GWI to shut down Mexico's Chiapas-Mayab

An October 2005 hurricane that damaged 175 miles of Ferrocarriles Chiapas-Mayab S.A. de C.V.’s (FCCM) track turned out to be too much for the Mexican short line to overcome.

Owned by Genesee & Wyoming Inc. (GWI) since 1999, the 1,119-mile FCCM last month notified the Mexican transportation secretary that the railroad planned to cease operations and terminate its 30-year concession with the government.

The railroad expects to wind down operations and discontinue service by July’s end.

Since Hurricane Stan destroyed or damaged about 70 bridges and washed out track segments between Tonala and the Guatemalan border nearly two years ago, FCCM has been working to develop a reconstruction plan.

Too hard to swallow
But the railroad, which employs 407 people, hasn’t been financially viable and rail traffic has continued to decrease since the storm, according to GWI.

“The uncertainty of the Chiapas reconstruction combined with the deterioration of our rail traffic means that we can no longer justify absorbing financial losses or making incremental investments,” said GWI President and Chief Executive Officer John Hellmann in a prepared statement.

The short-line holding company likely will record FCCM-related 2007 charges of about $12 million, or 30 cents per share, mostly in the second quarter. Charges will include severance costs, wind-down expenses, non-cash write-offs of currency translation accounts and tax impacts.

In third-quarter 2006, GWI recorded a non-cash after-tax impairment charge of $34.1 million.

The holding company plans to complete FCCM’s liquidation by year’s end.

As of March 31, the railroad retained $17.5 million worth of assets, including non-current assets (primarily locomotives and rail cars) totaling $6.6 million and current assets (mostly receivables and inventory) totaling $10.9 million.

Under terms of FCCM’s concession, the Mexican government could acquire or lease the railroad’s equipment based on fair market value.

GWI owns and operates 48 regionals and short lines in Mexico, the United States, Canada, Australia and Bolivia.

LABOR
Seven unions ratify national pact

Seven of the Rail Labor Bargaining Coalition’s (RLBC) eight member unions last month ratified a national contract with the National Carrier’s Conference Committee (NCCC).

The Brotherhood of Locomotive Engineers and Trainmen, Brotherhood of Maintenance of Way Employes Division, Brotherhood of Railroad Signalmen, National Conference of Firemen and Oilers/Service Employees International Union, Sheet Metal Workers’ International Association and International Brotherhood of Boilermakers signed off on the contract, which calls for general wage increases totaling 17 percent until Dec. 31, 2009. American Train Dispatchers Association members did not ratify the contract, which also eliminates railroads’ proposal to reduce train crews to one worker.

The NCCC, which bargains for more than 30 U.S. railroads (including the Class Is), has been negotiating national collective agreements with 13 rail labor unions since November 2004. The RLBC represents about 85,000 rail workers.

The NCCC still is trying to negotiate a national contract with the United Transportation Union (UTU), the largest rail labor union that’s seeking to merge with the Sheet Metal Workers International Association in part to boost bargaining strength.

In May, the UTU filed a federal lawsuit against the five U.S. Class Is to force the railroads to “bargain in good faith and honor an almost five-year-old written agreement to address in national negotiations the subjects of entry rates of pay related to employee training and experience,” according to the union.

EVENT
Pan American railway congress coming to Argentina

Efficient rail transportation is important all over the world. And providing railroad and government leaders an international forum to share challenges and advances in technologies, operations, service, finances and logistics is just as vital.

That’s the thinking behind the Pan American Railway Congress Association’s XXI Pan American Railway Congress to be held Aug. 30-Sept. 4 in Buenos Aires, Argentina. The event’s theme is “The Railroad as a Sustainable Instrument in the Integration, Development and Unification in Nations and Between Them.”

“[Various] courses taken have proved to be effective more so in some countries and with other railroads, but by no means as a universal adjustment,” said association member and Progressive Railroading co-founder Frank Richter. “What continues to be important is awareness of effective corrective initiatives and courses to adopt on their own or adapt from other countries or groups of countries. Much can be gained, as in the past, by government and railroad leaders focusing on that together at this periodic summit.”

For more information on the congress, email association member José María Ramos Mejía.