8th Annual MOW Survey - Preface

—Jeff Stagl & Angela Cotey

Optimism, pessimism and uncertainty. Officials from the 57 railroads who responded to our 8th annual maintenance-of-way (MOW) survey expressed a range of sentiments when sizing up their chances of completing proposed ’09 programs against a stiff recession-driven headwind.

Lower revenue and higher operating expenses are challenging roads’ mettle to balance resources — especially in the short-line sector.

“We might have to revise capital and operating expenses if revenues fall off in the middle of the year,” said Indiana Rail Road Co. officials in their survey.

But many of the 35 freight- and 22 passenger-rail respondents aren’t letting the economy drastically alter their MOW goals — to the point that 23 roads have increased ’09 budgets vs. last year, while most others have maintained spending levels or reduced budgets only slightly.

There even are a few rays of light that have broken through the recession’s cloud cover and are helping them carry out hundreds of major infrastructure projects, such as new bridges and stations, and track and tunnel upgrades.

Of course, the largest light source for passenger-rail respondents is federal stimulus funding. The Chicago Transit Authority (CTA) is relying on stimulus dollars to advance the Blue Line Dearborn subway track rehabilitation project, which otherwise might have taken a few years to fund locally.

“It’s a challenge to maintain and upgrade aging infrastructure without appropriate capital funding,” CTA officials said in their survey.

Another development in passenger roads’ favor: contractors are looking for work.

“Declining revenues will be a challenge that may be self-mitigated by more active competition among [project] bidders and a more available labor force,” said Washington Metropolitan Area Transit Authority officials in their survey.

Windows wide open

For freight railroads, the recession has afforded them more time — as in track windows — to focus on maintenance and get infrastructure up to snuff before traffic demand rebounds, many respondents said. That’s meant a sharper focus on prioritizing MOW projects and narrower focus on capacity expansion.

“While Union Pacific has reduced capacity spending to align it with demand, the company is committed to ... excellent maintenance practices,” UP officials said in their survey.

Many freight-rail respondents also have sharpened their cost-cutting skills to offset recession-inflated labor and material expenses.

“We’re driving productivity and in-sourcing services we formerly contracted out,” CN officials said in their survey.

But cutting costs doesn’t necessarily mean fewer crews and less equipment.

“I’d like to mention that I am hiring two trackmen and we just replaced six hi-rail work trucks despite the current economy,” said Reading and Northern Railroad Vice President of Asset Management Wes Westenhoefer in the short line’s survey.

Our survey respondents have a lot to mention about their MOW programs and recession-related strategies. In the pages that follow, they provide breakdowns of program spending and insights about program execution.

MOW ’09 Contents

• Class Is
• Regionals/Short Lines
• Passenger Railroads