2012 MATC Fall Lecture Series: Dan Sabin
Larissa Sazama
Author
11/07/2017
Added
6
Plays
Description
2012 MATC Fall Lecture Series
Searchable Transcript
Toggle between list and paragraph view.
- [00:00:02.311]Well, welcome to MATC Seminar Series.
- [00:00:05.267]It's my pleasure to introduce Dan Sabin,
- [00:00:07.994]who's going to be talking today.
- [00:00:09.569]He's the CEO and President of Iowa Northern Railway Company.
- [00:00:13.650]He has a wealth of experience in running short lines
- [00:00:15.943]and working for the Class I railways.
- [00:00:18.700]For the football fans out there,
- [00:00:19.925]he also runs the Hawkeye Express every Saturday
- [00:00:23.723]when there's a home game in Iowa City.
- [00:00:26.040]And I can't wait to actually take that train, Dan.
- [00:00:29.007]I'm looking forward to that.
- [00:00:30.837]And he's gonna be talking about the issues
- [00:00:35.498]of operating and the engineering issues of running a railway
- [00:00:38.794]and looking at the big picture.
- [00:00:40.099]So, Dan, thank you very much.
- [00:00:41.576]Thank you.
- [00:00:42.650]Good morning.
- [00:00:47.732]I'll talk a little bit about the Iowa Northern
- [00:00:50.253]and how we came to be.
- [00:00:52.917]But, what I'd like to do is,
- [00:00:55.655]as many of you may not know a lot about railroading,
- [00:00:59.015]it may be interesting to talk about the opportunities
- [00:01:02.496]that we have in the industry,
- [00:01:04.233]particularly the growing short line industry.
- [00:01:06.960]So, I've adapted this in a way where I kinda take a lot
- [00:01:09.934]of the small pieces and put 'em into a big picture scenario
- [00:01:14.573]because, at the end of the day, we're a business.
- [00:01:17.510]And we'll talk a little bit about that.
- [00:01:19.446]This was originally a main line of the Rock Island.
- [00:01:23.013]The Rock Island liquidated in the early '80s
- [00:01:25.974]and so, the grain elevators on the line worked together
- [00:01:29.788]with the trustee of the liquidated Rock Island
- [00:01:32.586]and bought it on February 22 in 1984.
- [00:01:36.571]We now cover north eastern Iowa with about 185 miles.
- [00:01:45.254]In the early years, when they took over the line,
- [00:01:47.437]there hadn't been trains over the track for some time
- [00:01:50.055]and it was, literally, pastures for the farmers.
- [00:01:52.968]They had knocked down all the fences
- [00:01:56.713]and there were actually four-inch in diameter trees
- [00:01:59.720]growing between the rails.
- [00:02:01.309]So, you can imagine what a challenge it was.
- [00:02:05.365]This is a map of our line.
- [00:02:06.389]We're kind of unique in the short line industry
- [00:02:08.525]because many short lines are spin-offs of a Class I railway
- [00:02:12.964]and they only have one connection.
- [00:02:14.997]The Iowa Northern's very fortunate
- [00:02:16.397]that we have three connecting points with Union Pacific,
- [00:02:19.787]two with Canadian National, two with Canadian Pacific
- [00:02:23.858]and then we connect, also, with the Iowa Interstate System
- [00:02:26.413]through the CRANDIC in Cedar Rapids.
- [00:02:29.896]We've been very aggressive in our economic development of,
- [00:02:33.884]I believe that we're one of the leaders in the state of Iowa
- [00:02:37.356]on attracting new businesses.
- [00:02:39.629]We've had a growth curve about 18% annually between 2003
- [00:02:44.212]and 2011, and that was despite a major flood damage
- [00:02:47.497]that put us out-of-service for 18 months,
- [00:02:50.730]or at least bifurcated our line,
- [00:02:52.785]and coming through a fairly major recession.
- [00:02:57.759]This kinda shows our relationship
- [00:02:59.234]with the connecting railroads.
- [00:03:01.082]We operate 24 hours, seven days a week.
- [00:03:04.977]Many of our interchanges are met twice.
- [00:03:08.588]Most of the customers on our line are served twice-a-day,
- [00:03:11.212]seven days a week, which is literally unheard of
- [00:03:14.145]in the railroad industry.
- [00:03:16.825]The probably the most important thing that we're proud of
- [00:03:19.220]is we run the company like a business,
- [00:03:21.668]and not like a railroad.
- [00:03:24.020]And, we really encourage our employees to look at
- [00:03:27.875]what we need to be doing, take the side of the customer,
- [00:03:30.917]and use their authority in the field to
- [00:03:34.084]be empowered to make decisions right away.
- [00:03:36.825]They'll never be criticized for making the wrong decision,
- [00:03:39.125]as long as it's always in favor of the customer.
- [00:03:42.695]We take a very serious position with the state
- [00:03:45.723]and the communities we serve.
- [00:03:46.983]We spend a lot of time in the field with these people.
- [00:03:50.155]We deal with crossings and a lot of issues.
- [00:03:54.404]And we always wanna have the community know us as a face,
- [00:03:58.390]and not just a big railroad from somewhere else.
- [00:04:01.231]We also encourage our people to take some risk.
- [00:04:04.133]We can't grow if there's not risk-taking,
- [00:04:07.511]and I encourage healthy
- [00:04:10.229]risk because we've gotta be easy to do business with.
- [00:04:13.417]We've gotta be something that stands out,
- [00:04:15.977]and then I repeat over and over and over,
- [00:04:17.776]"Don't act like a railroad."
- [00:04:21.605]These are some of our markets.
- [00:04:22.651]I won't go through them all,
- [00:04:23.663]but when you consider a railroad
- [00:04:25.528]that started only with grain, we've expanded quite a bit.
- [00:04:29.928]And next year, we'll be adding
- [00:04:31.037]even more commodities to our mix.
- [00:04:35.118]When we first took over the line in 1994,
- [00:04:38.916]a typical month was about 230 cars of grain loaded.
- [00:04:43.594]We have elevators now that will do,
- [00:04:45.649]one elevator will do 250 or 300,
- [00:04:48.635]and so we do nearly 2,000 carloads of grain per months now.
- [00:04:54.586]Interesting point is, at the bottom of our line,
- [00:04:57.108]we kinda look at Iowa Northern as a funnel.
- [00:05:00.258]And there's a billion bushels of corn in a normal year
- [00:05:03.441]that's goin' along our line.
- [00:05:05.409]And we'll handle about 22,000 carloads this year of corn,
- [00:05:08.898]soybeans, oats, and now we're even moving
- [00:05:11.202]some barley to Quaker.
- [00:05:13.274]But if Cedar Rapids was an independent nation,
- [00:05:16.146]it would be the third-largest importer of corn in the world.
- [00:05:19.996]It would rank only behind Japan and Mexico
- [00:05:22.962]for the level of consumption.
- [00:05:25.314]So when you consider that they're consuming
- [00:05:27.140]a million bushels a day, every month they're consuming
- [00:05:32.245]an entire county out of the state of Iowa.
- [00:05:36.632]The drought is certainly scary for all of us.
- [00:05:39.670]We believe that, by the end of this year,
- [00:05:42.352]will effect us by a loss of about 6,000 carloads of corn.
- [00:05:46.842]And it took about four million dollars
- [00:05:48.277]out of our predicted revenue this year,
- [00:05:50.291]just because the market conditions
- [00:05:52.849]and then the market conditions
- [00:05:54.078]that we're reacting to, the drought.
- [00:05:57.079]We really don't know where this is going to go.
- [00:05:59.056]It could be a long-lasting effect on a lot of our customers.
- [00:06:04.698]We were a leader in the ethanol world.
- [00:06:06.550]We developed one of the only originating ethanol terminals
- [00:06:11.422]to consolidate ethanol.
- [00:06:13.349]We have two ethanol plants that are on our line,
- [00:06:15.829]besides the consumers at Cedar Rapids.
- [00:06:18.822]And we went from zero cars in 2005,
- [00:06:20.757]to abut 14,000 cars a year in 2011.
- [00:06:25.401]It's a big piece of our business.
- [00:06:28.513]We also work on creating new business.
- [00:06:32.049]With Union Pacific, UP serves
- [00:06:33.633]the big John Deere tractor factory in Waterloo.
- [00:06:36.912]And they have about four miles of track
- [00:06:38.946]and then they bring the tractors to us, so we take them back
- [00:06:41.372]to UP, either at Cedar Rapids or Manly.
