Railway Track & Structures - January 2009 - (Page 44)

CHICAGO PERSPECTIVE Riding out a down economy T his is the time of year to look back and reflect and to look ahead and ponder. 2008 started off as a decent year for me personally and for the railroad industry. As the credit crunch blossomed into a fullblown economic crisis, things didn’t look quite as rosy. I also thought it was nice of the economists to tell us that we’re officially in a recession that began a year ago. As I look ahead into 2009, I don’t see everything coming up roses. But I do see basic strengths in the U.S. economy in general and the railroad industry in particular that give me cause for hope. With companies in virtually all types of businesses tightening their belts, the outlook could be gloomy. But don’t forget that the railroads are the low-cost shippers in many cases. As economically-pinched companies look at every way possible to reduce costs, more and more of them are going to consider rail to move goods. That’s a challenge to our industry. Those potential shippers avoided railroads for a reason. Now that they want to do business with railroads, how can the railroads provide the service they need? Will we see more sidings going into manufacturing facilities? Will we see new types of intermodal service reaching out to potential new customers? I don’t know the answers, but I do know railroads will have to be very creative to meet the needs of these potential new customers. Railroads and suppliers are also looking for ways to trim expenses. That’s the way business is done. But trimming can be overdone. Elsewhere in this issue, we bring you the capital forecast for 2009. As you can see, the capital expense plans for the larger railroads are pretty much flat or reduced. And these are preliminary figures that could be reduced further based on how much traffic the railroads carry in the coming months. I understand putting off some projects until better economic times, but there are some snares out there that could trip up the industry. Most of us have lived through periods of the euphemistically-named “Deferred Maintenance.” Essentially, the words meant that the engineering departments could do whatever they wanted—as long as they didn’t spend any money. Deferred maintenance drags our entire industry down. Reduced maintenance means slower speeds and increases the risk of accidents. Service drops below acceptable levels and shippers bite the bullet and pay higher costs to ship by truck. And when the green light finally came to go out and do the vital work, it cost much more to bring the tracks back up to where they had been than if the work had been done on a regular basis. Capacity problems have been increasing on all railroads. Traffic forecasts see freight shipments soaring well beyond what the railroads can handle, so those problems can only get worse over time. I think it’s false economy to stop all capacityenhancing projects at this time. I’m confident traffic will come back and then climb. How will the railroads build up to handle it? Work windows are already extremely difficult to obtain. How much more difficult will it be if railroads wait until traffic levels are high again to do the needed work? We’ve all been reading about proposed stimulus packages that would build up the nation’s infrastructure. Railroads must play a major role in any such program. I’ve already heard guesstimates that at least 80 percent of such funds will go to highways and I tend to agree with those guesses. I’ve seen the so-called “road gang” at work lobbying for highway projects. They’re not going to go away and they know how the game is played in Washington. As an industry, we have to do two things. First, we must have “shovel-ready” projects eligible for these funds. Second, everybody in our industry, railroaders and suppliers, has to work together to make sure railroads get a fair share of the funds in any stimulus package. Rail capacity-enhancing projects provide many benefits to the economy and we have to get that word out to our elected officials. If we don’t tell our story, who will? I wish you all a healthy and prosperous 2009. George S. Sokulski Associate Publisher 44 Railway Track & Structures January 2009 www.rtands.com http://www.rtands.com

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Railway Track & Structures - January 2009 Contents On Track Industry Today Supplier News AREMA News NRC News TTCI R&D Railroads Continue to Budget Major Capital Projects Battling Brush and other Vegetation Steel Mills Increasing Metallurgical Quality of Rail Steels Products and Literature People Calendar Advertisers Index Sales Representatives Website Directory Professional Directory Classified Advertising Chicago Perspective

Railway Track & Structures - January 2009

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