Jan 2013 Railway Age Magazine

ailway ge R A

January 2013 | www.railwayage.com

Serving the railway industry since 1856

railrOader Of tHe Year

Jim YOung

HOw He tOOk uniOn Pacific tO new HeigHts

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RailwayAge

JANUARY 2013

visit us at www.railwayage.com Features Jim young, Railroader of the year

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2013 Passenger Rail Outlook and Car Market at-a-glance

49

News/Columns From the editor

4

Update watching washington

12 14

Financial edge

64

Departments industry indicators

4

industry Outlook

6

Market

8

People

56

100 years ago

56

Meetings

56

Products

57

advertising index

61

Professional Directory

62

Classified

63

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49 On the COver CeO Jim young is the sixth UP recipient of Railway age’s Railroader of the year.

Photo: Union Pacific Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 345 Hudson St., 12th Fl., New York, NY 10014. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 214, No. 1.

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January 2013 Railway age 1

RailwayAge

From the Editor william C. Vantuono

Editorial and ExEcutivE officEs Simmons-Boardman Publishing Corp.

345 Hudson Street, 12th Fl. New York, NY 10014 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com

Corporate cultural change marks UP’s progress

M

ichael Ward, chief executive of CSX and a previous Railway Age Railroader of the Year, once told me that turning a large railroad around is much like trying to change the direction of an ocean liner. It’s a long process that must be done very carefully. Union Pacific Chairman James R. Young, our 2013 recipient of the industry’s most prestigious award, accomplished much the same thing, though with a bigger ship. An aircraft carrier comes to mind.

In Union Pacific’s case, the turnaround was not so much in terms of performance, though the railroad has gone through a couple of fairly nightmarish meltdowns in the past 15 years, such as the one that immediately followed the Southern Pacific acquisition.

UP, once described by our late Senior Editor Gus Welty as “the 800-pound gorilla,” has under Jim Young’s leadership experienced a remarkable cultural change.

As Young described to me at UP’s Omaha headquarters, today’s Union Pacific is an amalgamation of no fewer than six railroads.

We all know the fallen flags: Chicago & North Western, Missouri Pacific, Western Pacific, Missouri-Kansas-Texas, and Southern Pacific. Merging all those disparate cultures was a demanding task, one that rarely went as smoothly as the people in Omaha had perhaps hoped for.

Jim Young, who joined UP right out of college, has seen it all. The railroad upon which he continues to leave an indelible mark has set many records over the past few years.

Among these are record full-year earnings in 2010 and 2011, record capital investment every year since 2010 (and a strong possibility of another record in 2013), and—most important—record levels of customer satisfaction every year since 2009.

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January 2013

It is this latter category that Young believes is most important.

“The cultural change, in my mind, was one of getting together as a team, focusing on what’s important to this company to grow, which is customer service, and sticking with it relentlessly,” he told me.

“You can have $50 billion in assets, but at the end of the day if you do not have great service, you’re kidding yourself,” he observed.

I don’t think there is a railroad executive at Union Pacific, or for that matter any railroad, that would disagree with his assessment.

Those of us who have been around this industry for a long time know the old saw: “We would have a fine railroad if it weren’t for the damn customers.”

Today’s railroad leadership, Jim Young very prominent among them, realizes that railroads are not in business to move trains between point A and point B. If you want to engage in such activity, I suggest that you go to your local hobby store and buy an electric train set.

Our real business is providing cost-effective, environmentally friendly, safe transportation services. Moving large rolling vehicles on steel rails from origin to destination is merely our method of providing that service.

Leaders like Jim Young know that better than perhaps anyone else.

For the full story on how this remarkable and very personable man managed to turn an 800-pound gorilla into a far more nimble and responsive animal (I won’t say thoroughbred—that title is reserved for one of our big eastern carriers), see the cover story beginning on p.18.

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Industry Indicators TRAFFIC ORIGINATED carLoaDS

WEEK 50 enDIng DecemBer 15, 2012

MAJOR U.S. RAILROADS

By COMMODITy grain farm Products ex.grain metallic ores coal crushed Stone / Sand / gravel nonmetallic minerals grain mill Products food & Kindred Products Primary forest Products Lumber & Wood Products Pulp, Paper & other chemicals Petroleum Products Stone, clay & glass coke metals & Products motor Vehicles & equipment Iron & Steel Scrap Waste & nonferrous Scrap all other carloads TOTAL CAR LOADED

CANADIAN RAILROADS ALL COMMODITy

MEXICAN RAILROADS ALL COMMODITy

2012 20,342 1,046 8,443 121,386 19,298 3,812 9,385 6,521 1,571 3,363 5,661 28,966 12,597 7,244 3,922 9,470 17,179 5,048 3,091 4,295 292,640

2011 22,943 1,042 8,119 139,918 17,451 4,791 9,737 6,424 1,769 2,737 5,850 28,437 8,393 6,558 3,520 10,177 15,116 4,463 3,191 4,008 304,644

79,546

77,263

15,081 50 WEEKS 14,180,675 3,869,385 723,637

U.S TOTAL CANADIAN TOTAL MEXICAN TOTAL

% CHANGE -11.3% 0.4% 4.0% -13.2% 10.6% -20.4% -3.6% 1.5% -11.2% 22.9% -3.2% 1.9% 50.1% 10.5% 11.4% -6.9% 13.6% 13.1% -3.1% 7.2% -3.9% 3.0%

13,618 10.7% % CHANGE FROM 2011 -3.0% 2.2% 1.1%

WEEK 50 enDIng DecemBer 15, 2012

InTermoDaL U.S. RAILROADS TraILerS conTaInerS TOTAL UNIT

CANADIAN RAILROADS TraILerS conTaInerS TOTAL UNIT

MEXICAN RAILROADS TraILerS conTaInerS TOTAL UNIT

U.S TOTAL CANADIAN TOTAL MEXICAN TOTAL NORTH AMERICAN TOTAL

32,378 219,607 251,985

36,143 197,204 233,347

-10.4% 11.4% 8.0%

1,679 51,193 52,872

1,794 47,297 49,091

-8.0% 7.2% 7.7%

0 8,894 8,894

0 8,515 8,515

— 4.5% 4.5%

50 WEEKS 11,871,147 2,589,028 503,672 14,964,117

% CHANGE FROM 2011 3.3% 6.7% 19.3% 4.3%

ESTIMATED TON-MILES (BILLIONS), U.S. CLASS I RAILROADS 2012 34.1 1,634.6

WeeK 50 TOTAL WEEK 1-50

2011 35.6 1,673.0

% CHANGE -4.2% -2.3%

Source: Weekly railroad Traffic, association of american railrods

RAIL FREIGHT TRAFFIC TRENDS, U.S. CLASS I RAILROADS estimated billion ton-miles

38

2011

36

4

4 8 week

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30 28

26 12 16 20 24 28 32 36 40 44 48 52

January 2013

% CHANGE -29.4% -5.5% -30.1% -20.4% 0.1% -20.3% 28.0% -32.1% -18.0% -3.3% -45.0% -29.1% -6.7% -10.6% 19.8% -15.3% 38.3%

TOTAL CARLOADS, MARCH 2012 VS. 2011 NOVEMBER 2012 - 348,017 NOVEMBER 2011 - 342,482 270,000 280,000 290,000 300,000 310,000

320,000 330,000 340,000 350,000 360,000

copyright © 2012. all rights reserved.

RAILROAD EMpLOyMENT, CLASS I LINEHAUL CARRIERS, NOVEMBER 2012 (% change from noVemBer 2011)

Transportation (train and engine) 64,881; +1.12%

executives, officials, and Staff assistants 9,837; +4.67%

Professional and administrative 14,195; +2.68%

TOTAL EMpLOyEES: 162,766 % CHANGE FROM NOV. 2011: +1.65% Transportation (other than train & engine) 6,622; -1.68%

maintenance of equipment and Stores 30,057; +1.47%

maintenanceof-Way and Structures 37,174; +2.20%

EMpLOyMENT Up yEAR-OVER-yEAR AND FROM pAST MONTH figures released by the Surface Transportation Board show class I railroads employed 162,766 people in mid-november, up 1.65% from november 2011, and up 0.20% from october 2012. all categories save one gained year-over-year; Transportation (other than train & engine) fell 1.68% from a year ago, and also fell 0.59% from october. others slipping from october were Transportation (Train & engine), down 0.37%, andmaintenance-of-Way and Structures, off 0.08%.

32

26

chemicals coal crushed Stone / Sand / gravel food & Kindred Products grain grain mill Products Lumber & Wood Products metals ores metals & Products motor Vehicles & equipmet nonmetallic minerals Petroleum Products Pulp, Paper & allied Products Stone, clay & glass Products Trailers / containers Waste & nonferrous Scrap all other carloads

ORIGINATED NOV. ’11 41,161 19,953 24,287 13,574 22,713 6,874 7,751 7,088 21,803 10,041 2,235 1,812 16,723 12,394 37,033 10,600 85,950

Source: Surface Transportation Board

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2012

ORIGINATED NOV. ’12 29,415 18,857 16,966 10,810 22,732 5,482 9,923 4,814 17,874 9,713 1,229 1,285 15,601 11,078 44,355 8,983 118,900

By COMMODITy

36 34

28

carLoaDS

38

34 30

SHORT LINE AND REGIONAL TRAFFIC INDEX

Week-ended number

Happy 150th Birthday Union Pacific Railroad.

We are honored to be a part of your history.

Speed, Performance, Reliability Š Copyright, 2012. Loram Maintenance of Way, Inc. All Rights Reserved.

Industry Outlook Berkshire Hathaway completes sale of two short lines

BERKSHIRE HATHAWAY, the Omahabased parent of BNSF Railway, last month divested a second short line, the white City Terminal Union Railway,

NTSB issues first report on NJ bridge incident

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Port Everglades, FEC sign pact Florida east Coast Railway (FeC) has signed a joint marketing agreement with Port everglades to promote a new 42.5-acre near-port intermodal container transfer facility (iCTF), to serve south Florida as a major international and domestic freight hub.” The pact calls for joint promotions including international business development, the creation of promotional materials, shared sponsorships, and milestone events. groundbreaking is expected early this year, with completion slated for spring of 2014. The iCTF, to be adjacent to the Southport container terminals at Port everglades, will facilitate both domestic and international containerized cargo transfer through the port to/from the FeC main line.

Amtrak looks to new NEC trains in testimony Dec. 13 before the House Transportation & infrastructure Committee, amtrak President and CeO Joe Boardman said the company “is advancing plans to acquire new next-generation high speed trainsets and ending its plans to purchase 40 additional high speed passenger cars to add to the existing acela express

that when it purchased BNSF, it held about 90% of Midamerican energy Holding Co., itself a majority owner of Council Bluffs, iowa-based short line CBeC Railway. Berkshire sold CBeC to its two other co-owners in November.

Berkshire Hathaway also acknowledged a controlling interest in Marmon group, which includes RailServe, a subsidiary that controls white City Terminal Union Railway, a 13-mile short line that operates between white City and a junction north of Medford, Ore.

fleet, in order to better meet strong and growing ridership demand on the Northeast Corridor.” “in early 2013, amtrak will issue a Request for information (RFi) to formally start the process that will replace the existing 20 acela express trainsets and procure additional trainsets to expand seating capacity and provide for more frequent high-speed service on the NeC,” Boardman said. “The previous plan to add 40 new passenger cars with newer technology to the older acela trainsets was a stopgap measure, posed technical challenges, and was determined not to be cost effective and insufficient to handle new ridership growth projections.”

Boardman added that, in the past two years, “amtrak has moved forward a number of major proposals designed to address the NeC’s growth and development needs,” including “the NeC Upgrade Program to bring the corridor up to a state of good repair, add additional capacity to allow limited service growth, and make targeted trip-time improvements for all existing intercity, commuter, and freight services. among the elements is the gateway Program to build vital track, tunnel, and station capacity into the heart of Manhattan to support amtrak and regional passenger rail growth.” amtrak also is pursuing its “nextgeneration high-speed rail program,” aiming at 220 mph speeds, he said.

William C. Vantuono

The National Transportation Safety Board on Dec. 17 released its preliminary report on the Paulsboro, N.J. train derailment Nov. 30, but the initial release did not identify the cause of the accident.

NTSB’s report says readings from a data recorder showed the train was moving at 7 mph, well below the speed limit of 10 mph, when it derailed while crossing a swing bridge spanning Mantua Creek in Paulsboro, located in gloucester County, roughly 14 miles southwest of Philadelphia and of Camden, N.J. Conrail Shared assets train personnel had paused before crossing the bridge, seeking clearance to proceed, after being stopped by a red signal.

NTSB Chair Deborah Hersman earlier has noted the signal light was red, but that the train’s crew got permission from a dispatcher to proceed. a tank car in the accident ruptured, releasing vinyl chloride into the air and prompting the evacuation of nearby residents. a few residents were taken to nearby hospitals for evaluation.