- [00:06:44.073]And we often get in to some very interesting scenarios.
- [00:06:46.411]Where we had a shipload of tractors going to China
- [00:06:51.705]and the delays of getting 'em loaded,
- [00:06:53.551]the production, was very, very close.
- [00:06:56.206]So they asked if we would team up with them
- [00:06:58.296]and run a solid unit train
- [00:07:00.577]instead of going 10 or 15 cars a day.
- [00:07:02.731]So we put together about a 97-car unit train of tractors,
- [00:07:06.906]and each one of those are worth about
- [00:07:08.393]a quarter-of-a-million dollars, and we were able
- [00:07:10.617]to beat the deadline on the ship at Galveston by four days.
- [00:07:14.922]And so, we're working with UP and John Deere now
- [00:07:16.868]to maybe put all of their rail production into,
- [00:07:20.187]particularly the exports, into unit trains.
- [00:07:23.594]We're very big in fertilizer.
- [00:07:24.914]We've got several fertilizer plants on our line,
- [00:07:27.306]with quite a bit of expansion.
- [00:07:29.904]We work as UP's agent on their fertilizer into Waterloo.
- [00:07:35.369]I think we've probably,
- [00:07:36.782]we're fearful that we lose a lotta fertilizer business,
- [00:07:39.305]but we're hearing now that it's actually going to take more.
- [00:07:43.701]We were a leader in the wind energy business.
- [00:07:45.878]We've built one of the largest distribution centers
- [00:07:48.397]in the United States at Manly.
- [00:07:51.063]But, of course, we're really concerned now,
- [00:07:53.173]the wind business has died off nearly completely
- [00:07:57.129]until the determination is made
- [00:08:00.010]on the Production Tax Credits and that's all
- [00:08:02.528]in the hands of Congress.
- [00:08:04.631]And right now, it doesn't look very favorable
- [00:08:07.570]for wind to restore much in the next year or two.
- [00:08:13.251]That's a picture of our 25-acre, actually,
- [00:08:15.434]about 30 acres of solid wind.
- [00:08:18.051]That's what it generally looks like from about April
- [00:08:21.141]through October of the last five years at Manly.
- [00:08:25.726]There's probably well over a billion dollars
- [00:08:27.637]worth of components in that picture.
- [00:08:32.048]We also do a lot of transloading.
- [00:08:33.504]And we're developing a lot of growth in this area.
- [00:08:36.454]We do a lotta food products.
- [00:08:38.126]We do sugar.
- [00:08:40.222]We do vegetable oils, lot of unique things that we're doing.
- [00:08:46.058]And after the recession started, we found that,
- [00:08:48.443]for the first time, that we'd start handling lumber.
- [00:08:51.602]What few folks were buying lumber had to reduce the cost,
- [00:08:55.160]and so, where they used to truck it in from maybe
- [00:08:57.175]British Columbia or a regional center, they came to us
- [00:09:01.320]and asked if we could set up a transfer reload.
- [00:09:03.991]And now, we're doing about a car of lumber
- [00:09:06.498]about every-other-day, so it's very good growth.
- [00:09:10.734]We also do food-grade starches.
- [00:09:16.145]The boxes there on the right,
- [00:09:19.632]is vegetable oil coming in for salad dressing.
- [00:09:23.516]And there's a lotta unique things that,
- [00:09:25.280]for a short line railroad, we get very involved in.
- [00:09:27.383]And part of this is because we have so many connections
- [00:09:30.189]that we really serve well
- [00:09:31.287]as that last mile for the large railroads.
- [00:09:35.049]We also do some container work,
- [00:09:36.740]all related to the wind components.
- [00:09:40.343]A lot of imports of wind, we'll have a lot of small parts
- [00:09:43.443]and pieces that got with the turbines
- [00:09:46.367]and we convinced the UP to work with us
- [00:09:48.061]that we could take care of that at Manly
- [00:09:49.574]if they would run it by rail instead of trucking.
- [00:09:52.411]And it was a nice little niche
- [00:09:53.608]as long as the wind business was alive.
- [00:09:56.941]Then, of course, we do a tremendous business
- [00:09:58.879]with John Deere at Waterloo,
- [00:10:03.370]and it's a lotta fun to see a trainload of tractors.
- [00:10:05.391]It's a very beautiful train and it has a lot of value.
- [00:10:09.607]Interesting point, too, is that a tractor's never built,
- [00:10:12.043]unless that owner's identified.
- [00:10:13.952]So, in many cases, a farmer, say, from Saskatchewan,
- [00:10:17.928]will come, and he'll turn the key on the tractor
- [00:10:20.145]for the first start up of that tractor.
- [00:10:22.919]And it's really fun to see how sophisticated
- [00:10:26.391]this business has become and how much it's growing.
- [00:10:29.321]Most of the tractors we handle are exports.
- [00:10:32.548]So, when you see a trainload of tractors,
- [00:10:34.802]you might see different and very unique tractors.
- [00:10:37.432]They may be going to Kazakhstan or Russia
- [00:10:41.074]or China or Brazil or Argentina and every one
- [00:10:43.934]has their own specs on the design of them:
- [00:10:46.395]the lights, the fenders, and a lotta the apparatus
- [00:10:49.181]on each tractor.
- [00:10:51.694]In 2008, we had a horrible disaster.
- [00:10:56.501]In June, my son came in and said,
- [00:10:57.980]"What's the worse thing that could happen?"
- [00:10:59.162]I said, "The worst thing that could happen
- [00:11:00.723]"would be losing the UP bridge at Waterloo."
- [00:11:03.676]And, about 12 hours later, he came running into my office
- [00:11:06.610]and I knew exactly what had had happened.
- [00:11:08.258]We lost the UP bridge at Waterloo.
- [00:11:11.433]We also lost our CRANDIC bridge at Cedar Rapids,
- [00:11:14.021]which is the one on the bottom left.
- [00:11:16.616]We had about 38 miles of our track torn up or underwater
- [00:11:21.093]and the severing of the UP bridge at Waterloo took,
- [00:11:25.354]it's a nine-span bridge and five of 'em were in the river,
- [00:11:28.653]and it took 18 months through the bureaucracy, the processes
- [00:11:31.590]with the community, the state, and the Corps of Engineers
- [00:11:34.946]to get that bridge rebuilt.
- [00:11:37.669]And so, we had to run our railroad
- [00:11:39.283]with a break in the middle, and run it from both ends.
- [00:11:44.449]And the Union Pacific was very gracious.
- [00:11:46.185]They did a 250-mile detour of our corn
- [00:11:48.856]from Manly to Cedar Rapids so we could survive through this.
- [00:11:55.410]In total, it was costing us about 800,000 per month
- [00:11:58.757]with the detours and the additional costs,
- [00:12:01.533]segmented for 18 months, and we're still doing a lot
- [00:12:04.398]of flood-mitigation and, hopefully, we'll never have
- [00:12:07.070]to go through what we did,
- [00:12:08.811]but it was a very painful experience.
- [00:12:12.646]So, there's a few new things we're doing at Iowa Northern.
- [00:12:18.005]One thing that we've been working on
- [00:12:19.723]is what's called a slug unit.
- [00:12:21.698]If you look at the second unit
- [00:12:23.080]in that consist of locomotives, you'll see it's a short,
- [00:12:27.840]flat device that has no motor of any kind in there.
- [00:12:30.823]It has, excuse me, no diesel engine.
- [00:12:33.145]It's got four traction motors on the axle,
- [00:12:35.207]just like a locomotive, but it takes the power
- [00:12:38.057]from the generator of the mother unit that's attached to it.
- [00:12:42.416]So when that mother unit and the slug go out,
- [00:12:45.801]it has the emissions and the fuel burn of one locomotive,
- [00:12:48.871]but the tractive effort of two.
- [00:12:51.420]And, we found that, for every slug that we put into service,
- [00:12:55.643]it paid for itself in 10 months, just in fuel savings alone.
- [00:13:00.926]We also took over a line that was going
- [00:13:02.380]to be abandoned by the Union Pacific.
- [00:13:04.666]We operate over Canadian Pacific for about 28 miles
- [00:13:07.082]to the Forest City-Belmond Line.
- [00:13:09.611]And Forest City, you may or may not know,
- [00:13:12.184]is the home of Winnebago, for the large RVs.
- [00:13:17.511]It was quite an interesting experience
- [00:13:18.982]to take over this line.
