Indiana Honda plant a prime example of short lines' marketing potential
Doesn’t sound too earth-shattering? Here’s why it is: The Honda plant is the first automotive manufacturing facility to be built on and primarily served by a short line.
The automaker had considered building the plant in Illinois, Michigan, Ohio and Wisconsin, but chose the Indiana site in part because RailAmerica Inc.-owned CIND offers multiple railroad connections between Cincinnati and Shelbyville, Ind. In addition to CSXT and NS, the 81-mile short line interchanges with Canadian National Railway Co. and the Indiana & Ohio Railway Co.
The plant, which opened last summer, is being tooled to produce Honda Civic sedans. After the facility reaches full production capacity, more than 80 percent of the assembled vehicles will be transported via rail — outbound traffic that could total 8,000 carloads annually.
That’s a big boon to CIND’s traffic, just as landing the plant is a big marketing feather in the cap for both the railroad and short-line industry. The facility serves as a prime example of short lines’ ability to compete with Class Is for major industrial development projects, as well as their aptitude to work with Class Is to provide major shippers a total long-haul transportation option.
With Honda breaking the proverbial ice and CIND showing it can be a primary transportation provider, I expect a few more automotive plants to spring up along short lines in the near future. That is, if the economy rebounds and consumers become active auto buyers again.
Posted by: 
Jeff Stagl | Date posted: 1/7/2009
Comments
Posted by Kenneth Pritchard on 1/8/2009 1:46:51 PM
The Wabash Central Railroad stands ready to assist a progressive industry in a plant building on its rail line in Indiana and offering rail service on an 'as needed' and cooperative basis. WBCR has a direct connection with Norfolk Southern Ry at Bluffton, Ind. providing excellent rail service to all destinations throughout the U.S.A., Canada and Mexico.
Posted by James Mancuso on 1/9/2009 10:41:02 AM
If it works in Indiana in the case of that Honda plant, there is no reason why it should not work in Buffalo,NY,which still has more than two major railroads plus several short lines serving its industrial needs. Depending on what part of the city a shipper decides to put his plant, he would have a nice choice of railroads with which to do business via the shortline he may locate on, such as the Buffalo Southern, which would give him a choice of more than two railroads if you include CN and CP in the mix.
Posted by Shaderick May on 1/9/2009 10:56:14 AM
This is a Captivity Issue. When advising clients, shippers, on plant location the first choice is a point that is served by more than one Class I railroad; usually this is not an alternative. The second best choice is always a short line with access to more than one Class I and no encumberances, fees to the original parent Class I. what's needed to obtain this type of business is a long-term contract with the short line that protects the shipper from captive railrates while still providing a reasonable rate of return to the short line.
Posted by James Swidergal on 1/9/2009 12:22:04 PM
More of a question than a comment...If this is true of Shortline involvement and the "boom" for present and aspiring shortlines everywhere then why in the world would a shortline namely the EJE surrender and sell out to a Class1 namely the CN. OK sure,I see the CN''s point of view to bypass the Chicago maze of traffic, but as the shipping environment continually moves out into the surrounding (suburbs) of the Chicagoland area, I would think that the administration for the ex-EJE would have had the foresight to expand expotentially and make the EJE one of those Highly touted shortlines that it could have been. The EJE just as it sits right now before the CN takes control,is in a perfect geographical and possibly economical location, not only does it skirt the congested Chicagoland area, but with an adjustment or two concerning additional rail, increasing infrastructure, the EJE by itself could have not only served and made money at it,but could have expanded into the suburban passenger service link that is so desired especially now. The EJE''s property (for those of you unfamiliar) wrap around and pass thru some of the most up and coming communities along its entire line and would have created a boost for those communities that are already existing and even a bigger boost to those that are in trouble. The Eje connects with all of the Class1''s either directly or thru it''s link with the BRC and the Indiana Harbor Belt. I''m all for shortlines especially The EJE,making it and making it big,and they (eje) could have if they didn''t sell out for only $300million(I wish I had). The EJE story could have been the most exiciting not only monetarily, but astethically, in that it has two working roundhouses one at Kirk and another at Joliet,along with working turntables,along with picturesque right of way, along with experienced manpower,to make it happen. Once again it''s a story of David and Goliath and Goliath won again! This is one shortline story that doesn''t have a happy ending.
Posted by Larry Kaufman on 1/9/2009 3:51:03 PM
Everything you say about the EJ&E, James, is correct, but I think you miss the fundamental of the merger. The EJ&E didn't "sell out." It was - and still is - owned by U.S. Steel Corp., which no longer wants to be in the railroad business and thought $300 million was a good payday for a railroad that really is an outer belt around Chicago and doesn't serve much O/D traffic. The funny thing about the CN/EJE deal is that they didn't have to go through all the agony they did. If CN had done a haulage agreement, it never would have had to go to the STB or go through the environmental impact statement. Then, when the volume got up to an appropriate level, CN could have bought it. Then, because the traffic already would have been higher, there would be no environmental impact and no EIS to be done. On a purely transportation basis, there are no anti-competitive issues and the STB would have approved it as a minor transaction within a couple of months. I think CN went the way it did because it didn't want to be putting $100 million into someone else's railroad. Sort of like NS and KCS creating a new 50-50 subsidiary for the KCS Meridian Speedway. NS got ownership in exchange for its capital. In God we trust; all others pay cash.