NTSB said that 22 Paulsboro residents and the train conductor were treated and released at hospitals, fewer than were initially reported.

ahead of a schedule set by the Surface Transportation Board earlier this year, as part of the company’s acquisition in 2010 of BNSF. None of the entities that bought Berkshire’s short lines owns another railroad, negating the need for any additional STB oversight, Berkshire Hathaway said. last October, STB directed Berkshire Hathaway to “promptly remedy its noncompliance with railroad control requirements” stemming from its acquisition of BNSF. Berkshire Hathaway earlier had noted

Market GWI short line signs natgas pact genesee & wyoming inc. last month said its wholly owned subsidiary, the Columbus & Ohio River Rail Road Co. (CUOH), has signed a long-term agreement to serve the $900 million natural gas liquids fractionation hub being constructed in Scio, Ohio, by Utica east Ohio Midstream, llC. The facility, about 15 miles south of Carrollton, Ohio (on map), will be the largest integrated midstream service complex in eastern Ohio and gwi’s largest customer in the Utica Shale area. gwi said the plant’s location was selected based on proximity to the Utica Shale’s liquids-rich gas, to key natural gas pipelines and to the CUOH. The CUOH will construct a one-mile rail siding and rehabilitate a three-mile storage track to serve the facility.

North America ALTON & SOUTHERN RAILWAY: will expand its existing RailComm yard Control System by adding several new components to its switching yard in east St. louis, ill.

streetcar line, running mostly along Main Street from River Market to Union Station.

GO TRANSIT/METROLINX: exercised a 10-year option witn Bombardier Transportation for 10 years of fleet operations and maintenance services for gO Transit’s regional rail system, serving the greater Toronto and Hamilton area. The value of the two contracts, which are extended to 2023, is approximately C$927 million (US$937 million).

METROLINK (LOS ANGELES): authorized the purchase of ePa Tier 4 locomotives from electro-Motive Diesel (eMD), which it says will reduce locomotive emissions by 86%.

The contract includes a base order of 10 locomotives, plus an option to purchase up to 10 additional units.

Metrolink has allocated $129.4 million for the purchase of the locomotives.

KANSAS CITY, MO.: approved a $3.6 million contract with Omaha-based engineering firm HDR inc. for final design of the main components of a

MICHIGAN DOT: Finalized a $140 million agreement with FRa and Norfolk Southern for acquisition of 135 miles of NS right-of-way in the wolverine

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January 2013

NFTA (BUFFALO): Tapped los angelesbased aeCOM to evaluate transport expansion alternatives on behalf of greater Buffalo Niagara Regional Transportation Council, with light Rail Transit, streetcars, and BRT under consideration.

SONOMA-MARIN AREA RAIL TRANSIT (CALIF.): is adding a two-car diesel multiple-unit (DMU) order to its existing 12-car order from Sumitomo and Nippon Sharyo.

Worldwide VIRGIN TRAINS (U.K.): extended its contract with Bombardier Transportation worth $171 million, until March 2016 to maintain its Super Voyager diesel train fleet, used on Britain’s west Coast Main line.

Genesee & Wyoming , Inc.

ARLINGTON COUNTY, VA: approved plans to explore a public-private partnership arrangement to advance its proposed Columbia Pike streetcar.

LOS ANGELES COUNTY MTA: Opted for repair of a flawed junction where its Blue line and expo line light rail transit routes converge. The option was one of three offered by Zeta-Tech, a Harsco Rail Business unit, which found that the problem was caused by a design that was not in compliance with aReMa .

State, currently used used by amtrak trains between Kalamazoo and Dearborn, Mich. Norfolk Southern retains exclusive trackage rights along the route for freight operations.

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Washington Marriott Hotel February 4-5, 2013 | 10th International Conference on

COMMUNICATIONSBASED TRAIN CONTROL

•Efficiency •Productivity •Safety

ConferenCe topiCs • innovation, sustainability, and the future • international railroad and transit project updates • CBtC/ptC user roundtable • Business operations and applications • CBtC upgrades to Mature systems • CBtC/ptC supplier roundtable • rf solutions for CommunicationsBased signaling

Why you should attend Communications-based train control (CBTC) is revolutionizing all modes of railway transportation, passenger and freight, by adding capacity, increasing train throughput, enhancing safety, and reducing equipment life-cycle costs. The Tenth International Conference on Communications-Based Train Control, presented

by Railway Age and Parsons, will provide status reports on exciting, state-of-the-art CBTC projects and share information on initiatives to standardize this technology and ensure interoperability.

MarKetinG opportunities: event sponsorships are available.

Contact Jane poterala at 212-620-7209 or email jpoterala@sbpub.com.

For program updates, visit: www.railwayage.com/conferences

February 4th, 2013

February 5th, 2013

Continental Breakfast | Sponsorship Available

Continental Breakfast | Sponsored by Bombardier

Welcome Douglas John Bowen, Managing Editor, Railway Age Todd Wager, President, Parsons Transportation Group

CBTC/PTC Supplier Roundtable Moderator: Douglas John Bowen, Railway Age Participants will include representatives from Wabtec Railway Electronics, Siemens, Bombardier, GE Transportation, Thales Transport and Security, Ansaldo STS USA, Alstom Signal, ARINC, and Invensys Rail Corp.

Project Updates, Rail (PTC) Moderator: David Thurston, Vice President, Parsons • ETMS, North American Class I’s • Amtrak PTC Update: Keith Holt, Assistant Chief Engineer C&S, Amtrak • PTC, Caltrain: Dave Elliott, Senior Consultant, LTK Engineering Services Coffee Break | Sponsored by ARINC Innovation, Sustainability and the Future Moderator: Douglas John Bowen, Railway Age Luncheon | Sponsored by GE Transportation - Intelligent Control Systems Luncheon Address: Tom Prendergast, President, MTA NYCT CBTC/PTC Owner Roundtable Moderator: David Thurston, Parsons Participants will include representatives from Toronto (TTC), GO Transit, Copenhagen, Amtrak, and CSX Energy Break | Sponsored by Rail Safety Consulting Business Operations & Applications (Customer Enhancements) Moderator: Douglas John Bowen, Railway Age • Non Train Control Applications for CBTC Systems: Damien Convert, GE Transportation Systems Global Signaling LLC • PTC Governance Through the ITC Committee: Henry McCreary, Director PTC Communications, CSX • Recent LRT Activity: David Thurston, Vice President, Parsons Cocktail Reception | Sponsored by Parsons

CBTC Upgrades to Mature Transit Systems Moderator: David Thurston, Parsons • Robert Troup, Assistant General Manager, WMATA • Pete Tomlin, Senior Project Manager, TTC, ATC Project • Morten Søndergaard, Signaling Program Director, Banedanmark Coffee Break | Sponsored by Invensys Rail Corp.

Project Updates, Transit Moderator: Douglas John Bowen, Railway Age • Edmonton Transit System: René LaFlèche, P.Eng., Rail & Transit, Hatch Mott MacDonald • BART: Jean-Luc Dupont, Manager, Systems Capital Program, San Francisco Bay Area Rapid Transit District Group • Klavs Hestbek Lund, Project Director Transportation System, Metroselskabet I/S Luncheon | Sponsorship Available Tom Sullivan Memorial Award Presentation Luncheon speaker to be announced RF Solutions for Communications-Based Signaling Moderator: David Thurston, Parsons • RF Solutions Used in CBTC: Michael Fitzmaurice, P.E., Parsons • Network Security: Richard Moura, Railway Corridors, Signal Systems Engineer, GO Transit • Metrolink PTC Project: Paul Wadum, Senior Project Engineer, Parsons Lanyards Sponsored by Hatch Mott MacDonald Online Conference Proceedings Sponsored by Siemens Program subject to change/augmentation

Sponsorships available Contact Jane Poterala at 212-620-7209; jpoterala@sbpub.com.

Please register me for Tenth International Conference on Communications-Based Train Control taking place February 4-5, 2013 in Washington, D.C. Registration fee is $925 per participant. All fees payable in advance.

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RegistRation: Please send this completed form, or a photocopy, with your payment to: Jane Poterala, Conference Director, Railway age; 345 Hudson st., 12th Fl., new York, nY 10014; tel.: (212) 620-7209; Fax: (212) 633-1165; e-mail: jpoterala@sbpub.com.

ConFeRenCe Fee: the registration fee for CBtC 2013 includes admission to all conference sessions, conference documentation containing all available presentations, and social events.

Registration confirmation and invoice will be e-mailed.

Hotel: the Washington Marriott Hotel has set aside a block of rooms at $219 single/double for

conference attendees. these will be held until 30 days prior to the conference; those reserving after that date will depend upon room availability. We suggest that you contact the hotel directly at (202) 872-1500 for room reservations. specify “Railway age.” You will receive room confirmation directly from the Washington Marriott Hotel.

CanCellation PoliCY: Confirmed registrants who cancel after January 23, 2013 are subject to a $250 service charge. Registrants who fail to attend are liable for the entire fee unless they notify Railway age in writing prior to the event.

Update Supply BriefS Greenbrier spurns icahn The greenbrier Cos. firmly rejected Carl icahn-led american Railcar industries’ conditional proposal to acquire greenbrier for $22 per share. in a statement released late Dec. 20, the company accused icahn of making misleading statements. “although representatives of the two companies and greenbrier’s advisers have held discussions on numerous occasions since November 2012, at no point during these discussions did representatives of greenbrier or its advisers invite or encourage american Railcar [industries] to make an offer to acquire greenbrier for a price in the range of $20 to $22 per share.” icahn enterprises lP controls 55.6% of St. Charles, Mo.-based aRi. in November greenbrier affirmed that icahn and Reporting Persons affiliated with him have acquired 9.99% of the outstanding Common Stock of greenbrier.

(Ra, December 2012, p. 10).

l.B. foster, up in pact

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Railway age January 2013

u

nion Pacific, which 10 years ago broke new ground in locomotive technology by working with a major supplier to develop a Genset locomotive for yard service, on Dec. 12 unveiled one of seven ultra-lowemitting locomotives (ULELs) that have been deployed at Proviso Yard, Northlake, Ill., located in the greater Chicago area.

The new 2,000-horsepower Genset locomotives, RP20CDs built by RJ Corman Railpower, are powered by three 667-hp ultra-low-emission U.S. Environmental Protection Agency (EPA) off-road Tier 3-certified diesel engines that reduce NOx emissions by 80% and PM (particulate matter) by 90%, while using up to 37% less fuel compared to older switching locomotives. The fuel savings also reduces greenhouse gases up to 37%.

These locomotives differ from many Genset yard locomotives in that they are six-axle, with six traction motors, rather than four-axle. The two additional traction motors give this version of the Genset switcher

increased tractive effort compared to four-axle Gensets, “something that will be useful while the new locomotives are working to push railcars over the hump, where gravity then takes the cars into destination-specific tracks at the Proviso Rail Yard,” UP said.

“We continue to voluntarily research and develop new technologies to reduce locomotive emissions and this latest version of the Union Pacific Genset locomotive is another end product of that hard work,” said Union Pacific Senior Vice President Corporate Relations Bob Turner. “Union Pacific is committed to preserving our environment by reducing emissions to help improve air quality and conserve fuel.”

Working with National Railway Equipment Company, Union Pacific began developing a prototype Genset switcher locomotive in 2002 and today has 172 ULELs working in California, Texas, and the Chicago area. UP General Director Car and Locomotive Engineering Mike Iden led the railroad’s efforts to develop a switching locomotive that would use

Union Pacific

l.B. Foster and Union Pacific have agreed on a multiyear extension of a contract for the supply of prestressed concrete ties from the supplier’s Tucson, ariz., facility. The previous contract was set to expire Dec. 31. l.B. Foster said the extension “represents significant value for l.B. Foster Company and will help it to fund additional engineering and development of concrete tie design for the rail industry.,” adding the extension “follows an agreement the two companies have reached on a path forward for handling warranty claims on concrete ties previously made at its grand island facility, which was closed in 2011.”

New Gensets for Union Pacific unveiled at Proviso Yard

multiple smaller diesel/traction alternator powerplants, running in microprocessor-controlled combinations of one, two or three engines, to produce the required horsepower levels when needed. Iden’s idea was to package the diesel engine, traction alternator, and cooling system radiator in one compact, easily replaced module called a Generator Set or “Genset.”

“Modern off-road diesel engines are capable of providing the lower power required by typical switching locomotives while reducing fuel consumption and, most important, exhaust emissions,” UP noted. “Several other U.S. railroads continue to follow Union Pacific’s lead and are using similar Genset switching locomotives,” UP said. “Several Genset locomotives are also in use in Canada and South America.

A railroad in Germany has ordered them as well.”

Since 2000, UP has invested approximately $6 billion to purchase more than 3,500 locomotives that meet EPA Tier 0, Tier 1, Tier 2, or Tier 3 emissions standards. Also since 2000, UP retired more than 2,650 older locomotives and overhauled

Congratulations 2012 Railway Age Railroader of the Year

JIM YOUNG Chairman of the Union Pacific

or rebuilt nearly 4,150 locomotive diesel engines with emissions control upgrades. More than 80% of the railroad’s approximately 8,200 locomotives are certified under EPA Tier 0, Tier 1, Tier 2, or Tier 3 emissions standards.

UP noted that it is “constantly developing and evaluating innovative technologies. In addition to the development and implementation of Genset locomotive technology, we evaluated experimental technology, such as the Oxicat-equipped, long-haul locomotive and the DPF (diesel particulate filter) equipped, low-horsepower yard locomotive. Initial tests showed the Oxicat reduced PM by 50%, hydrocarbons by 38% and CO (carbon monoxide) by 82%. The DPF reduced PM by more than 70% in tests. We developed a comprehensive plan to reduce unnecessary locomotive idling time, and all new locomotives have automatic stop-start equipment and older locomotives are being retrofitted with it. Locomotive shutdowns can save 15-to-24 gallons of fuel, per locomotive, per day. More than 70% of our locomotive fleet is equipped with this technology.”