- [00:13:20.242]There's two major elevators that load regularly.
- [00:13:23.452]They had not loaded any corn for about five years.
- [00:13:26.594]In the first month after taking over,
- [00:13:28.428]we handled more traffic than had been handled
- [00:13:30.565]on that line in prior five years.
- [00:13:33.722]And so, we expected that it would take us
- [00:13:35.412]about a year to get a break-even.
- [00:13:38.010]We're break-even or profitable
- [00:13:40.355]in about 45 days of operation in the line.
- [00:13:44.367]And so, the service levels that we provide
- [00:13:47.497]to this line now has become very attractive.
- [00:13:50.209]There's some new industrial parks
- [00:13:51.306]that are going to be built.
- [00:13:53.500]We're working with Winnebago
- [00:13:54.596]to bring inbound chassis and other material.
- [00:13:57.093]We're also looking at containerizing outbound export RVs
- [00:14:01.196]over time that will go out by rail instead of being driven,
- [00:14:05.484]literally, to the West Coast.
- [00:14:08.553]We've also been working for about,
- [00:14:10.785]probably 10 years now, on biomass.
- [00:14:13.810]We thought things would happen much quicker than it had,
- [00:14:17.094]but we joined up with a couple of folks
- [00:14:19.100]and with Iowa State University, really do a lot of research.
- [00:14:23.672]There's a possibility that regulators will require
- [00:14:26.063]about a 20% blend of biomass in with coal in the future
- [00:14:31.936]and our line, just coincidentally, has about 12 million tons
- [00:14:34.879]of excess corn stover with every harvest
- [00:14:38.353]that's currently just plowed over
- [00:14:41.079]or just tilled in the next year.
- [00:14:45.940]That's within 30 miles of our line.
- [00:14:48.954]By baling this and getting to the rail, and to a processor,
- [00:14:53.946]like a thermogassification plant or a power plant,
- [00:14:57.447]it would generate 75,000 carloads of business
- [00:14:59.919]for our short line.
- [00:15:02.319]The larger railroads are not too focused on this right now
- [00:15:04.653]because it's generally short haul moves.
- [00:15:09.121]We do have some other interesting future plans
- [00:15:11.206]with the industrial development.
- [00:15:13.496]We've designated four areas along our line
- [00:15:15.583]that will become major industrial parks.
- [00:15:19.287]This first one is at Butler.
- [00:15:20.564]It's a little blurry, and that's deliberately,
- [00:15:22.596]so you can't go out and buy some land next to us.
- [00:15:26.697]But, the Butler park will expand about 300 acres.
- [00:15:29.765]We're goin' to have new locomotive shop,
- [00:15:31.837]fairly major rail yard there.
- [00:15:33.956]We have two new industries that are breaking ground
- [00:15:35.725]by the end of this year
- [00:15:37.189]and we'll anticipate that we'll probably have
- [00:15:39.715]six or seven industries there over the next five years
- [00:15:42.541]that'll generate about a thousand jobs.
- [00:15:46.785]Manly is kind of our pride and joy right now.
- [00:15:48.689]It's also my hometown.
- [00:15:51.609]The Manly terminal operation that you saw before
- [00:15:55.299]has a three-million gallon tank
- [00:15:57.348]for outbound ethanol or, perhaps crude, now.
- [00:16:01.344]We have two one-million gallon tanks for inbound diesel fuel
- [00:16:04.833]or denaturants or other products.
- [00:16:07.355]We do about 12 different chemicals through Manly now,
- [00:16:10.596]and we've also started as fairly center of operations
- [00:16:14.232]for outbound corn oil coming from the extraction
- [00:16:17.154]of corn oil from the ethanol plants.
- [00:16:19.992]If you see the UP spine line is right adjacent to our yard.
- [00:16:24.088]We've got a very large yard
- [00:16:25.232]that we've just completed rebuilding.
- [00:16:27.764]And our Logistics Park is 162 acres that we're developing
- [00:16:31.292]and we'll talk a little bit about that.
- [00:16:35.514]We've got the 162 acres that's just about
- [00:16:37.876]right on the Minnesota-Iowa border.
- [00:16:39.570]We're actually about 15 miles
- [00:16:44.580]from the border
- [00:16:46.605]and we're establishing a much larger transloading facility.
- [00:16:52.993]Next week, we've got the groundbreaking
- [00:16:54.659]for a steel distribution center that will bring coil steel
- [00:16:58.130]in for Iowa manufacturers and for southern Minnesota
- [00:17:02.229]and they'll be, we'll be working with outbound moves.
- [00:17:05.285]We're looking for a very large cold storage
- [00:17:07.717]and freezer warehouse.
- [00:17:09.747]There's some major players like Hormel, Tyson, Kraft Foods,
- [00:17:14.645]Cargill, that are in the area.
- [00:17:16.856]And we're tryin' to create a whole campus-like setting
- [00:17:19.646]of an origination point
- [00:17:21.119]where mix-and-match loads can be sent,
- [00:17:23.701]not only for domestic purpose, but too, for export.
- [00:17:29.107]And then there's a substantial intermodal facility
- [00:17:31.198]that we're planning in conjunction with a number
- [00:17:33.956]of our partners, including the state of Iowa.
- [00:17:36.498]This is a picture of our coil steel operation
- [00:17:38.777]and what it will look like when we start.
- [00:17:41.274]That should be in full operation by April or May.
- [00:17:45.022]The other interesting thing about north Iowa is,
- [00:17:48.126]Iowa's the largest producer of eggs in the United States.
- [00:17:52.464]We've got about, I recall now, about 63 million laying hens
- [00:17:57.192]in north Iowa, and each one of 'em
- [00:17:59.034]lays an egg every 26 hours.
- [00:18:01.569]There's 400 trucks a week that leave north Iowa
- [00:18:03.742]for California alone.
- [00:18:05.980]And so, what we're working on is to develop a mechanism
- [00:18:09.844]to safely load those into refrigerator cars or trailers
- [00:18:12.894]and run 'em by rail into these large markets.
- [00:18:18.578]The Intermodal Base Case is very interesting
- [00:18:21.043]for the state of Iowa.
- [00:18:22.696]Iowa ships out about three loads for every one inbound load.
- [00:18:27.982]So what happens, is a company that wants
- [00:18:30.224]to ship intermodally out of Iowa, say Des Moines
- [00:18:32.422]or north Iowa, has to order a container from Chicago.
- [00:18:38.060]They have to pay for the empty container to come out
- [00:18:41.213]and put a loaded container on that truck and ship it back.
- [00:18:43.701]So they start with a cost of about $1,200 for that box
- [00:18:48.312]to get to an intermodal train that's gonna go through Iowa
- [00:18:51.510]on its way to to California.
- [00:18:53.463]And so what we did is we took a regional approach to it.
- [00:18:56.828]We analyzed, "What does the state of Minnesota do,
- [00:18:58.923]"since we're so close to the border?"
- [00:19:00.965]And, if you draw a circle, with say a 150 mile radius
- [00:19:03.270]of Manly, Iowa, the ratio of inbound to outbound boxes
- [00:19:07.938]comes out 7.2 to 7.6.
- [00:19:11.233]And it's one of the few locations that we believe will have
- [00:19:13.570]almost perfect balance on the containers.
- [00:19:16.891]We're working with a Chinese company now that is committing
- [00:19:19.918]to a million metric tons of distiller grains
- [00:19:23.593]and they've been working with the Chinese shipping companies
- [00:19:26.528]to identify inbound loads for Iowa and Minnesota
- [00:19:29.026]that can be developed into this new efficient facility
- [00:19:33.622]in north Iowa.
- [00:19:35.548]Also working very closely with the Department
- [00:19:38.582]of Economic Development, the Governor's Office, and, now,
- [00:19:41.901]we'll be working very closely with the State Legislature
- [00:19:44.751]to see if we can make a public-private partnership
- [00:19:47.215]out of this and develop a world-class facility.
- [00:19:54.882]This is the map indicating kinda where we're at.
- [00:19:58.594]It brings Des Moines, Cedar Rapids, almost all the way
- [00:20:01.091]to Sioux Falls, goes into Wisconsin,
- [00:20:03.822]but primarily the southern third of Minnesota's
- [00:20:06.490]within that radius.
- [00:20:08.293]We're on three major Interstate highways,
- [00:20:11.947]so the availability of good truck moves
- [00:20:15.253]in and out of Manly is there now.
