Commerce: The ties between business and rail service
There’s little doubt that Roger Luce is happy to be where he is now. “In terms of economic development,” he says, “I think I’ve nailed the best job in the state.”
Luce, who at one time worked in central Wisconsin as the executive director and CEO of a chamber of commerce and as the executive director of an economic development corporation, was hired as executive director of the Oneida County Economic Development Corporation last year. Before he applied for the job, he did a lot of soul searching during a period of several weeks while spending time with his dying father. He admits he had thought of retiring, but realized that wasn’t his path. “My passion was in economic development,” he explains. “I thought,’I want to get back to doing that.'” When he learned that the executive director job would be opening up in Oneida County, he applied for it, even though he was aware that there were many openings in the field of economic development around the country at that time. “I’m probably one of the few in the profession that has continued to move north,” he says. “It’s all about quality of life.”
His positive attitude and enthusiasm for economic development are a perfect fit for his new post. He assumed his new role here last September and plunged into his responsibilities as soon as he hit town. “When I first came here, I spent the first 90 days getting to know the players,” he recalls, adding that he met one-on-one with Oneida County’s larger employers and made a point of introducing himself to local manufacturers. He’s spent a lot of time since then working on manufacturing-related matters, and he’s been working with municipalities to increase available certifiable business park land. He’s also dealing with revolving loan issues and numerous other matters related to growing, recruiting and retaining business in Oneida County.
Luce likes what he’s seen here. “It’s a supportive citizenry,” he says. “To me, the sense is that they’re all in it together. They all understand that what’s good for the whole is good for them.”
That collective sense that cooperation is necessary for successful economic development is central to another important issue with which Luce and leaders from numerous counties are dealing: the diminishing availability of freight rail service. With specific lengths of track owned by Canadian National being designated as out of service, the availability of rail service to many businesses is seriously threatened.
Canadian National (CN), which earned more than $8 billion in 2010, is a Class 1 rail company, a designation reserved for railroads with operating revenue of at least $396 million in 2010. “If you’re stopped at a crossing and more than 100 rail cars go by, that’s a Class 1,” Luce explains. “Canadian National has very limited switching operations beyond Class 1 in the state of Wisconsin.”
Railroads with an operating revenue of more than $20.5 million but less than $277.7 million are designated as Class 2 railroads. These are often called regional railroads and an example would be the Wisconsin & Southern. Class 3 railroads, or short lines, are defined as earning less than $10 million of annual operating revenue. There are more than 500 short line railroads in this country, compared to seven very large Class 1 railroads. An example of a local short line railroad is the Tomahawk Railway.
CN is the only rail company that completely crosses North America and it brings cargo from Vancouver through Wisconsin before rolling on to the giant switchyard in Chicago. According to the company’s website, the railroad not only serves all the major markets in Canada, but almost 75 percent of the U.S. population as well.
However, the giant company isn’t serving some small communities in northern Wisconsin. CN owns the rail line along Highway 8, but two portions of that line now fall under the “out of service” designation: the stretches of rail from Cameron in Barron County to Prentice in Price County; and from Rhinelander to Goodman in Marinette County. When a stretch of rail is designated as out of service, not only are rail cars not being run on that track, but the track is also not being maintained. The longer out of service lines are allowed to sit unattended, Luce explains, the stronger the case CN has for abandoning the line. The Canada Transportation Act in Canada and the Surface Transportation Board in the U.S. oversee the requirements a railroad must meet before it abandons a rail line. Even with those restrictions, CN has discontinued operations on more than 2,600 miles of track since 1992. Abandoned railroads often end up as segments of recreational trails-a development that benefits the tourism industry, but is detrimental to other industries for which rail service is vital.
With the specter of abandoned rail lines threatening business operations in northern Wisconsin, leaders in several counties recognized the need to take action.
“There had been discussions back in early 2011 among Erhard Huettl [who was the Forest County Board of Supervisors chairman at the time] and some of the adjoining counties about wanting to make sure rail service was going to be available for lumber products,” Luce recalls.
In June 2011, representatives from several northern Wisconsin counties met in Rhinelander, explains Luce, who also attended that meeting, even though he hadn’t yet been hired as the head of OCEDC. Huettl, Luce says, brought them together and the group discussed forming a coalition to have discussions with Canadian National regarding the out-of-service rail from Rhinelander to Goodman.
“Initially, the discussion was about the logging industry. I came to realize the importance of rail to other industries.” Luce cites ABX and Oldenburg Group as just a couple of examples of businesses for whom access to rail service is critical. “We need to protect this,” he says, “for the long-term viability of our businesses in the Northwoods.”
Out of the collaboration among the various counties came a proposal to form the Northwoods Rail Transit Commission. The organization’s goal is to do everything possible to ensure that rail service on CN’s branch lines from Merrill to Bradley and Cameron to Escanaba, Mich., continue.
“Each county had to approve a resolution to join the commission,” Luce explains, “and participate in the costs of the commission.” The organization achieved official status as a transit commission on May 22.
Under Wisconsin statute, rail transit commissions have the authority to acquire, repair and operate rail branch lines or to contract for a branch’s use. To acquire railroad track and accompanying structures, and to cover the cost of repairing them, rail transit commissions are eligible for grants from the Wisconsin Department of Transportation. So if CN does propose to officially abandon the aforementioned rail branches, the Northwoods Rail Transit Commission would be able to step in and try to purchase or lease the branches.
“We would love to see Canadian National agree to either lease or sell the line from Prentice to Ashland and the line that goes from Cameron to Escanaba,” Luce says. “We’d like to see all of that operated by a short line railroad.”
While rail service is crucial for business operations, the public at large also benefits from it.
“People have the perception that rail is an environmentally unfriendly, non-cost effective way to move,” Luce says. In fact, a single rail car can haul the equivalent of four truck loads of cargo. Compared to trucks, trains consume nearly one-third less fuel per ton mile moved. That single rail car can also carry a ton of cargo more than 430 miles on just one gallon of fuel. “The railroads are moving toward 90 percent efficient engines on their trains,” Luce says.
All of this means it’s much more cost-effective to ship products by rail. But it’s not really cost-effective for a Class 1 railroad to serve this area. Smaller Class 2 and 3 railroads, on the other hand, have less overhead and are better able to handle smaller loads. “Rail can be and has become an efficient competitor for moving product in and out,” Luce says. Short lines fill a niche for smaller communities that the larger railroads bypass. “What we’re saying is, ‘Allow our niche to be filled.'”