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January 2013 Railway age 13

Update Watching Washington With FRANk N. WIlNeR

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Congressional Amtrak haters eager to dismember the nation’s intercity rail passenger network, beginning with privatization of the Northeast Corridor, saw their legislative assault collide with an iron curtain from a most unlikely source—the fiercely Amtrak-hating Heritage Foundation, which advised lawmakers the corridor might not be theirs to sell.

The real owners of Amtrak—which encompasses the Northeast Corridor, conveyed to Amtrak under a 999-year mortgage payable to DOT—include Warren Buffett, Bill Gates, and insurance conglomerate American Financial Group, which is a 53% majority common-stockholder looking to cash in its holdings.

Amtrak was created in 1971 when Congress relieved then-financially struggling privately owned freight railroads from providing money-losing intercity rail passenger service.

In exchange for the passenger rail assets they donated to Amtrak, those railroads received federal tax credits; but four of the original participants, unable to make use of them, accepted 9.4 million shares of Amtrak common stock created for them. They were Penn Central (53%), Burlington Northern (35%), Chicago, Milwaukee, St. Paul & Pacific (7%), and Grand Trunk Western (5%).

American Financial Group purchased the common shares from the estate of bankrupt Penn Central.

Burlington Northern was merged into BNSF (now owned

by Berkshire Hathaway).

Grand Trunk Western is a subsidiary of Canadian National (of which Cascade Investment, controlled by Bill Gates, is a 10% shareholder).

And Milwaukee Road’s assets were acquired by Canadian Pacific.

The federal government issued preferred stock to DOT, representing its security in the federally subsidized Amtrak, but Congress later stripped preferred shares of voting rights and any liquidation preference, effectively leaving common shareholders in control.

(Curiously, common shareholders hold no seats on

Amtrak’s board—having been evicted from the Amtrak board by Congress in 1981—and a shareholders’ meeting has never been held.)

In 1997, Congress instructed Amtrak to redeem all of its common stock at “fair market value” by Oct. 1, 2002.

Litigation continues into 2013, more than a decade after the redemption deadline—the question being, what is “fair market value?”

Amtrak asked a federal court to declare the common stock “null and void,” with American Financial Group responding it would constitute an unconstitutional taking of private property. BNSF, CN, and CP are not parties to the lawsuit.

Amtrak then offered to repurchase all of its common shares for three cents each—or $158,000 for all common shares.

American Financial Group is seeking its original $52 million purchase price, plus interest and unspecified damages.

In December 2008, a federal court ordered binding arbitration, but on appeal it was held that an arbitration clause in the original purchase contract had expired. The litigation resumed, with a federal court dismissing the lawsuit in 2011, ruling that the Amtrak Reform and Accountability Act, which ordered the common-share redemption, did not give shareholders a right to sue Amtrak.

The court ruled also that American Financial Group failed to demonstrate Amtrak had an obligation to provide common

shareholders a profit by buying back its shares. American Financial Group has an appeal pending.

Congressional staffers who wrote the common-stock buy-back provision say its intent was to wipe the slate clean and allow Amtrak to pursue a new public offering of stock.

Thus, until American Financial Group’s litigation runs its course, it is unlikely a for-sale sign will be erected for Amtrak or the Northeast Corridor. Indeed, Amtrak is incorporated within the District of Columbia, and D.C. corporation law prohibits the sale of “all or substantially all” of a corporation’s assets without shareholder approval.

As for the NEC, it is one of the most valuable pieces of real estate in the world—an unbroken 456-mile corridor traversing more than 20% of the U.S. population, with a bundle of assets, rights, functions, and services tied to the real estate, i.e., fiber-optic cables, natural gas and coal slurry pipelines, and electric transmission lines, as well as air rights.

Interestingly, a sale of the corridor likely would effectively repeal an embedded commuter-rail-subsidy access formula Congress imposed specifically on Amtrak. By contrast, Conrail (now CSX and Norfolk Southern) obtained an ironclad perpetual corridor-access provision when transferring the corridor to DOT, which then transferred it to Amtrak.

For sure, there is a lot at stake when lawmakers assert they wish to privatize Amtrak.

January 2013 Railway age 15

Update CN blasts Canadian rail regulation legislation

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Railway age January 2013

Canadian National

Claude Mongeau, president and chief executive officer of Canadian National, last month said there is no evidence of systemic rail service problems warranting the Canadian government’s introduction Dec. 11 of legislation that would expand rail regulation to impose level of service obligations.

“The objective fact is that Canada has a world-class rail system, one known internationally for efficiency and reliability—a key asset for a trading nation like Canada—and that reflects a well-functioning market for rail services,” Fulmer RlwyAge12Wbtc 6/21/12 1:03 PM Page 1 Mongeau said in a statement.

“The government’s Rail Freight Service Review (RFSR) process launched in 2008 was a key factor in spurring further improvement in rail service. CN addressed every commercial recommendation of the RFSR panel to improve service, entering framework cooperation agreements with a wide array of stakeholders and level of service agreements with many of its customers to increase supply chain collaboration and deepen customer relationships,” Mongeau said.

Mongeau added: “CN has launched a comprehensive series of commercial initiatives that benefit our supply chain partners and the Canadian economy. CN is committed to helping its customers be more competitive in markets at home and abroad through better service and a relentless focus on continuous improvement.

“This is why I am troubled by the government’s decision to introduce service legislation that is inconsistent with the facts underscoring improved rail service, as well as the government’s stated agenda of innovation and productivity to foster economic prosperity for Canadians. I also believe the legislation sends mixed signals to customers and suppliers around the world about the government’s approach to commercial markets in Canada,” Mongeau said.

CONGRATULATIONS! The Okonite Company would like to add it's sincere congratulations to Jim Young: this year's Railway Age “Railroader of the Year”.

Jim's outstanding performance guiding the Union Pacific Railroad through turbulent economic conditions as well as his overall contributions to the Railroad Industry are exemplary.

The Okonite Company has been a strong supporter of the Railroad Industry since its founding in 1878, and remains so today.

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RailRoadeR James R. Young of the YeaR:

By william C. Vantuono, editor-in-Chief

U

nion Pacific, Chairman James R. Young recently observed, “has evolved from the company that built America by building the first transcontinental railroad to one that today is critical to the global supply chain.”

For his vital role in that evolution,Young is Railway Age’s 50th Railroader of the Year. He is the sixth Union Pacific recipient, preceded by Frank E. Barnett (1975), Robert M. Brown (1978), Mike Walsh (1991), Richard K. Davidson (2003), and William E. Wimmer (2007).Young will be honored on March 12, 2013, at Chicago’s Union League Club.

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Railway age

January 2013

Union Pacific has been Union Pacific, which celerecognized numerous times brated its 150th anniversary as a top employer of U.S. in 2012, has acquired five military veterans. railroads since 1981. Merging cultures, technology, operations, standards, and customer bases has been a demanding task, and a sometimes-elusive goal. Under the leadership of Young and such key team members as Jack Koraleski, the current President and CEO, UP recently has started to see what its franchise can deliver for customers, employees,

union Pacific’s Chairman James R. Young is the driving

force behind a remarkable cultural change at North America’s largest railroad.

communities, and shareholders. Leading doesn’t care about what’s going on with up to its 150th anniversary have been housing starts. What he wants to know is “Number one, you check such mile-markers as record full-year how much lumber we’re hauling that earnings in 2010 and 2011; record capiaffects his job. He wants to be able to your arrogance at the tal investment in 2010, 2011, and again come to work a year from now. That’s door. You engage your in 2012; and record levels of customer really the approach you take. You engage satisfaction since 2009. people, you listen to them. them and try to make it personal. You “We are unquestionably the top raillearn that over time, you learn personaliYou ask them relevant road in the industry for service and ties. I can walk into a crew room today, reputation, almost a last-to-first type of and I can tell you who wants to have a questions about what’s story going back to the late 1990s,” Young good discussion, and who doesn’t. We’re going on, and what’s said in a recent interview. “Our customvery fortunate. Over the past four or five ers have told me that UP is really making years, the negative incidents have really relevant to them.” a positive difference in their ability to become very rare. It’s what we talk about grow their businesses; not just large when we walk into these rooms, and companies but many small businesses, you’ve got a guy that did not get over the too. We have record levels of capital investment and a growroad last night, got tied up 20 miles outside of the terminal, ing workforce. We now love it when we are hiring; during sitting on a train, and is waiting to get called to go back the 10 years when I was CFO, ‘hiring’ was a bad word on home. You learn how to deal with people, how to engage Wall Street. UP employees understand that they are directly them. responsible for job security and the company’s growth Ra: The cultural change at Union Pacific from a “top down because what they do every day impacts our customers. My management culture” has largely been attributed to you. Was hope is that when people look at Union Pacific they see a that hard to accomplish? company that represents respect, trust, and integrity, is a Jy: Go back and look at the UP, and what formed us. The good place to work, and is important to America. Long previous leaders had a tough job. They tried to take diverse term, our financials have to be there or someone else will be cultures from different railroads and put them together. running the company, but we want to be a positive force in Whether we liked it or not, there was a different culture at the the 7,300 communities we serve.”

Chicago & North Western, the Southern Pacific, the MissouriI sat down with Jim Young at UP’s Omaha headquarters Kansas-Texas, the Missouri Pacific, the Western Pacific. That last month to talk about a wide range of issues. changed very quickly when we put the companies together. We Railway age: You are an Omaha native? had leaders that had to merge rosters and seniority lineups. We Jim young: Yes. I was born and raised here. I went to grade had to merge labor agreements, and systems. What was fortuschool and high school here. I went to the University of nate for me, though, was that things were changing pretty Nebraska, right up the road. I grew up in a large family, as dramatically. The work force was turning over. In one year the oldest child. You learn to work hard, how to deal with alone, 7,000 people left the work force, mainly through attripeople. It helped me with learning to run the railroad. You tion.You take that, and combine that with all the new people learn pretty quickly. You walk into a crew room to try to we were hiring. So one day, you’re walking into a crew room, engage a group of conductors and engineers. There are ways and one guy has an SP hat on, another guy has a C&NW hat to do that. Some work well, some don’t. on, another one is wearing an MKT hat, another one a Union Pacific hat. Walk in there two years later, and it’s entirely Ra: What would you say works well? different. There are new-hires; they want to make money and Jy: Number one, you check your arrogance at the door. You move up in the company. So the culture was changing. The engage your people, you listen to them. You ask them relequestion was, where did we want to go? What did we want to vant questions about what’s going on, and what’s really be? So, we focused on safety and customer value, and that may relevant to them. At the end of the day, an engineer really not seem simple. But I have to tell you, it wasn’t that January 2013 Railway age 19

RAilRoAdeR of the YeAR

complicated.You engage a group of employees, and say to them, “Look, this is the reason we are here; this is what we need to do with service; these are the expectations. If you do this, we can grow the company.You’ll see new investment come in, you’ll see more hiring, you’ll see more training.” And

we needed to stay focused on. The worst thing you can do is walk in to talk with a group of employees, and say, “Here’s my strategic plan for this year,” and next year you have a new one.

A lot of them will say, “Okay, this is just another plan of the month.”

“the cultural change, in my mind, was one of getting together as a team, focusing on what’s important to this company to grow, which is customer service, and sticking with it relentlessly. You can have $50 billion in assets, but at the end of the day if you don’t have great service, you’re kidding yourself.” we were able to say, if you provide great service, and work safely, here’s what’s going to happen. Many times, when we did follow-ups, and we made a commitment that we were going to put capital into the railroad, put in the second main line, or increase track speed, they would remember that. In following up, we reinforced everything. So the cultural change, in my mind, was one of getting together as a team, focusing on what’s important to this company to grow, which is customer service, and sticking with it relentlessly.You can have $50 billion in assets, but at the end of the day if you don’t have great service, you’re kidding yourself. When we went out and spoke with the employees, we wouldn’t have a new strategic plan every time. We would reiterate what was important, what Nebraska Governor dave heineman (left, with Jim Young) was one of many state and national legislators that helped Union Pacific celebrate its 150th anniversary in 2012.

20

Railway age January 2013

Ra: So, there is more consistency?

Jy: Yes. It’s no secret. We had some real struggles. We melted

down in 1998, and again in 2004, where we struggled. If you want to look at the proof: safety, employee satisfaction—all improved together with service. If we have great service, the employees are happy. They’re getting over the road; they feel like they’re doing something. Your safety metrics improve because you have a much more stable operation. The customer value proposition was there. That was easy pickings for us. You look at the customer value proposition. We were so far off that anything we did was an add-on in value. Today we personalize it. You talk to a person working in one location, like a car repair shop, and you ask him, “Tell me about

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RAilRoAdeR of the YeAR

your job. How would you change it? What are the things you would improve?” You engage him, and say, “We’ve made commitments to a customer. If you don’t do your job, if you don’t get that car repaired and back in service, we don’t stay on schedule. The customer is going to be unhappy.”

Ra: One thing that has impressed me is that this company

has been named one of the best places to work for. On top of that, and this is true with many of the railroads, there are a lot of new-hires coming from the military.

Jy: We are one of the top companies in the country in terms of hiring military veterans. We’ve been recognized many times. Our senior people get involved and engaged in hiring.

We know that we’re only going to be as good as the people we have, and maybe that’s an overused statement. But we just graduated a class in operations management training, and I have to tell you that it’s one of the best we’ve ever seen, diversity-wise, education-wise, experience-wise, leadershipwise. It’s terrific that we have such people coming in here.

What has helped is the reputation of the company. In today’s world, you have the 21-year-old who is looking for an opportunity. It doesn’t take him very long to realize that this is a great company to work for. We’re bringing great people in.