- [00:20:18.498]All the road ways were increased in structure
- [00:20:21.990]over the last fives years by the state of Iowa
- [00:20:24.009]and Worth County to handle the very heavy wind components
- [00:20:27.810]and the blades and the type of commodities
- [00:20:31.398]that we already have, so the infrastructure is there.
- [00:20:39.519]This is kind of a sketch
- [00:20:40.383]of what our facility will look like.
- [00:20:42.460]On the left side is, the little pink box,
- [00:20:45.038]is the new steel distribution center.
- [00:20:47.600]Then we're gonna have new transload tracks.
- [00:20:49.983]We'll have a bypass that will connect the loop tracks.
- [00:20:53.979]Then a cold storage freezer warehouse.
- [00:20:56.758]And then a fairly substantial intermodal facility
- [00:20:58.831]and container yard.
- [00:21:00.704]The loop track that goes around here will ultimately
- [00:21:02.568]be double tracked, so it'll have a capacity of handling
- [00:21:06.272]two full container trains
- [00:21:10.312]inbound and outbound
- [00:21:11.500]simultaneously without getting in each other's way.
- [00:21:16.640]We do a lot of business right now with Union Pacific
- [00:21:18.901]and that's growing actually as we speak.
- [00:21:22.312]We're up to about 20,000 revenue cars annually with UP.
- [00:21:26.176]We're doing about 6,000 with Canadian Pacific
- [00:21:28.717]and that is expected to grow.
- [00:21:31.174]We do quite a bit with Canadian National,
- [00:21:33.216]but our goal is to go from 20,000 carloads
- [00:21:37.780]in about 1998 to hit 105,000
- [00:21:41.949]carloads by 2014.
- [00:21:46.643]And we're on the curve right now.
- [00:21:47.927]We've broken through the 60,000 mark
- [00:21:50.994]and some of the projects that we have over the next
- [00:21:53.073]15 months should put us well up toward 90,000 revenue units,
- [00:21:58.720]not counting the intermodal.
- [00:22:00.984]Getting into the financial side of things,
- [00:22:04.683]that graph kinda shows where we've been in revenues
- [00:22:07.417]and operating expense and, of course, our earnings.
- [00:22:11.096]And you can see the hit that we took with the flood,
- [00:22:15.206]but since then, and despite the recession,
- [00:22:17.371]we've been able to continue
- [00:22:18.922]with some fairly sizeable growth and cost reduction.
- [00:22:24.828]We try to encourage all of our engineering
- [00:22:26.404]and operating guys, realize that they have
- [00:22:27.874]a very strong effect on the bottom line of the company.
- [00:22:31.367]And we talk a lot about that.
- [00:22:33.453]We show them that, as we grow, we have the ability
- [00:22:36.612]through capital spending to reduce our cost.
- [00:22:39.833]Our unit cost has dropped dramatically
- [00:22:41.392]over the last few years and,
- [00:22:43.582]as a consequence of this spending,
- [00:22:45.228]we reach a point with the capital spending can drop off
- [00:22:48.338]and more profitability can go into the company
- [00:22:51.958]and then have more opportunities for development,
- [00:22:54.499]acquisitions, and building the company.
- [00:22:58.746]When we started, we were right about
- [00:23:00.105]three-and-a-half million in revenue in 1994
- [00:23:02.916]and we've broken through the 30 million dollar's worth
- [00:23:05.885]of revenue this year.
- [00:23:09.440]In the overall scheme of things,
- [00:23:11.011]three full years over 30,000, you're brought up to
- [00:23:14.550]let's call it a Class II railroad instead of a Class III,
- [00:23:19.204]and so we're kinda going from the lowest levels
- [00:23:21.536]of the minor leagues into maybe more of a triple A club.
- [00:23:28.481]Productivity is real important.
- [00:23:29.825]We get down to the train crew level, have them see,
- [00:23:33.654]"How many more cars we can get on that same train?
- [00:23:36.925]"What can they do to deliver this as well as possible?
- [00:23:41.285]"What impact do they have?"
- [00:23:43.113]We have conductors that will be going across the country
- [00:23:45.324]and they'll call the next elevator and say,
- [00:23:47.047]"Look, we don't have any instructions to stop and serve you,
- [00:23:50.497]"but if there's something while we're in town
- [00:23:52.642]"that's come up, we're here for you and we'll be there
- [00:23:55.878]"in about 15 minutes."
- [00:23:57.882]I don't think too many railroads have that culture.
- [00:24:01.959]We try to create a very close correlation
- [00:24:05.209]to the number of crew starts.
- [00:24:08.261]We believe very strongly in high service levels.
- [00:24:10.681]As you can see, as we've increased the number
- [00:24:12.520]of crew starts, the traffic actually grows with the service.
- [00:24:18.185]And our revenue per crew start,
- [00:24:19.779]we have some fairly large goals on where to get this,
- [00:24:24.455]but there's so much we can do.
- [00:24:26.383]The economies of scales of railroading is so efficient,
- [00:24:30.580]that a train that's currently handling 25 cars, three years
- [00:24:34.516]from now might be handling 95 cars with the same crew.
- [00:24:38.899]You just add the locomotives and make sure that you have
- [00:24:41.300]the track structure to allow them to get over the road.
- [00:24:45.918]Our fuel burn per revenue car is going down
- [00:24:48.074]and we'll talk a little bit about how we've done that.
- [00:24:50.775]Our goal is to cut our fuel burn
- [00:24:52.493]from about 2008
- [00:24:55.186]to 2013 by half
- [00:24:57.698]And that's not very easy to do,
- [00:24:59.613]but we've done a number of things.
- [00:25:00.719]We have what's called smart starters and hot starters.
- [00:25:03.720]If the engine detects that there's been no activity
- [00:25:05.825]for 15 minutes, it shuts the engine down.
- [00:25:08.887]It charges the battery.
- [00:25:10.006]And we've got a little diesel engine
- [00:25:11.676]that'll burn maybe two-and-a-half gallons per hour
- [00:25:14.303]instead of the prime mover that's going to burn 30.
- [00:25:18.230]And so, even in the wintertime, our locomotives
- [00:25:20.350]will shut down if they're not constructive.
- [00:25:25.382]We have a lot of attention given to the crews
- [00:25:27.602]and how they manage the train, how they use their power,
- [00:25:30.571]the braking, and we're able to get our fuel down.
- [00:25:34.762]Our control stands tell the engineer
- [00:25:36.158]how much fuel he's burning and how he can back off
- [00:25:39.513]based on throttle position.
- [00:25:41.580]If he doesn't need to have that throttle
- [00:25:42.890]in the eighth notch, back it off to number six
- [00:25:45.714]and it's gonna save us 80 gallons per hour.
- [00:25:49.660]So, it's a very sophisticated approach
- [00:25:51.307]that we're trying to take.
- [00:25:52.839]We have GPS on every locomotive.
- [00:25:55.207]We can tell how much fuel is in the tank at any given time.
- [00:25:58.337]We know their throttle position,
- [00:25:59.998]what they're doing with their brakes.
- [00:26:02.211]It's kinda spooky.
- [00:26:03.044]The guys, we'll call 'em up and say,
- [00:26:05.061]"Why did you stop there at mile post 190?"
- [00:26:07.455]Say, "How did you know?"
- [00:26:09.809]It's very interesting to see now the way the crews
- [00:26:13.598]have taken this as a tool for themselves.
- [00:26:17.574]We talked about slugs.
- [00:26:18.664]And this train that you see there
- [00:26:22.053]used to take seven locomotives to handle about 90 cars
- [00:26:24.710]into ADM in Cedar Rapids.
- [00:26:26.816]We do it now with four locomotives and two slugs.
- [00:26:30.024]And so, as I mentioned, the payback for a slug
- [00:26:32.463]is 10 months just in fuel savings.
- [00:26:36.033]And when we have a 24/7 operation, we look for those trains
- [00:26:40.749]that have a lot of stopping and going
- [00:26:42.414]and acceleration penalties and put the slugs on those
- [00:26:46.587]and it has a dramatic impact on the fuel savings.
- [00:26:51.438]Our capital spending is primarily tied
- [00:26:53.566]to safety and to efficiency.
- [00:26:56.662]And over a, roughly an eight-year period,
- [00:26:59.261]we will have spent $100 million on the line
- [00:27:03.917]by 2015.
