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Norfolk Southern Corp. and the Watco Cos. Inc. are teaming up to launch a new short line in Michigan. Beginning in first-quarter 2008, the Michigan Central Railway will be headquartered in Kalamazoo and operate 384 track miles in Michigan and Indiana.

Later this month, the Class I and holding company — which owns 16 short lines operating in 14 states — will seek Surface Transportation Board approval to change ownership of several lines from NS to Watco and form the Michigan Central under a joint venture. Watco will be the short line’s parent company and operator; NS will be a minority investor in the deal.

Michigan Central will operate line segments between Ypsilanti and Kalamazoo, Mich.; Jackson and Lansing, Mich.; and Grand Rapids, Mich., and Elkhart, Ind. The short line also will acquire NS’ trackage rights for an Amtrak-owned line between Kalamazoo and the Michigan/Indiana state line.

“The new Michigan Central will preserve and enhance freight-rail service in southern Michigan,” said David Eyermann, Watco's senior vice president and assistant chief operating officer who's serving as Michigan Central’s interim president, in a prepared statement.

Watco plans to spend more than $6 million during the short line’s first year of operation — and more than $20 million within three years — to improve infrastructure and equipment.

“The track investments reflect our belief in the future of this railroad,” said Eyermann. “Our goal is to work with the state of Michigan, communities, Amtrak and … freight customers to make this a growing railroad.”