Some of that is a function of attrition. We’re going to lose up to 4,000 people again this year. The baby boomers are retiring. We have a lot of people hitting that age where they are leaving, and unfortunately there is a lot of talent walking out the door, a lot of institutional knowledge. On the other hand, we have a lot of very talented people coming in. They basically can step it up another level. What you have to do as a leader in this company is figure out how to take advantage of that talent, in terms of maximizing where you want to go as a “Now, our customer company. If you’ve been with this service index is the company as long as I highest it’s ever been. have, 30 or 35 years, there are some great it’s the best in the people out there. But industry. our employee there are a lot of terrific new people satisfaction, if you put it coming in. And that’s on a chart, it has risen true of the entire industry. The percepright along with it.” tion of our industry has changed over the years. Many people coming out of school years ago probably didn’t think very highly of the industry. Perhaps they knew that if they wanted to go out and make money, they should work in the railroad industry, that it’s a career opportunity. But that didn’t mean they were necessarily excited about it. But that’s changing.

Sure, you can go out and work for a technology company, but you might be out of a job in two years.

22

Railway age January 2013

“if we have great service, the employees are happy. they’re getting over the road; they feel like they’re doing something.”

Ra: So, there is a lot of resilience. What industry has come

through this economic downturn as well as the railroads? It really hasn’t lost that much momentum. If you look at Union Pacific specifically, you notice the significant drop-off in coal traffic. But you also notice the gains in other areas. So you seem to have a great deal of flexibility, a lot of diversity in the traffic base.

Jy: I believe we have about the best traffic diversity of any of the railroads. That has helped. But that doesn’t mean you get complacent over it. As far as coal is concerned, we won’t get hit as hard as the railroads in the East have. But we have taken a hit. We have a lot of excess capacity. We divide the railroad into regions—Northern, Southern, Western. Our Northern and Western regions have about 25% excess capacity. It’s a function of what has happened with our traffic mix. But as a company, we have a lot of agility. And agility is a term that one of our board members, a former Marine Corps Commandant, likes to use. He stresses that as a company, we need to be agile. During his time on the board, we’ve been through a major recession, and we’ve had other issues. You know, he’s right. I wish I could tell you where next year is going. What I can tell you is that we’re going to respond, whether we experience growth or have a decline. Our shareholders expect us to manage the business that way, and they don’t cut us any slack. There are no excuses. So, we are being a little cautious in terms of hiring, and we’re taking a look at capital investment. But that takes us back to our culture. We still have a lot of good new people coming in. Back when we

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RAilRoAdeR of the YeAR

were struggling with service, many of our people were seeing in the newspapers or elsewhere what was happening.

A lot of them took it personally. We sat down with our employees and talked to them about our problems, and many times they were just as angry as our customers. They felt that there should be pride in the company, in terms of what we do and what we provide our customers. They felt that we could do better as a company. Now, our customer service index is the highest it has ever been. It’s the best in the industry. Our employee satisfaction, if you put it on a chart, it has risen right along with it. Of course, we have to keep working on it. But everything works together. We have good network velocity. We’re getting trains over the road. We’re making the capital investments. People feel good about that. I look at our safety numbers on a daily basis. It doesn’t take long to correlate where you can see that everything is interrelated.

Ra: Would you say that this company has soul, a heart? How would you define Union Pacific?

Jy: Talking with our employees, when I introduce myself to someone and shake their hand, I ask them, “What do you think of your company?” That’s how we try to define it. And I don’t care whether you’re the chairman of the company, or you’re just starting out working on the track. People’s perception of your company is real. We want them to think that Union Pacific is a great company. That we have high ethical standards in terms of the way we operate. That you can count on this company to get things done for our customers. You go back many years, and many of our customers thought that we were a bit screwed up. They were surprised when we started doing what we said we would do.

Today they’re surprised when we don’t do something right.

That’s the mindset they have. They have those high expectations. So, to me, that’s kind of the way we define the soul, the culture of our company. I have had automobile manufacturers call us when they had problems with some of their major suppliers, and we were able to help resolve them.

They told me, you know, Union Pacific really came through for us. They had problems with production being backed up; they needed some special handling. We want our customers to think that we are a partner; that we will make the extra effort, and that we will get things done. We have to work on that every day. We just had an issue at the ports on the West

“We sat down with our smaller trains—whatever it employees and talked to took. We wanted people to say, them about our problems. you can count on Union Pacific. This was an opportunity they felt that there should be pride in the company.” to show our customers that they can count on UP to get their product moved. I don’t care whether it’s a huge company like Pacer Stack Train, or a cement shipper down in Texas. You want that mindset with that customer where they know they can count on us.

Ra: Your capital investment program was very strong last

year, $3.6 billion. What do you anticipate it’s going to look like in 2013?

“i believe the long-term future of Union Pacific is more volume growth. We will take some business off the highways. the country’s highway infrastructure is not in good shape, so people are going to depend upon the railroads more and more.”

Coast. There was a strike, and it ended quickly. There were a lot of containers sitting there, ready to roll, with a lot of products that needed to be delivered and made available to consumers. We were proactive about it. We took the extra steps, whether that meant running extra trains, running 24

Railway age January 2013

Jy: We are going to have a good healthy spend this year. Of

course, we have to separate Positive Train Control from our base capital spend. It is a huge number that we have to spend.

We don’t have any choice. PTC in 2012 was about $335 million. Any way you cut it, even taking out PTC, we’re

RAilRoAdeR of the YeAR

“DestineD in its beneficent influences to be one of the great civilizing anD commercial levers of the worlD”

not every magazine can research its own back issues stretching back more than 150 years. But in my april 2012 column i reported: “the clipping [at right] from an 1869 edition (Vol. 42) of american Railroad Journal, a Railway age antecedent publication. Seven years earlier, this same publication had covered President abraham lincoln’s signing of the Pacific Railway act in great detail, reproducing the landmark legislation in its entirety. “we at Railway age wish to express our profound appreciation to Jim young and his team at union Pacific for writing such a glorious “up to now” ending of this story.”

—william C. Vantuono 26

Railway age January 2013

RAilRoAdeR of the YeAR

Union Pacific’s gleaming headquarters in downtown omaha (left) occupies an entire city block and is a distinctive part of the skyline. the harriman dispatch Center (right) controls most of the railroad’s 33,000-mile network.

going to be investing more than $3 billion. That’s substantially more than we were investing, say, seven to nine years ago, when we were spending about $2.3 billion. We realized years ago that we had to build our network. You talk about agility. We decided years ago that we needed a network infrastructure that could handle wide fluctuations in traffic, and provide good levels of service. We looked at what we needed to do to maintain a single-track railroad.

Our Southern region “if you look at Union is about 98% singlePacific over the past five track, and yet, we are cramming a lot or seven years, we’ve of business down there today. We’re done very well for our going to have to add shareholders. But there more double track, which gives us more is no room to slip.” flexibility, but that will take time. We learned pretty quickly that we have to maintain our infrastructure. So, capacity expansion is needed for not only volume, but service. All that comes into play. We are going to have a healthy capital program. But if the economy moves south, we’re going to have to reduce our capital spend. We have had a healthy spend for many years. We are loading about 170,000 cars a week right now, but we have infrastructure that can handle 190,000 cars. But we’re still spending for the future. I believe the long-term future of Union Pacific is 28

Railway age January 2013

more volume growth. We will take some business off the highways. The country’s highway infrastructure is not in good shape, so people are going to depend upon the railroads more and more. We are doing things like building bridges. We’re taking a look at replacing a bridge over the Mississippi River that was built almost 100 years ago. It’s a bottleneck on our network, but if you take a look at our volumes today it’s not a huge bottleneck. Three or four years ago it was a huge bottleneck. Now is the time to replace it. We have several projects like that where we are really making a long-term investment, where we are putting a 100-year asset in place. Based on our volumes today, you might say that’s not really needed. But we are making a bet the volumes are going to continue to grow over the years, and that these investments need to be made because they will be an important part of our capacity.

Ra: You come from the financial side of the railroad. I can

recall attending analyst meetings years ago where capital spending was talked about, and many of the analysts in the room would roll their eyes, or groan, or sigh. I don’t see that so much anymore.

Jy: There is one caveat there. The analysts are going to scrutinize capital, as they should. So do we. We have to make sure that we have a good return, that we are disciplined in what we do. We have to know where we are going strategically. We have rewarded our shareholders very well. If you look at our stock appreciation, and our earnings growth, and our dividend increases and share repurchase programs, our shareholders look at all that and say, “That’s my cash.

Whether you pay me in a dividend, buy back stock, or put it into the railroad, that’s my cash.” That’s what our shareholders think, as they should. They are the owners of the company. We have been able to reward our shareholders, as

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well as invest in our business for the long-term. If that gets out of whack, we will have shareholders bail out on us, as they should. We’ve committed to them that we are disciplined about every dollar that we put into the railroad. It has to have a long-term investment return that we think meets or beats our cost of capital. We just bumped up our dividend 15%, and we’ve been able to do that over the years. Our shareholders, I think, are reasonably satisfied. But I will also tell you that they have no patience, and their memories are short-term. They are going to be brutal with us, and they should. I think our company has done a good job of recognizing what are shareholders require. If you look at Union Pacific over the past five or seven years, we’ve done very well for our shareholders. But there is no room to slip.

Ra: In general, there seems to be a greater understanding

that railroading is a long-term business, one that requires consistent investment.

Jy: In a lackluster economy, we’ve done pretty well. Our team has done a good job of managing costs. That is the expectation out there. The analyst reports come out, and they say we’re doing okay.

“We are disciplined about every dollar that we put into the railroad.”

with a reasonable valuation should create conditions for meaningful capital appreciation.”

Jy: I certainly won’t disagree with that.

We’ve had a good track record with our operating ratio, and we’ve provided guidance that we will lower it to 65% by 2017. My gut feeling is that we can do that. In our thirdquarter 2012 analyst meeting, our chief financial officer, when pressed, said that we may be able to do better than that. I know that our guidance has been on the conservative

“the operating ratio isn’t simply a function of pricing. it’s customer value. it’s volume leverage. it’s efficiency that you put into your operation.”

Ra: Here’s what one analyst had to say about Union Pacific.

I’d like your thoughts on this: “UP is well-positioned to increase prices at a relatively brisk pace, make continued productivity improvements, and generate healthy volume growth. Therefore, the company should be able to lower its operating ratio significantly over time. A lowered operating ratio will drive earnings-per-share growth, and combined

“As far as coal is concerned, we won’t get hit as hard as the railroads in the east have. But we have taken a hit.”

30

Railway age January 2013

side, but a lot of things have to be in place to get there. We need to have a reasonable economy with reasonable volume growth, and things like that.

Ra: Here is another observation: “A main risk is that the

macro economic picture domestically or abroad worsens.

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January 2013 Railway age 31

RAilRoAdeR of the YeAR

intermodal is one of Union Pacific’s best-performing business lines.

threats to that segment of business.

Railroads are heavily regulated and changes in the regulatory environment could negatively affect pricing opportunities in the future.” Your thoughts?

Jy: Well, this is true, but the operating ratio isn’t simply a function of pricing. It’s customer value. It’s volume leverage.

It’s efficiency that you put into your operation. All those have to come together to get to that mid-60s number. You can’t get there by pricing alone, and we won’t. The regulatory factors have been out there for years. Union Pacific is one of the few railroads that has been revenue adequate. There is some risk posed by new regulations, and we are looking at what this means, longer-term. Our commitment to our customers is this: We have to get our returns up on invested capital. This is an industry that at one time was performing very poorly. That’s why we had so much pressure on capital.

When we were running a 6% return on invested capital, and we were pouring billions of dollars into the railroad, investors were asking us why. In a way, they were correct. But our returns have moved up, and our customers have seen better service. Most customers want to know where we are going to put capacity that can help their business grow, long-term.

At the end of the day, because they are so reliant on the railroad, we will provide great value. So, what we try to do is position all this discussion, whether it’s with a member of 32

Railway age January 2013

Congress or a customer, that this industry last year invested $12 billion or $13 billion. That’s a huge number, because returns are moving up. Some of the politicians are scared to death, because they know that if they get regulation wrong, they’re going to see capital investment drop in the industry.

And that means jobs. Our experience with the legislators in

“Some of the politicians are scared to death, because they know that if they get regulation wrong, they’re going to see capital investment drop in the industry. And that means jobs.”

Washington has been that they want to make sure that we’re not gouging the customer. I understand that. But there are controls in place that are going to prevent that. You get a lot of argument about what proper pricing is, but the fact is that we are highly regulated on single-railroad-served customers.

When you look at the rate structures, they’re not out of line.

We’ve walked the talk where we’ve put capital back into the business. I can guarantee you that we wouldn’t be putting

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January 2013 Railway age 33

RAilRoAdeR of the YeAR

$3.6 billion into this business if our financial returns weren’t Lots of people have similar stories, so there’s nothing unique good. There’s one theory that says you have to cut all your there. For me, it boiled down to that I was getting close to capital and squeeze your capacity—which means that supply graduating, and I was getting my degree in accounting, with a and demand gets tighter, you raise your rates, and life is minor in computer science. I thought, whatever company good. That’s not a model we’re following. We’re following offers me a good job, I’ll take it. I needed to earn money. one that says we are going to match There were a couple of companies that demand with capacity and grow the busiI was interested in. Union Pacific was ness long-term. Unless you do that, you’re one of them. But I wasn’t certain about “When you have a crisis, going to have problems in Washington. You it, because there was this mindset that look at the Surface Transportation Board, that’s where you see who the railroads were a dying industry. and all the problems they’re dealing with, They had been taken over by the your true leaders are in like highway infrastructure that is woefully government in the East. But I needed a underinvested in, and it doesn’t matter job. Union Pacific called me on a Friday the organization.” whether it’s maintenance or growth capac[in 1976] and offered me a position. I ity. And here you have a railroad industry said, “When can I go to work?” They

“We’ve walked the talk where we’ve put capital back into the business.”

that’s a home run. Look at the amount of capital that continues to go in. Do they really want to break that model? That’s the discussion we get into when there is talk of new regulation, and it scares the heck out of them.