- [00:27:05.603]To give you and idea of what that means,
- [00:27:08.460]that over the last three or four years,
- [00:27:10.022]we've spent $59,000 per mile.
- [00:27:13.174]The Union Pacific is the largest spender of capital
- [00:27:15.980]in the entire industry and they spent less per mile
- [00:27:19.791]than the Iowa Northern.
- [00:27:23.550]Critical to our operations at Manly,
- [00:27:26.241]in particular, is a new yard.
- [00:27:28.697]We've got tracks Seven through 12 done.
- [00:27:31.310]Two and Six are just being finalized now.
- [00:27:34.268]We've added lights and new crossovers.
- [00:27:36.910]There's a new car repair facility.
- [00:27:39.171]And so, as soon as we started building this,
- [00:27:42.057]we gave Union Pacific our design,
- [00:27:44.213]asked them if there was anything that they would see
- [00:27:46.400]that should change.
- [00:27:48.207]And then we came back to them as it was being built
- [00:27:50.415]and said, "If this was a Union Pacific facility,
- [00:27:53.179]"what would you do with it?"
- [00:27:55.018]And now, we're meeting with UP on a regular basis to say,
- [00:27:58.142]"Gee, we can save $5,000,000 at Mankato, Minnesota
- [00:28:01.782]"if we bring traffic into Manly, you switch it for us,
- [00:28:04.212]"you hand it back to us in a finished form."
- [00:28:07.106]A lot of partnerships now that we're doing with UP
- [00:28:09.738]and the other railroads.
- [00:28:11.321]It's a lot of fun because now,
- [00:28:12.431]even their industrial development people
- [00:28:13.900]will get potential new customers and the UP will say,
- [00:28:17.324]"Call Iowa Northern first."
- [00:28:18.978]They know that we'll take care of the business,
- [00:28:20.535]we'll be like an agent of UP in that instance
- [00:28:23.754]and we can grow together and have a national network
- [00:28:26.414]to support it.
- [00:28:28.363]The picture there is a continuous welded rail train.
- [00:28:32.103]Welded rail is the greatest thing that's ever happened
- [00:28:35.112]in the rail industry, as far as I'm concerned.
- [00:28:38.387]And some of you may have an interest in welded rail,
- [00:28:41.921]but it has a huge impact on our ability
- [00:28:43.631]to get over the railroad.
- [00:28:45.292]It brings us up to a federal railroad, FRA standard,
- [00:28:48.420]that's good for 40 miles an hour.
- [00:28:51.606]We find our sweet spot for fuel consumption at 25.
- [00:28:57.269]But we've just about eliminated any sort
- [00:28:59.224]of main track derailment on our line.
- [00:29:02.048]We've also gone on kind of a unique situation
- [00:29:04.979]where every yard track or every non-mainline tie
- [00:29:08.860]that we install is steel ties.
- [00:29:12.035]It costs us a bout $20 a tie more to install it,
- [00:29:16.223]but when you install a wood tie in a place like north Iowa,
- [00:29:20.148]you can count on maybe
- [00:29:22.542]35 to 45 year life on that tie.
- [00:29:26.041]After Norfolk Southern did their studies on steel ties,
- [00:29:29.599]I'm convinced that my great-great-grandchildren will never
- [00:29:32.423]have to replace any of these ties.
- [00:29:34.246]They're probably good for a couple of hundred years.
- [00:29:36.492]They also appreciate in value, so if I ever need
- [00:29:39.596]to borrow money on collateral at the railroad,
- [00:29:41.476]we've got a steel infrastructure to support it.
- [00:29:47.310]Eliminating slow orders, it's so key to have good rail.
- [00:29:50.460]There's nothing more important than track.
- [00:29:52.591]You can have anything else in the world if it's not track.
- [00:29:55.355]So just in the last few months,
- [00:29:57.942]we've done a tremendous job in reducing.
- [00:30:01.698]And we're down from 46% of our railroad to 32%
- [00:30:05.822]is now at 10 mile or slow-ordered for some other reason.
- [00:30:09.655]And we've done that in 18 months.
- [00:30:12.771]I asked my operating
- [00:30:17.196]planning guy to help me quantify,
- [00:30:19.457]"What's the true ROI on welded rail?"
- [00:30:22.720]And I went to all my counterparts at Class Is
- [00:30:25.369]and the other shortlines and said,
- [00:30:26.619]"How do you justify welded rail?"
- [00:30:29.047]And I've never found anybody that can give us the answer,
- [00:30:31.626]or the justification.
- [00:30:33.347]So, maybe I could challenge some of you folks
- [00:30:35.193]to help us get to this answer.
- [00:30:36.784]But we found, with our GPS,
- [00:30:39.764]that our derailments per mile were eliminated,
- [00:30:43.150]literally, on the main track.
- [00:30:45.895]The only derailments we have now are generally
- [00:30:47.241]on someone else's railroad with our trains operating.
- [00:30:49.836]Thank goodness.
- [00:30:51.841]But with the GPS data that's available,
- [00:30:54.613]we found some very interesting things.
- [00:30:56.330]We had a 67% increase in our track speed.
- [00:31:00.082]We saved 4.21 gallons per mile.
- [00:31:03.693]And so, at $3.34 a gallon,
- [00:31:07.410]just the welded rail alone
- [00:31:09.161]is cutting almost a half million dollars off our fuel bill.
- [00:31:12.935]And that's where I get my goal of,
- [00:31:15.525]with these additional opportunities, we need to be able
- [00:31:19.961]to justify this fairly large capital spending.
- [00:31:22.803]We spent 12.75 million since 2008 on welded rail
- [00:31:27.781]and I think we'll find that it's absolutely
- [00:31:30.030]the best investment we ever could have made.
- [00:31:32.758]We still have to quantify our crew start savings,
- [00:31:35.549]our track capacity increases, the utilization
- [00:31:38.505]of our rolling stock and our locomotives.
- [00:31:40.432]But it's a process now that's showing us
- [00:31:42.456]that we've been going in the right direction.
- [00:31:46.251]We're also working,
- [00:31:48.433]We're pretending that we're the big guys in a lot of ways.
- [00:31:50.600]Our track guys have insisted, wherever possible,
- [00:31:53.982]that they do the work themselves.
- [00:31:56.787]In new track construction, everything,
- [00:32:01.200]there's only two things we don't do
- [00:32:02.372]on the Iowa Northern right now
- [00:32:03.401]is replace a bridge or lay welded rail.
- [00:32:07.333]If you see that bridge there,
- [00:32:08.943]that was a victim of the floods.
- [00:32:11.926]And we had a contractor come in,
- [00:32:13.983]the railroad's out-of-service for about 24 hours
- [00:32:16.247]to replace that bridge.
- [00:32:18.139]And then the other two pictures
- [00:32:19.290]are building new leads at Manly Yard.
- [00:32:22.961]We also have taken on some mammoth projects
- [00:32:25.714]replacing bridges with culverts.
- [00:32:28.063]And we're doing all of this in-house.
- [00:32:30.540]I don't think UP even does stuff like this in-house anymore.
- [00:32:33.395]It's generally a third-party contractor.
- [00:32:36.989]And then, with our capacity spending,
- [00:32:40.041]we've added new bridges, a lotta siding capacity.
- [00:32:43.631]We have to be ahead of the curve.
- [00:32:45.027]When you get new industries online,
- [00:32:46.221]they expect that that rail capacity will be in place.
- [00:32:49.510]So, oftentimes, what we do
- [00:32:50.917]is we'll have a new industry come in and we'll say,
- [00:32:52.679]"Look, we don't know if you're gonna ship by rail or not,
- [00:32:54.895]"so you put the money up for the material,
- [00:32:56.394]"we'll build the track, and then we'll pay you back
- [00:32:58.840]"on a per-car basis."
- [00:33:00.941]Creates a really good partnership with that customer.
- [00:33:03.705]And it's paid off very well for all of us.
- [00:33:07.101]But it's very interesting to see
- [00:33:09.459]that our 30-some engineering employees
- [00:33:11.536]probably build more track than any group of employees
- [00:33:15.137]anywhere in North America.
- [00:33:17.089]And I will put all, any of our guys up against some
- [00:33:19.900]of the major track builders on efficiency and quality work.
- [00:33:26.189]This is a table that just brings down the bottom line
- [00:33:29.521]with derailment costs.
- [00:33:30.506]If you look at the last column, there were years
- [00:33:32.856]that almost 10% of our revenue went
- [00:33:35.161]to derailments and incidents.
