Two small-road takes on ’09 capex
Most railroads expect to spend less on capex in 2009 for obvious reasons: the recession and soft traffic volumes, which I mentioned in a Class I “outlook” article I wrote (the issue should hit mailboxes by mid-month). But I couldn’t squeeze the capex forecasts of CEOs at two regionals into a sidebar I authored for the article.
Here’s what I learned from Iowa Interstate Railroad Ltd.’s Dennis Miller and the Indiana Rail Road Co.’s Tom Hoback.
Iowa Interstate doesn’t plan to cut its capex budget for 2009 (the 550-mile regional budgeted about $11 million for ’08). The railroad will continue to spend money on infrastructure improvements and equipment as long as Iowa Interstate generates a “decent” return on the investment, says Miller.
Conversely, Hoback expects to reduce the Indiana Rail Road’s capex budget from $9.4 million in ’08 to $9 million in ’09. Yet, the 500-mile regional will spend the most it’s ever spent in its 22-year history because of two major (and separately budgeted) projects, he says.
The railroad will build a spur into a new southwest Indiana coal mine and construct an 8,000-foot siding to expand capacity between Sullivan and Dugger, Ind. — projects expected to cost between $15 million and $20 million.
On the drawing board the past two years, the projects will advance to the construction phase in 2009 because the railroad can take advantage of slower traffic and reasonable costs for certain materials, says Hoback.
“The time to do them is now,” he says.
Posted by: 
Jeff Stagl | Date posted: 12/5/2008
Comments
Posted by James Swidergal on 12/30/2008 12:35:16 PM
Agreed...now is the time everything is cheaper.
Posted by Pat on 1/5/2009 11:25:36 AM
IT APPEARS THAT THE MAINTENANCE CREW WHO IS CHARGE OF KEEPING THE TRAIN GOING HAS SOME DRUGGIES AND OTHER ILLITERATES RUNNING IT. THIS IS SPEAKING FROM PERSONAL EXPERIENCE WITH SEVERAL OF THE CREW MEMBERS.
Posted by Larry on 1/6/2009 11:38:33 AM
What on earth is "Pat" talking about? I've reread the original blog and see nothing in it that would trigger a response about "druggies" or train crews. The numbers may be small by Class 1 standards, but the two carriers involved are doing exactly what any business must do -- investing and reinvesting in their facilities so they can serve customers and thereby make a profit for their owners. That's not really a radical position, at least not for us capitalists.