Ra: What got you interested in the railroad industry to

begin with?

Jy: For me, it was pretty simple. I was a non-traditional

student. I didn’t graduate from college until I was 25 or 26.

I worked full-time, and I went to school at the same time.

34

Railway age January 2013

said, “Monday.” On that Monday, Northern Natural Gas Company, which I had sort of preferred, called me and offered me a job. But I had already accepted the position with UP. Northern Natural later became Enron. Sometimes I think, someone was looking over my shoulder! But what was fascinating about UP was that the first or second week on the job, they put me in the head end of a locomotive. The train left Council Bluffs at about 4:00 in the morning, headed toward North Platte. Then, I took another train back. So, the management training was to kind of throw you out into the

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January 2013 Railway age 35

RAilRoAdeR of the YeAR

field. But I started out in the financial area. Then I went into the planning and analysis group. John Kenefick was running the UP, and he wanted to cut back spending on outside consultants. So we formed this new group internally to provide a lot of analytical support. I got involved with the mergers, the Missouri Pacific transaction. It was an opportunity to learn a lot about the railroad. I eventually got back into the financial organization. I became CFO, and worked for Mike Walsh and Dick Davidson. Dick really helped me a lot. I don’t necessarily like to use the term “mentor,” because you’re really responsible for your own career development.

But one of the things that Dick did was to go out and spend a lot of time on the railroad. When he went out, I went out with him. I spent a heck of a lot of time learning the business, and it really helped. When you stand in front of a

couple of hundred analysts in New York City and try to explain things like slow orders and capacity and network planning, it helps to have been out in the field learning about it. So one thing led to another, and I was appointed President and CEO about 10 years ago. We’ve had a pretty good run.

Ra: You came into the industry at an opportune time, just

before deregulation with the Staggers Act, and all the mergers. So you’ve been through all of that.

Jy: I learned a lot from that, trying to merge cultures and systems and labor agreements. At one point, during a service meltdown, I moved into operations and began working for Brad King, who headed up a group called Customer Service Planning. Talk about a learning experience, when all the sudden you’re the guy who has responsibility for customer service,

“Unfortunately this industry to a certain extent is still underappreciated.

We’re visible in many ways. derailments and grade crossing accidents always seem to make the front page. We’ve done a lot with the media getting our message out to the public, but there are still a lot of people out there whose experience with a railroad is sitting at a grade crossing waiting for a train to go by. they don’t really understand what we mean to them.”

“We’re following [a model] that says we are going to match demand with capacity and grow the business long-term.”

36

Railway age January 2013

RAilRoAdeR of the YeAR

“Customers want to know where we are going to put capacity that can help their business grow, long-term.”

and you have a company in gridlock! The phone calls, the discussions, the customer interactions—I learned a lot about what makes customers happy, what makes them angry. My secretary, who has since retired, still gets Christmas cards from some of those customers. We were able to help them during the crisis. It just goes to show you how bad things got, and the drastic measures we had to take to fix things. But you learn a lot from those experiences.

When you have a crisis, that’s where you see who your true leaders are in the organization. So it was a great learning experience, but I wouldn’t want to go through it again. It was very tough. There were hearings in Washington. There were hearings in Texas, on the chemical coast.

Ra: Do you have any thoughts on the passenger rail business

in this country? There has been this perception that Union Pacific isn’t passenger-train-friendly. But you look at the Capitol Corridor, which is a great public-private partnership, or your improving relationship with Amtrak, and perhaps that perception isn’t correct.

Jy: Some of the perceptions are real, in terms of what people think. It would be very easy to sell this franchise, meaning, 38

Railway age January 2013

provide all the passenger train capacity that is requested of us. But five or six or seven years from now, we would come to the realization that we have sold our capacity. So, we have been very disciplined about how we think about freight and passenger capacity. Unfortunately, there are some passenger advocates whose view of the world is, “Well, UP can just give me a couple train slots a day. What’s the big deal? Life will be good. We can just run our passenger trains.” We have to be very careful with that. I think we have been consistent in terms of our message, and our requirements. We have put on the table our willingness to work with the passenger advocates, to be very clear about what’s required, but also to model the operation so that they understand it. Building capacity isn’t cheap, and that’s where we get some of the negative feedback that we are being too restrictive. But we have to protect our freight franchise. There are some corridors, such as in California, Chicago, Houston, or New Orleans, where the capacity is pretty much fixed, and you pretty much have to build new right-of-way. That gets very expensive. But we try to work with everybody.

Ra: Would you agree that public perception of railroads

is improving?

Jy: Yes, but unfortunately this industry to a certain extent is

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RAilRoAdeR of the YeAR

Jim Young, with Assistant Vice President, Corporate Communications donna Kush, presents a Nebraska license plate commemorating UP’s 150th anniversary.

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still underappreciated. We’re visible in many ways.

Derailments and grade crossing accidents always seem to make the front page. We’ve done a lot with the media getting our message out to the public, but there are still a lot of people out there whose experience with a railroad is sitting at a grade crossing waiting for a train to go by. They don’t really understand what we mean to them, what we mean to

the local and national economies. Our job is to continue to promote what we dot, because if you get into a discussion about why it’s important to protect freight capacity, it’s a tough sell unless the person we’re dealing with understands what we do. We reaped a lot of benefits from our 150th anniversary celebration last year, but memories are short. We have to keep at it. Ra

Railway age’S railroaDer of the Year awarD the Railroader of the year award was started by modern Railroads magazine in 1964 as the “man of the year” award. Railway age acquired modern Railroads in 1991 and has presented the award annually since then.

1967: louis w. menk, northern Pacific Railway

ReCiPieNtS UNdeR ModeRN RAilRoAdS

1970: John S. Reed, atchison, topeka & Santa Fe Railway

1964: D. w. Brosnan, Southern Railway System

1968: william B. Johnson, illinois Central Railroad 1969: John w. Barriger, missouri-Kansastexas Railroad

1965: Stuart t. Saunders, Pennsylvania Railroad Co.

1971: Jervis langdon, Jr., Penn Central transportation Co.

1966: Stuart t. Saunders, Pennsylvania Railroad Co.

1972: Charles luna, united transportation union

40

Railway age January 2013

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ReCiPieNtS UNdeR ModeRN RAilRoAdS cont.

1973: James B. germany, Southern Pacific transportation Co. 1974: l. Stanley Crane, Southern Railway System 1975: Frank e. Barnett, union Pacific Railroad 1976: Dr. william J. harris, Jr., association of american Railroads 1977: edward g. Jordan, Conrail 1978: Robert m. Brown, union Pacific Railroad 1979: theodore C. lutz, wmata

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1980: John g. german, missouri Pacific Railroad Co. 1981: lawrence Cena, atchison, topeka & Santa Fe Railway 1982: a. Paul Funkhouser, Family lines Rail System 1983: l. Stanley Crane, Conrail 1984: hays t. watkins, CSX Corp.

1985: John l. Cann, Canadian national 1986: Raymond C. Burton, Jr., trailer train Co. 1987: willis B. Kyle, Kyle Railways

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1988: Darius w. gaskins, Jr., Burlington northern 1989: w. graham Claytor, Jr., amtrak 1990: arnold B. mcKinnon, norfolk Southern 1991: mike walsh, union Pacific Railroad

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ReCiPieNtS UNdeR RAilWAY AGe 1992: william h. Dempsey, association of american Railroads 1993: Raymond C. Burton, Jr., ttX Co. 1994: l. S. “Jake” Jacobson, Copper Basin Railway 1995: edwin moyers, Southern Pacific transportation Co. 1996: Robert D. Krebs, at&SF, and gerald grinstein, Burlington northern 1997: Paul m. tellier, Canadian national 1998: David R. goode, norfolk Southern 1999: edward a. Burkhardt, wisconsin Central transportation Co. 2000: the Railroad worker (“Railroader of the Century”) 2001: michael R. haverty, Kansas City Southern Railway

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ReCiPieNtS UNdeR RAilWAY AGe cont.

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2002: e. hunter harrison, Canadian national/ illinois Central 2003: Richard K. Davidson, union Pacific Railroad

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2004: Robert J. Ritchie, Canadian Pacific Railway 2005: David R. goode, norfolk Southern 2006: Richard F. timmons, american Short line & Regional Railroad association

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2007: william e. wimmer, union Pacific Railroad 2008: Stephen C. tobias, norfolk Southern 2009: michael J. ward, CSX 2010: matthew K. Rose, BnSF 2011: wick moorman, norfolk Southern 2012: David l. Starling, Kansas City Southern 2013: James R. young, union Pacific Railroad

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Diversity holDs sway

Carbuilders ready a wider variety of products to a larger audience of rail operators.

By Douglas John Bowen, Managing editor

Joseph M. Calisi

M

easuring North American passenger car orders each year, one tends to look first, and perhaps foremost, at the actual numbers, which fluctuate up or down, year by year. The measure remains valid.

But for the 2013 Passenger Car Outlook, what’s striking are the other numbers behind car production—those of new manufacturers involved and new customers arriving on the passenger rail scene.

Particularly noticeable is the number of orders for streetcars, and the suppliers willing and able to provide them. By the numbers, most streetcar orders are relatively small. But the number of streetcar orders suggests big market changes ahead for the supplier industry.

And the supplier numbers multiply, as stalwarts such as Siemens Mobility, already a U.S. powerhouse for light rail transit, face growing competition from relative upstarts who have landed equipment orders, such as United Streetcar, LLC, Pacifica Marine, and Brookville Equipment Corp. Still other suppliers seek to score their first North American

streetcar order, KinkiSharyo International and CAF America among them. The potential client list may offer plenty of opportunities in 2013 and beyond, as cities across the U.S. opt for streetcar startups.

The streetcar is not the only emerging North American rail mode. On the opposite end of the rail modal list (measured by top speed), orders for high speed rail (HSR) cars, or higher-speed rail (HrSR) cars, are also increasing as the U.S. finally takes tentative steps toward faster intercity passenger operations, be it in the Midwest, Florida (All Aboard Florida), or Amtrak’s venerable Northeast Corridor.

Ridership growth continues

The data that drive much of any industry growth is the number of passengers requiring rail service. Here, too, the news remains encouraging.

The American Public Transportation Association on Dec. 10 said more than 7.9 billion trips were taken on U.S. public transportation in the first three quarters of 2012, January 2013 Railway age 49

2013 PassengeR Rail OutlOOk

2013 Passenger Car Market at a glanCe Figures compiled by DOuglas JOhn BOwen, Managing editor

These new and rebuilt cars were delivered in 2012 Purchaser Boston (MBTA) Buffalo (NFTA) Calgary Chicago (CTA) Chicago (Metra) Denton County, Tx. Edmonton

# of cars 4 3 12 130 4 8 14 17 1 7 10 44 108 23 60 3 1 1 1 14 63 38 90 1 6 26

Houston (MTA) Miami-Dade (Metromover) Minneapolis/St. Paul (Metro Transit) Newark (NJ Transit) New York (Metro-North) New York (NYC Transit) Philadelphia (SEPTA) Phoenix Portland (TriMet, City of Portland) San Diego San Francisco (MUNI) South Florida RTA Southern Cal. RRA (Metrolink) Toronto (GO Transit) Toronto (TTC) Toronto (TTC) Utah Transit Authority VIA Rail Canada

Type Bilvel Commuter Rebuilt Light Rail Light Rail Transit Rapid Transit Bilevel Commuter DMU Commuter Rebuilt Light Rail Light Rail Light Rail Automated People Mover Light Rail MultiLevel Commuter EMU Commuter Rapid Transit EMU Commuter Automated People Mover Streetcar Light Rail Rebuilt streetcar Bilevel Commuter Multilevel Commuter Bilevel Commuter Rapid Transit Streetcar Light Rail, Streetcar Intercity

New and rebuild deliveries

Builder Hyundai Rotem Ansaldo/Breda Siemens Bombardier Sumitomo/Nippon Sharyo Stadler Bombardier Siemens Siemens Bombardier Siemens Bombardier Kawasaki Kawasaki Hyundai Rotem Bombardier United Streetcar Siemens In House Hyundai Rotem Hyundai Rotem Bombardier Bombardier Bombardier Siemens In House

(as of Dec. 31)

4,485

4,502 2011

2,904

689

890

3,140

3,372

1,109

1,004

2010

3,726

1,555

1,702

1,818

4,967

New and rebuild backlog

2006 50

2007

Railway age

2008

2009

January 2013

2010

2011 2012

2006

2007

2008

2009

2012

Orders likely to develop in 2013

Work progresses on this undelivered backlog (as of Jan. 1) Purchaser Amtrak Atlanta Boston (MBTA)

# of cars 130 4 71 86 Buffalo (NFTA) 22 Calif. (ACE) 2 Calif./Illinois et al 130 Chicago (CTA) 522 Chicago (Metra) 156 Cincinnati 5 Connecticut (DOT/N.Y. MTA) 24 Dallas (w/DART) 2 Denver 56 Edmonton (City Transit Division) 3 5 Honolulu (HART) 80 Houston (MTA) 39 18 Los Angeles 78 Miami-Dade 136 Maryland (MARC) 54 Mexico City (STEDF) 8 Minneapolis/St. Paul (Metro Transit) 49 Montréal (Societe de Transport) 468 Newark (NJ Transit) 56 New York (Metro-North) 237 New York (NYC Transit) 300 103 New York/New Jersey (PATH) 10 Oregon 14 Orlando (SunRail) 20 Ottawa 6 30 Philadelphia/NJ (PATCO) 120 Portland (TriMet) 18 Portland (TriMet/City of Portland) 4 Salt Lake City (UTA) 5 San Diego 63 San Francisco (BART) 410 San Francisco (MUNI) 12 127 Seattle 6 Sonoma-Marin (Calif.)