- [00:33:37.891]In 2011, that was less than 1% and we wanna keep it
- [00:33:41.596]that way and keep diminishing that cost to the company.
- [00:33:46.167]We've expanded our shop capacity.
- [00:33:47.868]We have 26 locomotives.
- [00:33:49.846]All of the work is done in-house,
- [00:33:51.473]unless there's a major overhaul.
- [00:33:53.429]And, in that instance, we'll generally take
- [00:33:55.294]that diesel engine out, send it out to a contractor,
- [00:33:59.105]and have that locomotive rebuilt or that engine.
- [00:34:03.123]We have 26 locomotives right now.
- [00:34:06.249]We've gotten to be so efficient in some of our traffic
- [00:34:08.243]that we've actually got about five locomotives stored.
- [00:34:11.518]So, we do have a capacity for a lot of growth.
- [00:34:15.093]And then, with the expansion, we're hoping
- [00:34:16.850]to get four more slug units this year.
- [00:34:20.310]Increase our savings and our ability
- [00:34:22.578]to handle more tonnage with the same fleet.
- [00:34:26.090]And we're continually rehabbing our older locomotives.
- [00:34:29.340]The 461, not only was set up to be a mother for a slug,
- [00:34:34.576]but also it has the generator to power the Hawkeye Express.
- [00:34:40.726]We try to provide leadership through our people.
- [00:34:44.797]There's a tremendous momentum in logistics right now.
- [00:34:47.596]Nothing stays the same.
- [00:34:49.886]The railroad used to be the same railroad year in, year out.
- [00:34:54.563]And we find about every quarter now,
- [00:34:56.062]we have to make major adjustments on the marketplace,
- [00:34:59.780]the connections we work with, the needs of our customers,
- [00:35:03.164]and "what can we always do
- [00:35:05.116]"to know what that customer needs?"
- [00:35:07.781]And then to decide which one of our connections
- [00:35:10.148]has the strength to work with us.
- [00:35:14.039]And by doing this, we put the authority in the field.
- [00:35:16.657]There's shift workers that make decisions night and day
- [00:35:19.153]that most railroad shortline Presidents
- [00:35:21.069]would expect to make.
- [00:35:22.519]And we're very proud of our people, to be able to take
- [00:35:25.130]that risk and to do the right thing.
- [00:35:31.070]We're trying, as I say, to constantly redefine.
- [00:35:35.549]We were very big in ethanol.
- [00:35:37.705]Nobody knows what's going to happen to ethanol now,
- [00:35:39.962]so the ethanol infrastructure is there.
- [00:35:43.121]We have the tanks, we've got the tank parts,
- [00:35:45.287]we've got the service, the sidings,
- [00:35:47.548]so maybe it becomes crude oil.
- [00:35:49.342]Or maybe it becomes, who knows what's next?
- [00:35:52.265]Maybe it's jet fuel A, made out of biofuels.
- [00:35:56.391]But we're going to be there and we'll have the ability
- [00:35:58.530]to absorb this new traffic
- [00:36:01.573]well before it comes onto the marketplace.
- [00:36:05.159]And, finally, I'd be remiss
- [00:36:06.217]if I didn't highlight the Hawkeye Express.
- [00:36:09.287]We handle 5,000 football fans
- [00:36:12.529]into the stadium every home game day.
- [00:36:15.659]That's 30,000 fans on the seven-game schedule.
- [00:36:20.113]We're really lookin' forward to the Cornhuskers
- [00:36:21.986]coming to see us on November 23rd.
- [00:36:24.528]We invite you to come and find us at Coralville
- [00:36:26.297]and ride the Hawkeye Express and I hope you'll come over
- [00:36:29.068]and introduce yourself.
- [00:36:30.971]Thank you very much.
- [00:36:32.433](applause)
- [00:36:39.247]So, did you have any questions from the audience?
- [00:36:49.194]Not all at once.
- [00:36:50.166]Any questions from the online audience?
- [00:36:53.274]Clint VanWinkle asks, "Are there any M-track routes
- [00:36:56.099]on your tracks, either current or future planned?
- [00:36:59.725]There's not.
- [00:37:01.281]We've had M-track special trains operate over Iowa Northern,
- [00:37:06.192]with private cars and this sort of thing.
- [00:37:08.487]And we have had some other special passenger trains,
- [00:37:11.894]but we're not in any future routes for M-track.
- [00:37:15.017]But that doesn't mean that a short-cut
- [00:37:17.446]to Minneapolis might someday be in the future
- [00:37:21.061]and we'd certainly be ready for it.
- [00:37:28.113]I just wondered if you could talk
- [00:37:29.059]a little bit about your extension plan.
- [00:37:30.954]How to you decide when to expand, and how,
- [00:37:32.852]and what are your limitations
- [00:37:34.186]within your area of operations now?
- [00:37:37.903]Well, we're an overnight sensation after 43 years,
- [00:37:41.288]so, we've learned through a lot of pain
- [00:37:43.687]and in my shortline life that some of the business models
- [00:37:48.189]for shortlines just don't work for us.
- [00:37:50.338]So we've got one rule, and that is,
- [00:37:52.211]"We'll take any line that we can get,
- [00:37:54.134]"as long as it's contiguous to us,
- [00:37:56.024]"either by trackage rights or connecting directly."
- [00:37:59.904]And part of the thing we do, is we try to be very supportive
- [00:38:03.520]for the Class I efforts to show them that we have ability
- [00:38:07.235]to serve customers that they will never have.
- [00:38:10.354]As a consequence, if they get to the point
- [00:38:12.397]where they identify a line as marginal,
- [00:38:15.115]I think most of them realize now that the Iowa Northern
- [00:38:17.384]would be a great candidate to either lease the line, buy it,
- [00:38:20.704]or partner with that Class I.
- [00:38:22.893]So it wouldn't surprise me in, say, five years,
- [00:38:25.743]if we pick up another 500 miles of track.
- [00:38:28.770]But, otherwise, all of our growth is organic.
- [00:38:32.026]It's internal.
- [00:38:33.865]So we have a question we ask ourselves every month.
- [00:38:37.861]"Is there any piece of track on our railroad
- [00:38:39.427]that's not making money?"
- [00:38:41.603]And, if we could make more money by building another track,
- [00:38:44.829]what's that return on investment?
- [00:38:46.336]How soon can we get it in?
- [00:38:48.471]Whenever we lay welded rail,
- [00:38:50.381]it's usually at seven-and-a-half miles at a time,
- [00:38:53.069]so that gives us some tremendous cascade rail
- [00:38:56.312]for the next industrial project.
- [00:38:58.430]And that's really saved a lot of our customers
- [00:39:00.850]a lot of cash to get that new industrial track built,
- [00:39:04.729]with a fairly high-quality rail.
- [00:39:09.465]We have two questions online.
- [00:39:10.521]One from the University of Iowa, "When hiring people,
- [00:39:12.818]what type of education are you seeking?"
- [00:39:16.235]Well, it depends.
- [00:39:17.825]Most of our field people are high school graduates.
- [00:39:23.097]We've got some conductors that are degree-ed.
- [00:39:27.514]We're at a juncture now,
- [00:39:29.398]where we have professional engineering staff
- [00:39:32.584]and that will have to grow.
- [00:39:36.288]We're really looking for people who have the appetite
- [00:39:38.313]to work for a railroad.
- [00:39:40.158]I mean, I think the railroad industry
- [00:39:41.550]is probably the most exciting place for a young person
- [00:39:44.843]to ever wanna consider.
- [00:39:47.297]But we still have a culture that's very materialistic
- [00:39:49.832]where you need to be out there in the middle of the night
- [00:39:52.991]or on that weekend or in that snowstorm or dig out
- [00:39:58.028]a train that's stuck in the snow or watching for that flood.
- [00:40:02.212]There's a lotta people that come into it,
- [00:40:03.874]we give them very thorough training,
- [00:40:07.086]and we wash out about 60% of our new people
- [00:40:10.266]within the first six months.
- [00:40:12.673]They just decide that it's not for them.
- [00:40:15.330]On the other hand, we get people
- [00:40:16.390]that find out it's in their blood
- [00:40:18.255]and they're the best damn employees we could ever find.
- [00:40:20.342]They're great.
- [00:40:23.641]And we have another question from Kristy Jameison,
- [00:40:28.015]"How has your growth and capacity been aided
- [00:40:30.214]"or has your growth and capacity been aided
- [00:40:32.634]"by any state-administered grant or work programs?"