Posted by michael willis on 1/11/2009 9:32:44 PM
MORE RAILWAY MAGAZINES ARE SORELY NEEDED! - to entice aspiring young civil, construction, structural, mechanical & electrical engineers, industrial and vehicle designers, planners, architects, business and management majors available today in bookstore chains such as Barnes & Noble and Borders. this colossal feat could increase public interest in the railroad industry. Rail-fan editions are great reading but cater to the already loyal middle-age railroader. Community college level rail courses and publications could appeal to locomotive engineer training, railyard positions, traffic control and logistics. Four year colleges could help to bring back the professional business standing that railways had before. US railways and public transport will soon take center stage in the new infrastructure bill. I did a rough count of what was available in the transportation sections of the magazines area of a Barnes & Noble store in Rochester Hills Michigan: automotive-more than 200 editions, trucking & 4x4 offroading-more than 100, atvs/snowmobiles-more than 30, motorcycles-more than 75, boating-more than 40, UFO magazines-take a guess- there were even more knitting magazines than rail editions! RAILWAYS-less than 10! 4 were from the UK and 6 from the US. Thomas The Tank Engine has his very own section with the wooden railway set and dozens of books. There has to be something to fill the void in rail publications and generate real general public interest between Thomas The Tank Engine and the TGV.
Posted by Larry Kaufman on 1/12/2009 11:39:05 AM
Michael Willis raises some interesting points. If publishing more magazines specializing in railroads were the answer, I suspect there would have been many more such publications by now. The fact is that the railroads managed to virtually withdraw from public view and those schools that had strong engineering programs closed most of them because of a lack of student interest. It is the railroads' obligation to make themselves known to potential employees, and to make railroad careers attractive to those they would like to bring into the industry. Young people today have different standards and concepts that did prior generations. Being on call 24/7, for example, accepting a culture of intimidation, being supervised by people with little comprehension of how to be a good supervisor. These are things today's young people will not accept. No, Barnes & Noble and Borders will not create a pool of potential rail employees. They carry the mix of publications that they do because those are the ones that sell and that have sufficient advertising support. Railroads do little advertising of their own (CSX and NS being notable exceptions), and rail equipment suppliers tend to restrict their advertising to professional publications like Progressive Railroading. How many suppliers do you see paying for space in Trains?
Posted by James Swidergal on 1/12/2009 12:05:05 PM
First,in responce to Mr Kaufman,I whole-heartedly agree,and thanks for the info (USS ownership issue),but what I was trying to render here was in relation to the story about how shortlines have the potential to advance their place in the railroad arena. The "J" had that all built in and still gave it up, that's a sell out. But you are right,the CN went about it the wrong way, the UP has been using that corridor for some time now, and it seems not to affect their bottom line. Perhaps,E.Hunter Harrison is a bit more greedier than James Young. Secondly, Mr Willis,it seems that your comment has nothing to do with shortlines or the Honda story, and I am in agreement with the fact that there really is a lack of railroading journals and periodicals,etc. But it's more likely than not for the fact that printing such hard copy, is being replaced (just like the daily newspapers,ie Most recent event Chgo Tribune) not because of lack of content but because of the lack of interest (in Railroading) and cost prohiobitive aspect of start up, and feature writers,and overhead,and all the other costs of doing business. Thomas the tank engine took a fullfledge marketing scheme to bring it into the lives of little children, and is not the real railroad with it's complex issues. And speaking of complex issues,I wonder why such a great deal of time and money was expended by the FRA and the Carriers' on that report published in Oct 2008 at the FRA R&D website on The Problems with recruiting and retaining employees. I'm available and I'll work for as many years as they'd let me, where do I sign up.
Posted by Larry Kaufman on 1/12/2009 2:58:54 PM
James, I also agree that the short lines have a most important place in the railroad firmament. The EJ&E, however, is a different story. It just doesn't have much origin or destination traffic, and there are few rewards today for being what used to be called a bridge carrier. Only those railroads that can control either the origin or termination can deal with the Class 1s and have any real chance for survival. UP uses the J only for coal and probably doesn't have a need to bypass Chicago (It already has Rochelle for its outer intermodal volume.) CN, on the other hand, has a rather clear need and strategy to be a competitor for international intermodal into the Southeast. That involves entering North America at Prince Rupert, as much as two sailing days closer to Asia than LA/LB or Seattle, and then getting through/around Chicago quickly by staying out of the congestion in close-in Chicago. Thus, the J has a value to CN that it doesn't have for UP. It's not a matter of greed by Harrison or less greed by Young. It's pure economics. The J fits CN's strategy and UP doesn't need it.
Posted by Paul Matchett on 1/13/2009 12:39:32 PM
I help put that track in, glad to see a train using it finaly, that CWR was a pain to put in!!
Posted by Richard Frick on 1/13/2009 9:13:31 PM
Railroads are vital to the Automobile Industry. Large parcels of land adjacent to rail lines are of paramount importance to provide service for the Manufacturing Plants. Whether they are Short Lines or Main Lines are not within the thought processes of the Parties that perform the search for property, utilities, labor force and incentives to locate a Manufacturing Plant. The CSX made a decision concerning the line that runs from Cincinatti to Indianapolis and felt that it was not cost effective. Enter the CIND and Rail America with the foresight to seek prospective customers and their desire to work with the State of Indiana to locate industry along their line. They also showed strong forsight in dealing with Honda to develop the Rail Facility to meet their Honda's rail needs. Honda came out the winner with the ability to utilize the CIND and Contract with the interchange agreements to achieve flexibility for their shipping needs. Honda and CIND/Rail America and the State of Indiana are all winners. What could be better?