14 Southern Calif. RRA (Metrolink) 20 South Florida RTA 8 Toronto (TTC) 246 203 Toronto (TTC/Metrolinx) 182 Toronto (Metrolinx/GO Transit) 18 94 Tucson 7 Vancouver 28 VIA Rail Canada 94 Virginia Railway Express 8 Washington, D.C. (WMATA) 364 3

TyPe Inter city Streetcar Bilevel Commuter Rebuilt LRT Rebuilt Light Rail Bilelvel Commuter HrSR Intercity Rapid Transit Bilevel EMU Commuter Streetcar EMU Commuter Streetcar EMU Commuter Light Rail Rebuilt Light Rail Rapid Transit Light Rail Light Rail Light Rail Rapid Transit MultiLevel Commuter Light Rail Light Rail Rapid Transit* Multilevel Commuter EMU Commuter R 179 Rapid Transit R 188 Rapid Transit Rapid Transit Intercity Bilveel Commuter DMU Commuter Light Rail Rebuilt Rapid Transit Light Rail Streetcar Light Rail/Streetcar Light Rail Rapid Transit Rebuilt streetcar Rebuilt Light Rail*** Streetcar DMU Commuter Commuter Bilevel Commuter Rapid Transit Streetcar Light Rail DMU Commuter BiLevel Commuter Streetcar Skytrain Intercity Bilevel Commuter Rapid Transit Streetcar

Builder CAF USA Siemens Hyundai Rotem Alstom Ansaldo/Breda Bombardier Sumitomo Bombardier Sumitomo/Nippon Sharyo CAF USA Kawasaki Brookvile Equipment Hyundai Rotem Siemens Bombardier AnsaldoBreda CAF USA Siemens Kinkisharyo AnsaldoBreda Bombardier Bombardier Siemens Alstom/Bombardier Bombardier Kawasaki Bombardier Kawasaki Kawasaki Talgo America Bombardier Alstom Alstom Alstom Siemens United Streetcar Siemens Siemens Bombardier Brookville Equip./In House Ansaldo/Breda Pacifica Marine Sumitomo/Nippon Sharyo Hyundai Rotem Hyundai-Rotem Bombardier Bombardier Bombardier Sumitomo/Nippon Shayro Bombardier United Streetcar Bombardier In House Sumitomo/Nippon Sharyo Kawasaki United Streetcar

New-car deliveries by mode Year Regional/Intercity 2003 356 2004 596 2005 486 2006 358 2007 139 2008 227 2009 187 2010 199 2011 235 2012 343 Total 3,126 2012 % of Total 11.0%

Rapid Transit 470 103 302 250 402 272 752 782 113 243 3,689 6.6%

LRT/Streetcar/APM 169 127 132 130 121 97 202 148 149 59 1,334 4.4%

Total 995 826 920 738 662 596 1,141 1,129 497 645 8,149 7.9%

Purchaser Boston (MBTA) Calgary California (Caltrans) Charlotte Cincinnati Dallas (Trinity Railway Express) Fort Worth (TEX Rail) Illinois Los Angeles (LACMTA) Montréal (Societe de Transport) New Jersey Transit New York (LIRR) New York (NYC Transit) Orlando (SunRail) Phoenix (Valley Metro) Seatttle (Sound Transit) Sonoma-Marin Calif.)

So. Calif. RRA (Metrolink) Toronto (Metrolinx/GO Transit) Washington, D.C. Waterloo-Kitchener, Ontario

# of cars 24 24 14 TBD 5 6 20 55 69 30 336 171-261 236 290 350 123 14 5 4 2 45-55 50 3 14

TyPe Light Rail Light Rail Rebuilt Commuter Streetcar Streetcar Rebuilt Bilevel Commuter DMU Commuter Intercity Bilevel Rebuilt Light Rail (In-house) Rebuilt Rapid Transit Rapid Transit Rebuilt Commuter++ EMU Commuter (M-9, M-9A) R179 Rapid Transit Converted R188 Rapid Transit New R188 Rapid Transit Bilevel Commuter Streetcar Bilevel Commuter DMU Commuter Commuter/Rebuilt Commuter Bilvevel Commuter Streetcar Light Rail

The five-year (2014-2018) outlook Purchaser AMT (Montreal) Amtrak Austin (Capital Metro) Boston (MBTA)

# of cars 24 160 TBD 212 24 Calgary 12-36 California (ACE) 10 California (Caltrans) 36-60 Charlotte (CATS) 18 Chicago (CTA) 0-600 Chicago (Metra) 196 Cincinnati 25 Dallas (w/DART) 2 Dallas (Denton County, Tx.) 1 Edmonton (City Transit Division) 48 Florida East Coast Industries TBD Fort Lauderdale TBD Honolulu 6 Los Angeles 157 TBD Kansas City TBD Kenosha Area Transit (Wisconsin) 1-2 Maryland (MARC) 30-35 Mexico City N/A Milwaukee TBD Minneapolis/St. Paul (Metro Transit) 35-40 Mississauga TBD Montreal (AMT) 24 Montreal (Societe de Transport) 386 Newark (NJ Transit) 228 53 TBD New York (LIRR) 252 New York (Metro-North) 130-280 New York/New Jersey (PATH) 10-75 Norfolk, Va. (Hampton Roads Transit) 3-5 North Little Rock, Ark. 2-6 Oceanside, Calif. (NCTD) 6-12 Orlando (SunRail) 0-46 Philadelphia (SEPTA) 231 141 San Antonio 9 San Bernadino (SANBAG) TBD San Diego (MTS) 22 San Francisco (BART) 200-300 20 San Francisco (MUNI) 4-24 Southern California RRA (Metrolink) 20 South Florida RTA 5 TBD Stockton, Calif. (ACE) 14-20 Toronto (TTC) 126 Vancouver (TransLink) 5-10 Virginia Railway Express 42 Washington, D.C. (WMATA) 64 *Rubber-tired vehicles ++ Equipment damaged by Hurricane Sandy *** Deferred indefinitely

TyPe Commuter HSR Intercity Diesel Light Railway Rapid Transit Light Rail Light Rail Bilevel Commuter Bilevel Intercity Light Rail Rapid Transit, inc. rebuilds Rebuilt Bilevel Commuter Streetcar Streetcar DMU Commuter Light Rail HrSR Intercity Streetcar Rapid Transit Light Rail Streetcar Streetcar Historic Streetcar Multilevel Commuter Rapid Transit Streetcar Light Rail Light Rail Multilevel Commuter Rapid Transit EMU Commuter DMU Commuter Light Rail EMU Commuter (M-9) Commuter, EMU Commuter Rapid Transit Light Rail Vintage Trolley Bilevel Commuter Bilevel Commuter EMU Commuter Light Rail Streetcar Light Rail Light Rail Rapid Transit Automated People Mover Light Rail Multilevel Commuter Streetcar Commuter/Regional Bilevel Commuter Rapid Transit Commuter Bilevel Commuter Rapid Transit

January 2013 Railway age 51

2013 PassengeR Rail OutlOOk Car 4400 is the first of 204 streetcars Toronto has ordered from Bombardier.

an increase of 2.6% over the corresponding period in 2011.

“With seven consecutive quarters of ridership increases, it’s obvious that public demand for public transit is growing,” said APTA President and CEO Michael Melaniphy.

Speaking before a budget deal was reached between President Obama and the Republican-controlled House of

Representatives, Melaniphy said, “As Congress works to resolve our country’s deficit problem, it also needs to work to resolve the transportation deficit. Otherwise public transit and highway funding will be facing an annual $15 billion shortfall in the next 10 years.”

Melaniphy added, “We continue to see that in areas where the local economy is improving and new jobs are being added, public transportation ridership is up. This makes sense since nearly 60% of the trips taken on public transportation are for work commutes.

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52

Railway age

January 2013

International interest in HSR

International rail players seem to believe the U.S. may truly be poised to join the global high speed rail community and, though their influence within the U.S. is limited, they did what they could. Symbolic among those efforts was the gathering in Philadelphia last July of more than 1,000 high speed rail planners, operators, and equipment manufacturers at HIGHSPEED 2012, a World Congress sponsored by the Paris-based International Union of Railways (UIC).

APTA was a co-sponsor of the event, while Amtrak, Association of American Railroads (AAR), U.S. Department of Transportation, Federal Railroad Administration (FRA), and VIA Rail Canada were cooperating organizations.

The meeting followed, by mere days, an affirmation by California to the state’s 700-mile intrastate high speed rail plan, designed to link Sacramento and San Francisco, in the north, with Los Angeles and San Diego in southern California.

California High-Speed Rail Authority CEO Jeff Morales told UIC conference attendees that obstacles would continue to crop up as the project progressed—but the project would progress. In November, following a judicial ruling favorable to HSR, Morales said, “We don’t want to just prevail in the courts. We want to make it more workable for the communities as we go forward.”

California thus joined—and politically reinforced—ongoing efforts by Amtrak to improve its bellwether Northeast Corridor, charitably labeled as true HSR by the UIC during the Philadelphia conference, though NEC top speeds only reach 150 mph over select small stretches of right-of-way.

Bombardier Trransportation

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resource for employees and employers as it is instrumental in helping people travel to their jobs.”

All major modes of public transportation increased from January through September of 2012, APTA said. But light rail transit (LRT, up 4.2%) and heavy rail (or metro, up 3.6%) saw the largest increases in the first nine months.

TRANSPORTATION & INFRASTRUCTURE

Amtrak last month revamped its own plans for equipment, eschewing plans to add 40 additional cars to its existing Acela Express fleet. Instead, Amtrak this year will issue a Request for Information evaluating a purchase of up to 20 new high speed trainsets. Amtrak has not specified a specific number of cars desired; industry observers suggest eight-car trains fit Amtrak’s vision of future HSR operations, at least initially.

Multistate order for HrSR gear

Regardless of the actual number, Amtrak’s potential order, joining that of the California High-Speed Rail Authority, is tempting indeed to carbuilders, many of which have remained poised—and patient—as they await what they believe is the U.S. entry into the HSR market, however belated it may be.

As for higher-speed rail (HrSR), the action has begun. Led by Illinois, several Midwest states, joined by California, last November placed an order for 130 intercity cars from Sumitomo Corp. of America. Sumitomo has partnered with railcar manufacturer Nippon Sharyo, which will build the cars at its new plant in Rochelle, Ill. The purchase is being funded through the FRA and has met all FRA requirements so that the final assembly is “prepared by American workers, with American-sourced steel, iron, and manufactured components.”

California’s participation is noteworthy, since the Sumitomo equipment will be designed for operation at speeds up to 125 mph, making it at best an interim equipment move for the Golden State; California’s HSR system envisions top speeds of 200 mph.

More obvious is Illinois’ leadership role for Midwest states, as it seeks to lock in 110 mph operating speeds on much of Amtrak’s Chicago-St. Louis service. Union Pacific owns most of the right-of-way along the corridor, plied

by Amtrak intercity service, and has been performing the federally funded upgrades to track, switches, and train control equipment. RA

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T D W

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Nineteenth Anniversary

US$ 1,000,000,000 During 2011/2012, Railroad Financial Corporation advised railroads, shippers and financial institutions on the acquisition or disposition of more than One Billion Dollars in railcars and locomotives.

Our services include: • Advising on the purchase of new equipment from manufacturers and component suppliers; • Disposing of existing equipment; • Arranging third party maintenance contracts; • Structuring finance transactions and arranging full service or net leases for new and used railcars and locomotives.

If you plan to acquire or dispose of railcars or locomotives in 2013 and would like to learn why equipment end-users engage Railroad Financial and how they profit from the work RFC does for them, please contact us.

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People

Meetings

HigH Profile The greenbrier Cos., inc. named Martin Graham executive Vice President of Materials Management, engineering and Operations,for greenbrier Manufacturing North america, effective Jan. 2, 2013. He reports to alejandro Centurion, president of greenbrier manufacturing for North america. graham will have direct responsibility for engineering, purchasing, and production control functions, and is expected to lead improvements across greenbrier’s new railcar manufacturing platform. graham has more than 21 years of experience in senior management. He previously served as the prescient of Trinity Rail North american Freight, a division of Trinity industries, inc., overseeing operations throughout North america. Prior to that, he served as president and COO of Thrall Car Manufacturing Co. “we are particularly fortunate to have a seasoned executive of Martin’s caliber joining the greenbrier organization,” said greenbrier President and CeO william a.

Furman. “He is widely respected for his extensive knowledge of railcar manufacturing and leasing, including tank cars. He has vast international experience and is a proven industrial leader.”