- [00:40:36.187]Yes, very much.
- [00:40:38.149]Since the inception, the original mortgage
- [00:40:39.639]of the Iowa Northern was with the IRFA program,
- [00:40:43.455]the Iowa Railway Finance Authority, which is the only reason
- [00:40:46.279]that some of these lines were able to exist,
- [00:40:48.702]because they had low-cost funding.
- [00:40:51.621]We did a remortgage to pay for our
- [00:40:54.573]very extensive initial welded rail program
- [00:40:59.241]and we got a 25.5
- [00:41:01.656]a 25.5 million dollar loan
- [00:41:04.215]through the federal railroad administration
- [00:41:06.515]at about 3 7/8 percent interest for 30 years.
- [00:41:11.925]That is now even better.
- [00:41:13.446]It's a 35 year term at probably about 1% and so,
- [00:41:18.113]with our flood, we not only had help
- [00:41:20.743]from our connecting railroads, particularly Union Pacific,
- [00:41:23.530]but we also had, literally, an act of Congress
- [00:41:26.113]to help us raise the money it took to restore that bridge.
- [00:41:30.349]And there's been other grants on our development
- [00:41:33.477]of industrial facilities that the state
- [00:41:36.912]is involved in very heavily with us.
- [00:41:40.969]Okay, and another question from Loren Knight,
- [00:41:43.714]"Could you give us a brief overview
- [00:41:45.274]"of what spurred your interest in railroads to begin with
- [00:41:47.947]"and how you got started when there's so many
- [00:41:50.644]"different options in the transportation industry?
- [00:41:53.018]"Why railroad?"
- [00:41:55.256]Well, I'm kind of an old guy.
- [00:41:56.937]I'm gonna turn 60 next week and
- [00:42:00.992]I was raised in a railroad family.
- [00:42:02.954]My dad was a locomotive engineer,
- [00:42:04.320]ran passenger freight trains between Des Moines and Manly
- [00:42:08.506]and Cedar Rapids and to Minneapolis,
- [00:42:10.338]so I was raised on trains.
- [00:42:13.924]I got the opportunity to spend a lot
- [00:42:15.660]of time along the railroad.
- [00:42:17.866]I was the youngest, I started when I was 15 in 1968
- [00:42:21.576]as a student telegrapher.
- [00:42:23.657]Worked as a track laborer when I was 16.
- [00:42:25.649]And I was the youngest train dispatcher
- [00:42:27.033]in the United States at the age of 18.
- [00:42:30.100]Started workin' at Des Moines
- [00:42:30.933]and then I decided I better get my act together
- [00:42:33.270]and get an education.
- [00:42:35.236]So, I ended up with a double major in economics and business
- [00:42:39.777]while I was going to school.
- [00:42:41.542]And it's probably a better way for me,
- [00:42:44.357]because I was just gonna railroad
- [00:42:46.701]and then once I got the opportunity, I thought, "Now what?
- [00:42:49.330]"What will I do?"
- [00:42:50.163]And I realized that, without the education,
- [00:42:52.920]I was gonna be very limited in how far I could progress.
- [00:42:56.188]After about 15 years working in management
- [00:42:58.162]for the large railroads, I realized I was unemployable
- [00:43:01.880]and I had to get out on my own.
- [00:43:04.118]Started a consulting firm with the idea of getting
- [00:43:06.685]into shortlines and, coincidentally,
- [00:43:09.383]the first shortline opportunity was where my dad started
- [00:43:11.613]in 1944 in northern Iowa.
- [00:43:14.173]So, I'm back.
- [00:43:18.957]Any more questions online
- [00:43:20.118]or in the studio audience?
- [00:43:28.964]I have two questions, actually.
- [00:43:30.468]First is, "where do see the railroad industry
- [00:43:33.643]"in, say, 50 years?"
- [00:43:36.028](inaudible speech)
- [00:43:39.338]And my second question is, "With the upcoming elections,
- [00:43:42.070]"with two opponents that have
- [00:43:44.064]"pretty different energy policies,
- [00:43:46.201]"how do you feel like that affects your industry
- [00:43:49.799]"over the next four years?
- [00:43:51.740]Those are good questions.
- [00:43:53.244]50 years from now, I know I'm gonna be kinda crabby,
- [00:43:57.197]but I'm very excited.
- [00:43:58.785]When you look at an industry, Union Pacific's
- [00:44:00.846]celebrating their 150th anniversary this year.
- [00:44:05.508]And you look how far we've come, in the railroad industry,
- [00:44:09.502]but it's still a steel rail and a steel wheel.
- [00:44:13.682]And so, the technology of the principle of railroading
- [00:44:17.466]is pretty much the same, where track is everything,
- [00:44:20.555]and everything else in between is the technology
- [00:44:23.049]that's made us so efficient,
- [00:44:26.455]so much beyond anything that I ever imagined
- [00:44:29.547]when I first started on the railroad.
- [00:44:33.205]I think my sons and my grandkids are going
- [00:44:35.620]to have a tremendous opportunity to go
- [00:44:38.556]to the next generation.
- [00:44:40.235]When I started, we were loading grain
- [00:44:42.201]in 40-foot grain boxes.
- [00:44:45.798]Now, you know, we're 286,000 pound capacity grain cars
- [00:44:50.217]and I would imagine the next few years
- [00:44:52.067]they'll be about 318,000 pounds.
- [00:44:55.497]When you can keep adding that productivity
- [00:44:57.381]on a per-car basis, when you look at the gains we've made
- [00:45:01.485]just through work rules with labor,
- [00:45:04.741]where Union Pacific can run from Council Bluffs to Cheyenne
- [00:45:08.131]with two crews and at 70 miles an hour
- [00:45:12.032]and the ability that we have as an industry,
- [00:45:15.791]and then you look at the very serious situation
- [00:45:17.907]with what's happening with truck drivers.
- [00:45:20.412]Where will those drivers come from?
- [00:45:21.869]So, the relationships that we're generating now
- [00:45:24.883]are partnering with truckers.
- [00:45:26.950]And that's an unlimited opportunity,
- [00:45:28.627]as far as I'm concerned.
- [00:45:30.428]Capacity has to be there.
- [00:45:32.348]Very interesting point is that, through this recession,
- [00:45:35.478]the railroads are just one of the few industries
- [00:45:38.222]that have spent more money on capacity and capital spending
- [00:45:41.975]through the recession than they ever did before.
- [00:45:45.329]So they're coming out of the recession in the next year
- [00:45:47.401]or two, hopefully, with incredible capacity.
- [00:45:52.013]I think, on your question on the Presidential election,
- [00:45:55.830]it's a little frustrating
- [00:45:57.369]because I think both sides understand railroading.
- [00:46:02.942]Both sides understand transportation.
- [00:46:05.676]Both sides understand the critical part
- [00:46:08.318]that we play to the economy.
- [00:46:11.832]But one area that really frightens me
- [00:46:13.360]is the regulatory environment
- [00:46:15.416]that the Obama side has created.
- [00:46:18.185]I'm on an advisory committee
- [00:46:20.878]at the Surface Transportation Board on Energy.
- [00:46:24.773]And five years ago, when we started this group,
- [00:46:27.973]the utility companies were at odds
- [00:46:29.633]with the railroads constantly on service, and rates,
- [00:46:32.170]and efficiency and productivity.
- [00:46:35.397]But now, we're 300 million tons a year less coal
- [00:46:41.074]in our industry than we handled two years ago
- [00:46:44.250]and it'll keep growing.
- [00:46:45.795]And until we solve that issue of using coal
- [00:46:48.976]in a positive way, and creating a partnership
- [00:46:52.337]on how we use these commodities,
- [00:46:56.037]I think it's gonna be very, very serious
- [00:46:58.176]for us as an economy
- [00:47:02.477]with what this will do to the price of energy.
- [00:47:06.030]And that's about as far as I better go politically, I guess.
- [00:47:08.942](laughter)
- [00:47:13.013]Well, first off, Dan, thanks for a great talk.
- [00:47:15.774]And I did have one question.
- [00:47:19.380]I appreciate the multi-line aspect
- [00:47:21.004]of some of the things you're talking about,
- [00:47:22.408]but I was wondering if you talk a bit more about that.
- [00:47:24.940]The challenges of being multi-lined,
- [00:47:27.067]having to work with these different railways
- [00:47:29.531]and the state DOT and those things.
