Not all onboard with rail reconnection effort

Not everybody is onboard with the idea of a joint business, community, government effort to ask two rail companies—Union Pacific and Canadian National—to reconnect their lines for the betterment of them all.

The Barron County Executive Committee heard from businesses for and against the proposal at its July 3 meeting at the Barron County Government Center.

In opposition

Sharon Masek and Brian Mittlestadt were present, representing Superior Silica Sands.

Masek said SSS has invested millions of dollars in its facilities and in Barron County.

She said since 2010, it developed the Auburn mine and New Auburn dry plant on the UP rail line, constructed the Clinton dry plant on the CN rail line, developed two mines near Arland, purchased MidWest Frac mine site and renamed it CRM, developed Thompson Hills mine near Chetek and constructed the Arland dry plant to enable shipping on the BN rail line to St. Paul.

Masek said in 2014, SSS approached both CN and UP and asked them to consider reconnection to assist with the movement of empty cars between its rail facilities. Both rail companies firmly refused.

She said SSS found out by heresay and a newspaper article that their company would benefit from the current proposal and has not been included in any discussion or planning regarding the potential rail reconnection.

She said their position is not in support of the proposed reconnection. She said numerous in-basin frac sand mines have opened within the past 2 years, mostly in Texas. These in-basin facilities have a detrimental economic impact on Wisconsin Northern White sand producers as prices  for it have fallen significantly even though production has been cut by millions of tons per year.

She said there is already as much Northern white sand being shipped from this area on the CN as can efficiently be handled. In  addition, there are new sand sources being developed in Canada that will compete with the companies currently shipping on the CN.

Masek said the result would be a depressed market and would likely lead to loss of jobs, elimination of one or more local frac sand facilities and a substantial direct impact to the local economy.

She said SSS’s current monthly operating budget is $3.1 million, even with some facilities temporarily idle.

Masek affirmed that the company is going through a restructuring process that  it believes will make it stronger, more efficient and more competitive. As part of that restructuring, it has developed a 3-year business plan that includes emphasis on maintaining and building its Northern White segment.

She concluded, “If these two lines are reconnected, rail companies would have to compete for existing customers. You can’t have direct competition and think everyone will come out good.”

In favor

Larry McGlumphy and Katie Fortin of Northern Industrial Sands LLC spoke in favor of the reconnection and explained why they are spearheading the proposal.

McGlumphy, the general manager, said, “As we all know  a business, like many other things, can only succeed when given opportunity to do so. All of us in here must diversify its products to meet customers changing  needs and expand into global markets of opportunity. We must increase efficiencies and lower operating costs to stay competitive.”

He said, “Barron County has a deep understanding of the importance of keeping rail lines open.

“At NIS, our intention is to bring businesses, governments and communities together for everyone’s benefit by gaining access to two Class 1 railroads.”

The GM said, “Rail rates are rising, and there isn’t a rail shipper out there who isn’t voicing concerns about the rising rates.”

He reminded the committee of the changes that have occurred in the railroad industry in the past 20 years.

He said, “The railroad industry  had consolidated from 40 major railroads to just seven by 2000. The four biggest railroads, two in the Western U.S. and two in the East, now control more than 90% of rail traffic.

“With certain routes being completely exclusive to one carrier, shippers may have no choice as to which Class 1 they use. AAR data shows that this lack of competition has created a 30% increase in rates from 2000-2017, after factoring for inflation.”

He said “We are not asking for government to step in and tell private business how to run their affairs; we are asking two railroads to get together and work out a deal that is mutually beneficial for everyone.”

He said, “The State of Wisconsin as well as local municipalities struggle with budgeting enough money to rebuild roads to support ever-increasing truck traffic. Some experts say that using one railcar is like taking three to four semitrailers off the roadways.”

Fortin, NIS’s legislative and special projects manager, said, “We want to sit down and talk to them. There really are enough customers for everyone. We want the railroads to sit down at the table and hash it out.”

Jess Rolston, plant manager at McFarland Cascade, a Stella Jones company, said it has also invested millions of dollars in the county. “We can’t ship CN. We have to ship UP. For us, it will open up markets. Once the track goes in, the competitive market takes care of itself. We support it and would like to see it go in.”

Barron County Administrator Jeff French shared letters of support for the rail reconnection from Dallas Sloan, general manager of Barron Electric; and Mark Johnson, Jr., president of Rice Lake Weighing Systems.

Resolution to full board

Barron County Economic Development director Dave Armstrong said he worked to bring in Stella Jones and its business plan was dependent on the reconnecting of the lines. He said it was good to build support, but his fear was that their attempt would be like a flea trying to wag a dog’s tail.

Rep. Romaine Quinn said “From my perspective, you want everyone in the county to succeed. I’m not here to pick winners or losers. But to use government to stifle competition is the worst thing we could possibly do.”

Supervisor Karolyn Bartlett said,  “We can pass a resolution to support it, but it feels like businesses haven’t gotten together with an approach. I feel like there’s not an organized effort to push that, and that’s what it’s going to take.”

Committee chair Louie Okey said, “So far only Superior Silica Sands has spoken against it.  All else have been in favor. I surely love Superior Silica Sands, but we have other businesses. To go forward is not a bad thing. If we don’t try and give it a chance, we will never know.”

Supervisor Bob Rogers remarked, “It wasn’t that long ago that Barron County recognized the importance of rail and was looking at investing significant dollars to improve it. There was an exhale of relief when the sand companies did it.”

Rogers added that now’s the right time for doing a resolution and getting the reconnection done.

French told the committee it was important to keep in mind that the resolution would be advisory only. The county unilaterally has no authority to demand the line be reconnected, he said.

Be that as it may, the committee approved a resolution supporting the reconnection of the two rail lines in Cameron. It will now go to a vote by the Board of Supervisors at its July 15 meeting at 7 p.m. in the Government Center’s auditorium. All interested are invited to attend.

(Copyright © 2019 APG Media)

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