February 4-5, 2013 Railway Age/Parsons International Conference on Communications-Based Train Control

AMTRAK—David Nichols named Chief Transportation Officer.

CSX—as of Jan. 1, Gary Bethel named vice president-Northern Region, succeeding Craig King, who is retiring.

Bethel reports to Cindy Sanborn, vice president and chief transportation officer. also, Frank Lonegro succeeds Bethel as vice president-Mechanical, reporting to Oscar Munoz, executive vice president and COO. lonegro will continue to have responsibility for CSX’s implementation of the industrywide Positive Train Control initiative. as well, Kathleen Brandt named president of CSXTechnology, also reporting to Munoz.

INDIANA RAIL ROAD—Mike Engel promoted to the newly created position of Senior Vice President and Chief Financial Officer; he will continue as Corporate Secretary. Bob Babcock named to the newly created position of Senior Vice President of Operations and Business Development, overseeing all non-energy related marketing development while also directing economic development and operations of the railroad. Eric Powell has moved from the company’s government affairs department to the marketing department as Manager, intermodal and economic Development; he will continue to manage the company’s corporate communications.

56

Railway age

January 2013

NORFOLK SOUTHERN—Elizabeth Kennedy Lawlor named resident Vice President government Relations.

Based in Montgomery, ala., she will coordinate the NS government relations activities in alabama, louisiana, Mississippi, and Tennessee.

SEPTA—promoted Robert Lund Jr., P.E., to assistant general manager of engineering, maintenance and construction.

100 YEARS AGO in

(JANUARY 1913) NEW HAVEN NEWS The New York, New Haven & Hartford announces that the line between Stamford, Conn., and New Haen, 40 miles, will be ready for electric propulsion by July 1, next. With this extension trains can be hauled by electric locomotives from New Haven to New York, 74 miles.

Clerks of the New York, New Haven & Hartford to the number, it is said, of 1,600, have secured an increase in pay. The men affected appear to be those in the general offices and at larger stations. The most important concession is an increase of 15 cents a day to all now drawing less than $25 a week and establishing the minimum rate per day at $2.

washington Marriott, washington, D.C. Jane Poterala, Tel.: 212-620-7209; email: jpoterala@sbpub.com; website: www.railwayage.com.

February 12-13, 2013 ARDA 2013 Executive Forum BNSF Network Operations Center Viewing gallery, 2600 lou Menk Drive, Fort worth, Tex. Ron Skinner, Tel.: 785-393-8191; email:amraildev@gmail.com; website: www.amraildev.com.

March 3-6, 2013 Rail Equipment Finance Conference 2013 la Quinta, Calif.

Tony Kruglinski, website: www. railequipmentfinance.com.

March 5-6, 2013 18th Annual AAR Research Review Pueblo Convention Center, Pueblo, Colo.

Peggy Herman, Tel.: 719-584-0576; email: annual review@aar.com; website: www.regonline. com/18thReview.

March 13-15, 2013 wednesday, March 13, 2013 Introduction to Practical Railway Engineering Seminar Stan Fulton Building 4505 Maryland Parkway, University of Nevada, las Vegas, Nev. Desiree Knight, Tel.: 301-459-3200, ext. 703; email: dkknight@arema.org; website: www.arema.org.

Products Roller bearing cap screw locking system moves forward The wheels, axles, Bearings and lubrication (waBl) Committee of the association of american Railroads granted conditional approval last November for a new roller bearing Cap Screw locking System (CSlS) developed

by Stage 8 locking Fasteners. San Rafael, Calif.-based Stage 8’s system is “the first significant improvement in roller bearing end cap locking systems in over 50 years.”

Between October 2010 and May 2011, the Stage 8 CSlS was field tested on coal cars cycling between the Powder River Basin and an ameren energy power plant in Missouri.

Test cars had the Stage 8 locking system on one wheelset of each truck, while the other wheelset was fitted with a conventional locking system. after 50,000 miles, the roller bearing end caps were examined by personnel from Stage 8, Midland Railway, and ameren energy. every one of the Stage 8 cap screw fasteners retained more than 90% of their initial torque values (iTV). By comparison, only 15 % of the conventional cap screw fasteners retained more than 90 % of iTV. extended testing to 150,000 miles yielded nearly identical results; all of the Stage 8 cap screws were still holding more than 90% of iTV. Robert ahern, director of Stage 8 Fasteners, says these tests showed his company’s Cap Screw locking System to be far superior to conventional hardware. “The current cap screw locking system has more than a 6% failure rate when measuring applied

torque retained after 50,000 and 150,000 miles,” he says. “Failure is defined as retention of less than 50% of iTV. when the cap screw locking system fails so do roller bearings and that costs money.” aaR’s conditional approval allows the Stage 8 system to advance to the next phase of in-service application. Holly arthur, aaR’s assistant vice president of Media and Public Relations, says, “Stage 8 is permitted to sell 12,000 of their systems (approximately 1,500 car sets) to the industry. Stage 8 will keep a record of the cars to which these devices are applied and track the cars for at least 50,000 service miles and at least 12 months in service for any problems.”

These tests showed the Stage 8’s

Cap Screw locking System to be far superior to conventional hardware. according to industry MD-11 reports measuring the retained torque of Roller Bearings, 22% of the bearings recorded had less than half of the original torque applied. The Roller Bearing engineering Committee states that a loss of half the original applied torque is a failed end cap screw.

For 25 years, Stage 8 has supplied fastener systems for applications in the automotive, construction equipment, railroad, military, and aerospace industries. “Over 17 million Stage 8 locking systems have been installed without a single reported failure,” the company says.

To learn more, visit www.stage8. com. —Bruce Kelly January 2013 Railway age 57

Do you have the most up-to-date FRA Regulations?

Reb Says...

Use this handy index to verify that you have the most up-to-date version of the FRA regulations. The left-hand column lists the FRA Part number and the right-hand column list the latest revision date. Items highlighted in red denotes recent changes. (IFR = Interim Final Rule) FRA Part #

Last Update Effective:

FRA Part #

Last Update Effective:

FRA Part #

Last Update Effective:

40 . . . . . . . . .10-3-12 209 . . . . . . . .6-25-12 210 . . . . . . . .8-14-89 211 . . . . . . . .7-20-09 213 A-F . . . . .6-25-12 213 G . . . . . .9-13-10 214 . . . . . . . .6-25-12 215 . . . . . . . .6-25-12 216 . . . . . . . .6-25-12 217 . . . . . . . .6-25-12 218 . . . . . . . .6-25-12

219 220 221 222 223 224 225 228 229 230 231

. . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . . .1-1-13 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12

232 233 234 235 236 237 238 239 240 242

. . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .7-13-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12

Mechanical Department Regulations

The following is a list of booklets reprinted from the Department of Transportation Code of Federal Regulations 49 CFR Parts 200 to 399 that apply to the rail industry.

They are printed in a convenient format and are kept current with updates from the Federal Register which may be supplied in supplement form.

Item FRA 50 or Code Part # more Each

209 211 BKTSSAF 213 BKTSSG 213 BKWRK 214 BKFSS 215 BKROR 217 218 BKRRC 220 BKEND 221 BKSEP

BKHORN 222 BKRFRS 224 BKHS 228 BKLSS 229 BKSLI 230 BKSAS 231 BKBRIDGE 237 BKLER 240 BKCONDC 242 BKBSS

Railroad Safety Enforcement Procedures & Rules of Practice Track Safety Standards (Subpart A-F) Track Safety Standards (Subpart G) Railroad Workplace Safety Railroad Freight Car Safety Standards Railroad Operating Rules and Practices Railroad Communications Rear End Marking Device, Passenger, Commuter & Freight Trains Use of Locomotive Horns Reflectorization of Rail Freight Rolling Stock Hours of Service Locomotive Safety Standards Steam Locomotive Inspection Railroad Safety Appliance Standards Bridge Safety Standards Qualification and Certification of Locomotive Conductor Certification

232 Brake System Safety Standards

26.40

8.95 8.55 8.55 6.25 8.55

8.25 7.85 7.85 5.85 7.35

4.15 3.50

3.80 2.75

12.25

10.95

5.25 9.40 10.00 19.95 8.35 5.25 11.75

4.75

10.00 Each

13.75

Mech. Dept. Regs.

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$26.95

Bridge Safety Standards

12.50

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25 or more

Technical Manual for Signal and Train Control Rules.

Includes Part 233, 234, 235, 236 - Spiral Bound Order 25 or more and pay only $39.10 each

BKPSS

Passenger Safety Standards 20.80 Part 238, 239 - Order 25 or more and pay only $18.95 each

BKSTC

Signal and Train Control Systems Includes Part 233, 234, 235, 236 Order 25 or more and pay only $16.00 each

BKMPIE

Motive Power & Equipment Inspection Under Revision Defect codes for 215, 218, 223, 229, 231, 232 Coming Soon!

BKCAD

Drug and Alcohol Regulations in the Workplace Part 40 & 219

Fax: (402)346-1783 • Email: orders@transalert.com

BKMFR

9.00

7.85 4.75 11.00

BKTM

1809 Capitol Ave, Omaha, NE 68102

A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound.

Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment 217 Railroad Operating Rules 218 Railroad Operating Practices - Blue Flag Rule 221 Rear End Marking Device-passenger, commuter/freight trains 223 Safety Glazing Standards 225 Railroad Accidents/Incidents 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards

FRA Part 237 establishes Federal safety requirements for railroad bridges. This rule requires track owners to implement bridge management programs, which include annual inspections of railroad bridges, and to audit the programs. Bridge Safety Standards Part 237 also requires track owners to know the safe load capacity of bridges and to conduct special inspections if the weather or other conditions warrant such inspections. Softcover. Spiral bound.

9.00

Each

The Railway Educational Bureau

49 CFR Part 225 - Railroad Accidents/Incidents This rule increases the rail equipment accident/incident reporting threshold from $9,500 to $9,900 for certain railroad accidents/incidents involving property damage that occur during calendar year 2013.

This action is needed to ensure that FRA's reporting requirements reflect cost increases that have occurredsince the reporting threshold was last published in November of 2011.

Dates: This regulation is effective January 1, 2013.

46.00

17.50

35.00

BKBRIDGE

Bridge Safety Standards

$5.25

Part 213: Track Safety Standards 49 Part 213, Subparts A-F. Classes of Track 1 through 5: Applies to track required to support passenger and freight equipment at lower speed ranges. Includes Defect Codes and Appendices A, B, and C to Part 213. Softcover. Spiral bound. 114 pages.

BKTSSAF

Track Safety Standards

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Add Shipping & Handling if your merchandise subtotal is: UP TO $10.00 10.01 - 25.00

Add $4.10 Add 7.20

25.01 - 50.00 50.01 - 75.00

Add 9.80 Add 10.90

Orders over $75, call for shipping

*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 1/13

RA Wrk Ste 1_2V 10 2010

10/15/10

9:18 AM

Page 1

Ashcroft’s isolated pressure instrumentation endures ashcroft® pressure instruments can be configured with media isolators specifically engineered for harsh or corrosive process liquids and gases. whether the measuring device is a dial gauge, switch, digital gauge or transmitter, there is an ashcroft® diaphragm seal or other isolation device that can be mated for complete media protection. ashcroft® seals are available in a wide variety of sizes, wetted materials and configurations including capsule type, welded or bonded and clamped designs with threaded, flanged and flushing connections. Pre-assembled, filled and ready for installation, these isolated instruments provide the right combination of measurement performance and media protection in any demanding severe-service application. Contact ashcroft inc. to find out more; Tel.: 800-328-8258; website: www.ashcroft.com.

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Some examples of training subjects include: Freight Car Inspection and Repair • AAR Field Manual Familiarization Rules 1 thru 83 • Introduction to FRA Safety Appliances (Part 231) • FRA Freight Car Safety Standards (Part 215) • Draft system defects and repairs • Inspecting draft system and center sills (Hands-on) • Truck and Wheel defects. Roller Bearing and adapter defects • Hands-on Gauging/Measuring wheel and truck defects Single Car Air Brake Test • • • •

Fundamentals of Freight Train Air Brakes Single Car Air Brake Component Identification and Function Daily Test, Single Car Test and Special Tests Review AAR S-486 Single Car Air Brake Test Procedures

FRA Part 232 Brake System Safety Standards for freight and other non-passenger trains •

Martin Engineering offers conveyor brush cleaner Neponset, ill.-based Martin engineering Co. says its new powered brush cleaner for conveyor belt applications has a rotating design that removes material accumulation and dust in difficult applications, even in conditions involving sticky materials or stringy fibers, such as coal and biomass. The Martin® Brush Cleaner’s economical 230/460-volt, 3-phase electric motor provides successful cleaning with minimal power consumption. Constructed of durable steel and stainless steel components, the cost-effective belt cleaner delivers a long-service life, holding up in harsh ooperating environments.easy to install and maintain. Contact Martin engineering, Tel.: 309-852-2384; email: info@mertin-eng. com; website: www.martin-eng.com.

• • • • •

Review Brake System Safety Standards definitions and extent of the regulations.

Class l Brake Tests – Initial Terminal Inspections Measuring Piston Travel Review piston travel decals Hands-on “Class l Brake Test” Performance Evaluation “Class l Brake Test”

Train Yard Safety includes: Rail Yard Safety Blue Signal Rules Moving rail cars safely Hands-on Demonstration Call us today to learn more about how we can help you!

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The Railway Educational Bureau January 2013 Railway age 59

Intermodal Age the new

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April 2–3, 2013 Join Marine Log and raiLway age in Baltimore for a special conference exploring the multi-modal approach to moving cargo efficiently—by rail, by ship, by truck.