- [00:47:32.835]It clearly is a feature of our industry
- [00:47:34.595]and I'd appreciate your insight on that.
- [00:47:37.579]It is.
- [00:47:39.191]As I mentioned, we have a very close relationship
- [00:47:40.934]with our connecting railroads.
- [00:47:45.023]With a big railroad system, you've got a lot
- [00:47:46.116]of politics involved, you've got changes in managers,
- [00:47:49.526]changes in dynamics and personalities.
- [00:47:52.579]And sometimes, you're on the right side
- [00:47:54.403]and sometimes you're on the wrong side.
- [00:47:56.300]What we've tried to do, is to always go
- [00:47:57.835]to our connecting railroads and be very honest with them.
- [00:48:01.510]We say, "We're an independent company.
- [00:48:03.349]"We're here for the benefit of the customer first,
- [00:48:06.038]"but we'd like you to be aggressive with us
- [00:48:08.446]"to capture more business and we think we can show you how
- [00:48:11.782]"to do more yourself."
- [00:48:13.468]For example, when the wind industry came out,
- [00:48:16.916]we had just completed Manly Terminal
- [00:48:18.420]with the ethanol facility.
- [00:48:21.220]I got a call from a friend of mine at Union Pacific in Omaha
- [00:48:24.169]and he said, "Hey, we need to have distribution centers
- [00:48:27.291]"in five locations on Union Pacific and Manly, Iowa
- [00:48:30.685]"is one of 'em.
- [00:48:32.081]"Will you take the last mile for us?"
- [00:48:34.622]And, ultimately, we partnered up with UP
- [00:48:36.377]and created the largest distribution facility,
- [00:48:40.630]literally, in North America.
- [00:48:42.778]We do this a lot now.
- [00:48:46.560]At least three days a week, someone at one
- [00:48:47.892]of the Class I railroads will call and say,
- [00:48:50.237]"What do you think of this?
- [00:48:51.821]"Is there something you can do for us to make this better?"
- [00:48:55.198]And that relationship has really been fun.
- [00:48:58.791]The state of Iowa, as I mentioned, had the mortgage
- [00:49:01.411]on the property when we first came back to Iowa.
- [00:49:05.312]And, had it not been for the state of Iowa,
- [00:49:07.095]and assistance through the flooding and a lot of help
- [00:49:10.355]in facilitating the relationship,
- [00:49:14.804]none of these railroads,
- [00:49:18.588]other than just the core mainlines would be there today.
- [00:49:21.712]I mean, just look at what Nebraska's lost
- [00:49:23.133]in the last few years.
- [00:49:24.646]They lost most of the Rock Island,
- [00:49:26.924]they lost most of the C&W.
- [00:49:29.358]In fact, I was involved in a study of what we call
- [00:49:32.165]the "cowboy line" from Norfolk to Chadron
- [00:49:35.294]and worked very hard to try to save that line
- [00:49:37.622]and it just couldn't get through appropriations
- [00:49:39.813]quick enough, so the line was abandoned.
- [00:49:42.623]But I think we'll regret that as an industry
- [00:49:45.119]and for the state of Nebraska for generations.
- [00:49:49.354]And so, I'm not sure if I answered the question
- [00:49:52.485]exactly the way it was asked, but the relationships
- [00:49:55.950]that we have, even with our communities are incredible.
- [00:50:00.773]I'll get called to a city council meeting and they'll say,
- [00:50:03.561]"You have seven crossings in town.
- [00:50:05.025]"When you gonna fix 'em?"
- [00:50:06.706]I'll say, "Well, that's 349th on our list,
- [00:50:10.618]"but I tell you what, if you restore that crossing with us,
- [00:50:13.961]"and let us close a couple of these unused crossings,
- [00:50:16.690]"we'll put it at the top of our list."
- [00:50:18.857]And it's been a great relationship with the counties,
- [00:50:21.114]the communities, and now, after probably 10 years,
- [00:50:25.545]we've got 90% of our almost 400 crossings
- [00:50:29.596]totally rebuilt now.
- [00:50:40.203]So, two more questions from the online audience.
- [00:50:43.065]University of Iowa asks, "Safety, car versus train conflicts
- [00:50:47.494]"at railroad crossings is a concern.
- [00:50:49.959]"Do you have any thoughts on how it can be improved?"
- [00:50:54.291]Well, in my career, it's improved a lot.
- [00:50:57.455]Folks like you that have that research capability,
- [00:51:02.532]Operation Lifesaver, I think, has been very good,
- [00:51:05.186]particularly when you start teaching young children
- [00:51:08.027]in elementary school of the dangers.
- [00:51:12.170]There's probably nothing scarier than to be on a train
- [00:51:15.822]and see a car on that crossing or a school bus
- [00:51:18.664]or a gas truck or something like that.
- [00:51:21.267]And I've been on trains with some near misses
- [00:51:23.328]that I'll never forget.
- [00:51:26.089]And it's the most powerful thing to frighten you
- [00:51:30.822]to see that from the locomotive
- [00:51:32.271]and know how helpless you are.
- [00:51:33.902]I was on a rail diesel car in Canada
- [00:51:38.381]quite a few years ago and we were doing 90 miles an hour
- [00:51:40.675]and a gravel truck just cleared,
- [00:51:44.106]and I was standing in the cab with the engineer.
- [00:51:46.753]And there wouldn't have been one survivor
- [00:51:48.768]if we would have hit that gravel truck.
- [00:51:51.049]Out of about 95 passengers, and the crew, and myself,
- [00:51:55.508]none of us would have survived that.
- [00:51:58.005]And so, I can't answer your question
- [00:52:00.208]on how it can continue improving other than it's an area
- [00:52:03.568]that has been getting good federal and state funding.
- [00:52:08.106]It's probably one of the most important things we can do
- [00:52:11.823]and the work that I've seen here just in my brief visit
- [00:52:14.750]indicates that you guys are really in the right direction
- [00:52:17.678]and it's really tweaking now to get those nuances fixed on
- [00:52:21.710]that relationship between a busy road with traffic lights
- [00:52:25.263]and double track main lines and that,
- [00:52:29.082]but it's very frightening.
- [00:52:31.445]But, we also have
- [00:52:35.430]have a lot of technology now.
- [00:52:36.876]All the Class Is have cameras, so you can at least reenact
- [00:52:40.033]what occurred and try to prevent it from happening again.
- [00:52:43.126]But I wish there was an easy answer for that
- [00:52:46.182]to eliminate it completely.
- [00:52:50.405]And one last question is, "What is the possibility
- [00:52:52.747]"of running fully automated trains
- [00:52:55.771]"where they are operated remotely
- [00:52:57.629]"from the University of Iowa?"
- [00:53:00.198]Well, go Hawks!
- [00:53:01.093](laughter)
- [00:53:03.954]I hope that never happens.
- [00:53:06.461]I would guess that if you can run
- [00:53:11.528]an airplane from over Afghanistan from North Dakota,
- [00:53:15.695]I guess that the technology's probably there to run a train.
- [00:53:20.177]I don't even like remote control locomotives.
- [00:53:24.200]We're down to two-man crews.
- [00:53:26.263]We've got four eyes that are diligent to look out
- [00:53:29.819]for things, not only the safety of themselves,
- [00:53:32.288]but the safety of the public and other folks.
- [00:53:37.489]I have no doubt that the technology will get us there,
- [00:53:40.478]but I hope that they never practice it on a total basis.
- [00:53:47.408]And that concludes the questions.
- [00:53:48.826]Give your speaker a nice round of applause.
- [00:53:50.509]Thank you.
- [00:53:51.559](applause)
The screen size you are trying to search captions on is too small!
You can always jump over to MediaHub and check it out there.
Log in to post comments
Embed
Copy the following code into your page
HTML
<!-- To force a 16x9 aspect ratio use 'padding-top: 56.25%;' instead of 'padding-top: 75%;' --> <div style="padding-top: 75%; overflow: hidden; position:relative; -webkit-box-flex: 1; flex-grow: 1;"> <iframe style="bottom: 0; left: 0; position: absolute; right: 0; top: 0; border: 0; height: 100%; width: 100%;" src="https://mediahub.unl.edu/media/8725?format=iframe&autoplay=0" title="Video Player: 2012 MATC Fall Lecture Series: Dan Sabin" allowfullscreen ></iframe> </div>
Comments
0 Comments