargo forecasts so railroads can order enough equipment for the summer-fall peak shipping season. "Forecasting is the word of the day," said David Longsworth, a BNSF spokesman. Longsworth noted that the ports late last year projected a 7 percent to 8 percent increase in imports from Asia. BNSF executives this March visited shipping lines in Asia, and the forecast was increased to 10 percent. So far this year, BNSF's intermodal liftings are running 20 percent to 30 percent over last year. "The forecasts were a little off," he said.

Shipping lines expect volumes this year to peak again in September to October, but they don't expect a dramatic increase over the record 400,000-TEU-plus volumes that Los Angeles and Long Beach posted in May. Those totals exceeded the highest monthly volumes during the 1999 peak season.

"We expect a slow but steady increase through the peak," said Henning Meyn, chief operating officer at Yusen Terminals, the terminal operator for NYK Line North America. This year's peak season may extend longer than the traditional four-to-six-week peak, said Clifton Hickok, general manager of pricing and marketing-North America at Hanjin Shipping. If the season is spread out, it will help shipping lines, terminal operators and rail carriers handle the increased volumes, he said.

PENNSYLVANIA: West Deer native trying to put historic locomotive back on track

PITTSBURGH -- It was clear from the start that restoring Pennsylvania's official steam locomotive meant more than simply turning a rusted, broken-down hunk of steel into a little engine that could, the Pittsburgh Post Gazette reported.

Instead, the 82-year-old Mighty K-4s No. 1361, now undergoing repairs in Scranton, would have to be rebuilt from the ground up, rivet by rivet, until it was a sparkling specimen of a bygone era when rail ruled supreme.

"The K-4 probably pulled more people than any locomotive in America," said state Rep. Rick Geist, R-Altoona. "This is a very, very big deal."

Geist, who has championed the K-4s and sponsored the bill designating them as the state's official steam locomotive, remembers what it was like growing up in a town built upon the rail business.

"They weren't just locomotives to us," he said of the trains that noisily chugged and belched smoke as they passed through Altoona. "They were living things. They had a life and soul of their own. They rambled, mumbled, creaked and moaned."

The job of breathing life back into the long-abandoned, 250-ton K-4 has fallen to Jeff Miller, a 42-year-old West Deer native who is as surprised as the next guy that his weekend hobby of repairing steam engines has parlayed itself into a career.

"It was just something that was interesting," said Miller, who was working as a general mechanic for the owners of Freeport Brick Co. in the early 1980s when he agreed to help a friend restore an old locomotive.

"Before the 1980s, I didn't even know this kind of stuff existed," Miller said.

At first, Miller showed up on weekends to clean bolts and rivets. Along the way, he met several railroad enthusiasts who would stop by his friend's shop to see the engine's progress.

As he became part of the enthusiasts' inner circle, Miller joined the Pittsburgh Transportation Museum Society that ran excursions on local railroads, and he began volunteering to help clean up other engines around the country.

In 1988, the owner of a rail service business in Fort Wayne, Ind., made Miller an offer he couldn't refuse.

It was a chance to go to Williams, Ariz., and get paid to work as a mechanic on the steam locomotives at the Grand Canyon Railroad.

"He said $30,000 to start, $40,000 in two years and after that, the possibilities were unlimited," Miller said. "He said unlimited ... so who could pass that up?"

Miller wound up working directly for the Grand Canyon Railroad instead of his acquaintance.

The mechanic didn't know it then, but a career had just been born.

Miller went on to work on locomotives in Texas, North Carolina, Kentucky, Tennessee and Minnesota.

For a year beginning in June 1995, Miller found himself at the Steamtown National Historic Site in Scranton, where the National Park Service oversees a working railroad repair shop.

Miller was visiting the shop with a locomotive crew from Minnesota that was running an engine at the park during its grand opening, Steamtown officials accepted into their custody a very tired, rundown permanent guest.

"The No. 1361 came in about a week before we were due to leave," Miller said.

He looked the locomotive over and realized right away someone had their hands full. His first impression was that of all the engines he had helped restore, the K-4 "needed the most work."

The reasons were obvious, as Miller would soon learn.

The K-4 was built in 1918 and was retired in 1956 after running an impressive 2.5 million miles.

The locomotive was displayed outside near the tracks at the Horseshoe National Historic Landmark in Altoona from 1957 to 1985, when it was towed to the nearby Juniata Locomotive Shops for its first restoration.

Crews got the K-4 up and running in 1987, but time had not been kind. A year later, the locomotive sustained a catastrophic main-bearing and drive-axle failure.

The locomotive was dismantled in 1996 and taken to Steamtown. It is being restored through a partnership between the Altoona Railroaders Memorial Museum, the University of Scranton and Steamtown.

In addition to the $420,000 in grant money already spent on the project, Gov. Ridge released another $600,000 in March to help pay for the K-4's full restoration.

Miller has been leading the restoration since September 1997, the year he formed his own company, Dampf Technologies. Dampf, he explains, means "steam" in German.

At the beginning, Miller was inundated with time-consuming problems.

Nearly every broken pin and bolt had to be replaced with handmade duplicates.

"Almost everything was made for this job," Miller said. "There is very little off the shelf."

And Miller, who works on the K-4 with one other full-time employee, relies on three or four weekend volunteers, some of whom are railroad buffs, to help pick up the slack.

"Usually with a project of this magnitude, you have dozens of people working on it in shifts," he said. "I have always been used to working with five, 10 or 20 people."

Still, Miller and his crew have completed about 60 percent of the work on the K-4s and are now moving from what he calls the manufacturing stage onto true assembly.

Because of the scope of the restoration, Miller lives in Scranton and rarely comes home.

"Oh, I'll swing by every month or so to get the mail," said Miller, who has put 208,000 miles on his pickup truck driving to and from Steamtown, and other faraway jobs, over the past seven years.

Barring any unforeseen problems, Miller said with a careful smile, the K-4 should be back on track by fall 2001.

The K-4 will probably make a meandering victory tour of the state, Geist said, and will eventually find a permanent home at the railroad museum in Altoona.

"I'm anxious for it to be done," Geist said. "This is an artifact that is living and breathing. And when it is under steam, it is unbelievable. This is great for the community and Western Pennsylvania, and it can become a symbol for the state of Pennsylvania."

Not only will the locomotive carry passengers, said Chris Aherns, Steamtown's project director, but it also will give people a unique opportunity to experience with all of their senses a small piece of the past.

"When you can do something that is part of your heritage, it puts a dynamic spin on what life was like back then, and you have furthered the educational process. It gives people something to relate to," Aherns said.