ConferenCe topiCs • • • •

Securing and tracking cargo Improving efficiency through technology Managing the national equipment pool Labor’s critical role

• • • •

Successful public-private partnerships Panama Canal expansion Government policies that need to change Improving infrastructure: federal grants

exhibit and sponsorship opportunities Contact Jane Poterala, Conference Director, at tel. 212-620-7209 or jpoterala@sbpub.com

mArinelog.com/events

rAilwAyAge.com/conferences

Ad Index Company

Phone #

aldon Co., amsted Rail group auto Truck Boatright enterprises, inc.

Bombardier Transportation Cyclonaire Corp.

Danella Rental Systems, inc.

Dixie Precast ellwood Crankshaft & Machine FreightCar america Fulmer Company gross & Janes Co. Helm Financial Corp.

Herzog Railroad Services, inc.

Holland Co. Hotstart invensys Rail Corp iTT enidine/Koni l.B. Foster Co lTK engineering Services Okonite Co. ORX Plasser american Corp.

Progress Rail Services PTMw RJ Corman Railroad group R&w Machine Division RCe RailComm, inc.

Railquip, inc.

Railroad Financial Corp.

Railworks Railway educational Bureau, The Soft Rail Star Headlight & lantern STV, inc.

Timken Co. Unitrac V&H inc.

Vossloh group

847-623-8800 312-922-4516 816-412-2131 800-873-2020 215-639-1444 402-362-2000 610-828-6200 770-944-1930 724-347-0250 312-928-0850 724-325-7140 636-343-8484 415-398-4510 ext 1610 816-233-9002 708-672-2300 ext.382 509-536-8667 502-244-7400 859-488-0322 412-928-3506 215-641-8826 201-825-0300 814-684-8484 757-543-3526 256-505-6485 785-232-7792 859-881-7521 708-458-4200 866-472-4510 585-377-3360 770-458-4157 312-222-1383 866-905-7245 402-346-4300 888-872-4612 585-226-9500 ext.137 212-777-4400 330-438-3000 412-298-0915 913-780-6526 00 49 239 252 273

Fax

Email address

847-623-6139 312-922-4597 816-412-2191 205-298-9483 215-639-3724 402-362-2001 610-828-2260 770-944-9136 724-347-0254 312-928-0890 724-327-7459 636-343-9793 415-398-4816 816-233-7757 708-672-0119 509-534-4216 502-253-3760 859-334-3340 412-928-3512 215-542-7676 201-825-3524 757-494-7186 256-840-2651 785-232-7793 859-885-7804 708-458-3299 630-355-7173 585-377-3341 770-458-5365 312-222-1470 952-469-1926 402-346-1783 585-226-2029 212-529-5237 330-458-6006 865-693-9162 913-780-0045 00 49 239 252 274

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e-rail@aldonco.com 14 kskibinski@amstedrail.com 21 eschoenfeld@autotruck.com 53 info@boatrightcompanies.com 47 maryanne.roberts@us.transport.bombardier.com 48 sales@cyclonaire.com 31 pbarents@danella.com 15 fbrown142@aol.com 44 ecgsales@elwd.com 33 ewhalen@freightcar.net C2 jroberts@fulmer.com 16 mattclarke@grossjanes.com 13 bwind@hlmx.com 16 tfrancis@hrsi.com 46 gpodgorski@hollandco.com 39 mfloyd@kimhotstart.com 43 bob.coffman@safetran.com 25 jpipp@koni-na.com C3 glippard@lbfosterco.com 41 tfurmaniak@ltk.com 52 info@okonite.com 17 glenn@orxrail.com C4 plasseramerican@plausa.com 23 bcox@progressrail.com 27 pgoff@ptmw.com 31 www.rjcorman 37 jwarner@rwmachine.com 7 dennishanke@rcequip.com 42 sales@railcomm.com 3 sales@railquip.com 33 tkruglinski@railfin.com 54,55 jrhansen@railworks.com 45 bbrundige@sb-reb.com 58,59 sales@signalcc.com 44 chrisjacobs@star1889.com 35 info@stvinc.com 53 communications@timken.com 29 ppletrandrea@unitracrail.com 35 b.boehm@vhtrucks.com 13 info@vossloh-north-america.com 9

The advertisers index is an editorial feature maintained for the convenience of readers. it is not part of the advertiser contract and Railway age assumes no responsibility for the correctness.

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 345 Hudson St., 12th Floor New york, Ny 10014 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com

AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX emily guill 20 South Clark Street, Suite 1910 Chicago, il 60603 (312) 683-5021 eguill@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, CANADA – QuEbEC AND EAST, ONTARIO Mark Connolly 345 Hudson St., 12th Floor New york, Ny 10014 (212) 620-7260 Fax: (212) 633-1863 mconnolly@sbpub.com

AK, AZ, CA, CO, IA, ID, IL, KS, MN, MO, MT, NE, NM, ND, NV, OR, SD, uT, WA, WI, WY, CANADA – Ab, bC, Mb, SK Heather Disabato 20 South Clark Street, Suite 1910 Chicago, il 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com

GLObAL ADVERTISEMENT SALES, EXCEPT ITALY, ITALIAN-SPEAKING SWITZERLAND, JAPAN, AND NORTH AMERICA Donna edwards advertisement Manager Suite K5 & K6 The Priory, Syresham gardens Haywards Heath, RH16 3lB United Kingdom +44-1444-416368 Fax: +44-1444-458185 de@railjournal.com.uk

AuSTRALIA, CZECH REPubLIC, HONG KONG, INDIA, KOREA, MIDDLE EAST, NETHERLANDS, NEW ZEALAND, RuSSIA, SCANDINAVIA, SOuTH AFRICA, SOuTH AMERICA, SPAIN, WORLDWIDE RECRuITMENT Steve Barnes international area Sales Manager Suite K5 & K6 The Priory, Syresham gardens Haywards Heath, RH16 3lB, UK +44-1444-416368 Fax: +44-1444-458185 sales@railjournal.co.uk ITALY, ITALIAN-SPEAKING SWITZERLAND Dr. Fabio Potesta Media Point & Communications SRl Corte lambruschini Corso Buenos aires 8 V Piano, genoa, italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

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12-6 4-Chome, Nishiiko, adachi-Ku Tokyo 121-0824 Japan +81-3-5691-3335 Fax: +81-3-5691-3336 amkatsu@dream.com CLASSIFIED, PROFESSIONAL & EMPLOYMENT Craig wilson 345 Hudson St., 12th Floor New york, Ny 10014 (212) 620-7211 Fax: (212) 633-1325 cwilson@sbpub.com

January 2013 Railway age 61

products & services

Reidler Decal Corporation St. Clair, PA 17970 Fax: 570-429-1528 marketing@reidlerdecal.com The Federal Railroad Administration's proposed new delineator configuration

Reidler can help you comply with the FRA ruling by offering prismatic reflective yellow delineators that meet their specifications.

• 4" x 150 fl Rolls (kiss-cut available) • 400 candlepower retroreflection • Application instructions provided

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recruitMeNt

EDNA A. RICE, EXECUTIVE RECRUITER, INC

Trainers and Training Developers The Railway Educational Bureau is in the process of creating a training and development database to be used as a resource for the railroad industry.

If you have experience training in an instructor-led environment and/or developing training materials for the rail industry, and are interested in becoming a part of our group, please send your resume to:

Brian Brundige The Railway Educational Bureau 1809 Capitol Avenue Omaha, NE 68102 62

Railway age

January 2013

(713) 667-0406 FAX (713) 667-1651 Web address: www.ednarice.com Email: resume@ednarice.com

EDNA A. RICE, President 6750 West Loop South Suite 735 Bellaire, Texas 77401-4111

Railway Age Digital Edition For More Marketing Power contact cwilson@sbpub.com

equipMeNt sALe/LeAsiNG

Available For Lease

◆ 5,150 cu. ft. Pressure Differential (PD) Covered Hopper Cars. Food grade interior linings but don’t necessarily have to stay in food grade service. ◆ Mill Gondolas - 65’ 6” interior length with 5’ sides and 52’6 interior length with 4’6” to 5’ sides ◆ 4,240 cu. ft. Gondolas - Interior bracing still in place. OK for C&D, coke, scrap, aggregates, etc. ◆ 3,600 cu. ft. Open Top Hoppers. 45 degree slopes for aggregate, coke, coal, etc.

For additional information and pricing, please contact John Goodwin ph one (605) 582-8318 fax (605) 582-8304 www.carmathinc.com e -m ail jgoodwin@mwrail.com

STEEL BODY ROTARY DUMP HI-SIDE COAL GONDOLAS

Western Farmers Electric Cooperative offers for sale 145 railcars previously used to deliver low sulfur Wyoming coal. For information & bid package call Ben Wetherill at 580-873-2201 x140 or email b_wetherill@wfec.com. Principals only. Proposals due 4/30/13.

eMpLoYMeNt

REGIONAL CLASS I SALES MANAGER L.B. Foster Company is looking for Class I Regional Sales Managers responsible for directly calling on North American Class I Railroads and assisting in creating sales strategies for each of our product lines. Current positions are located in Omaha, NE and Montreal, Canada.

Minimum Qualifications: • Bachelor’s Degree in Business, Marketing or related field • 5+ years of sales and railroad industry experience • Excellent understanding of Class I Railroads safety practices and a member of e-RAILSAFE In return, we offer an opportunity to build a solid career with competitive compensation and a very attractive benefits package, including first-day health care coverage and a market-leading 401(k) program. To apply, visit www.lbfosterjobs.com E/O/E M/F/H/V

Find your rail industry job opportunities @ Craig Wilson

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Sales Representative

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212.620.7211

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cwilson@sbpub.com January 2013 Railway age 63

Financial Edge anthony KRuglinsKi

Watch your Terms & Conditions!

T

erms & Conditions, or “T’s & C’s,” are those operative provisions in your equipment leases that can become problematic when you least expect it, such as when you have a casualty or when you are marshaling rolling stock for return to the lessor at leaseend. It is at such times that the terms and conditions to which you agreed when you first leased your equipment can come back to bite you if you haven’t negotiated T’s & C’s in your favor.

For instance, if you have an equipment “casualty,” it’s the T’s & C’s in your lease that dictate how a casualty is defined, who defines it, and when it occurs; how the lessor is made whole and how much time the lessee has to do so; and whether the lessee can substitute equipment of similar age, utility, and value in lieu of cash.

What about the issue of returning equipment at lease end? In this case, look to the T’s & C’s to determine: • Where and when the equipment must be returned.

• How much notice is required to be given of an intention to return the equipment.

• Who pays for the transportation to storage, the storage fees themselves, and inspection.

• In what condition the equipment must be for return.

• Whether rent continues until the last unit is accepted back.

There are dozens of provisions in typical finance and operating leases that detail how the parties are required to behave in connection with various events during the lease term. The issue for each one of these terms and conditions is whether each has been drafted to benefit the lessor or the lessee or, on some negotiated basis, both.

Where does the novice lessee learn

64

Railway age

January 2013

which lessor-proposed T’s & C’s are acceptable and which ones aren’t? For some lessees the answer will be simple.

If you are a small company with a modest credit profile, don’t worry about T’s & C’s in the lease document you are given to sign. You won’t have much choice if you want to get the equipment you need. You may simply be given a preprinted form with little chance to change things other than to correct the spelling of your name.

You will have opportunities to negotiate; make the most of these opportunities.

But let’s say that you’re a company that has both critical mass and a decent financial condition so that your business will be of interest to a variety of competing leasing companies. In such a case, the market will have already established the best, lessee-friendly terms and conditions that you can expect to achieve. Your job will be to find out what these “market” T’s & C’s are for a lessee in your position at that point in time and, once determined, to get your lessor to agree to them. (Need we say that it is highly unlikely your lessor will disclose them?)

There are several ways to do this: You can hire my firm, Railroad Financial Corporation, to handle your lessor negotiations. Over the past 24 months, we’ve advised equipment endusers on more than $1 billion in new and used equipment transactions.

Transaction documentation is part of what we do; we know what the market is offering to lessees with your financial profile. (End of advertisement.)

You can seek a law firm to represent you that has had recent experience with negotiating finance or operating leases for other clients. Try to find a firm that has a practice in this area of law.

You can ask your lessor for a copy of the most recent rolling stock lease that was negotiated with another lessee. To assure privacy, you can suggest deletion of the name of the lessee and lease economics. But you do want to see the T’s & C’s that the last lessee accepted. (Since that lessee may have been lax in protecting itself, this has drawbacks.)

Or you can sit and say “no” to everything the lessor suggests until your deal either craters or you get some movement in your direction in the negotiations. The issue you will have will be knowing when you have gotten all you can get from the other side.

Things not to do: • Do not let a finance lessor hand you a non-rail-equipment-specific lease with general T’s & C’s or T’s & C’s tailored to non-rail equipment.

• Do not use a lease older than 12 months as a guide to appropriate T’s & C’s for a new finance or operating lease, even if you originally negotiated it. The current market for new leases is so hot (particularly finance leases) that more lessee-favorable T’s & C’s very likely are available today.

If you are a desirable target customer for a financial or operating lessor, you will have significant opportunities to negotiate the terms and conditions of your lease document. Make the most of these opportunities to get the best deal possible on each and every one.

Is this a technologically advanced, meticulously engineered circular marvel capable of transporting beings and cargo millions of miles?

Or is it a flying saucer?

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