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Crossties NOVEMBER/DECEMBER 2005 T h e M a g a z i n e F o r P r o d u c e r s A n d U s e r s O f T r e a t e d W o o d C r o s s t i e s A n d R e l a t e d P r o d u c t s .

SPECIAL REPORTS RTA Donates Thousands To Aid Katrina Victims Association Well Represented At AREMA Conference Annual Convention Shown In Pictures Helms Takes On Role As Association President 2005: A Tipping Point For Short Line Railroads Railroad Operates On 5 Principles Maine’s Forestry, Rail Industries Profiled

PLUS: A Q&A With RTA President Tony Helms convention 2005 | coverage what they said AT THE CONVENTION Presenters Discuss Demand, Challenges & More Packed with information and activities, RTA’s 2005 Convention has been highly regarded as a success. Part of what makes the event so allows us to use a very soft pad directly SHORT LINE & successful is the presentations. This year, topics under the rail. This new tension clamp REGIONAL RAILROAD FORUM allows us also to use standard technology. addressed everything from the latest engineering Steve Sullivan, Here are some pictures of its applica- American Short Line and research efforts to purchasing plans for the tion in the from Petersburg to Regional Railroad coming year and more. While space would not Moscow. With the four-spindle device, Association allow for complete presentations to be published, one worker can assemble four screws at Fuel prices have had a what follows are excerpted comments from RTA the same time. Robal developed an eight- slight dampening effect. convention presenters. spindle screwing device where we can But, interestingly enough, it hasn’t been install 600 meters per hour. that dramatic. Rail capacity—we can con- tinue to grow rail business but only to the Terry Amburgey, extent that we have capacity. And that can RESEARCH & TASKpro: be defined in several different ways. And, PRODUCT DEVELOPMENT FORUM Commercializing The basically, the Class 1s tell us that they are Dr. Allan Zarembski, Manufacturing Process out of capacity. They are trying to add ZETA-TECH Associates: For Borate Pre/Dual capacity now, but that’s a long-term solu- Comparative Analysis Treatments tion. Short lines don’t have a problem of 6x8 vs. 7x8 Timber The people in Louisiana, before their with capacity. Short line business has Crossties minds were on Hurricane Katrina, were been growing, and it’s been growing well. The crossover point in low very seriously considering not placing density and branch lines, the point where wooden crossties in track in Southern Paul Boisvenue, it starts making sense, seems to lie in the Louisiana. And, if it can happen in St. Lawrence and Atlantic 400- to 500-ties range. Generally, it seems Louisiana, it can happen in Mississippi, Railroad Company that in the 500- to 700-ties range the eco- Texas, Alabama, Georgia and Florida. So, Regional short lines are nomics work, so if you’re putting in any- we have to do something to address the faced with making some thing more than 500 to 700 ties per mile reasons for poor performance. changes to their business into the track for these lighter density I think we’ve got the solution—it’s a model, so we have done some rate lines, then 6x8 ties seem to make eco- matter of your clients knowing about it. increasing. We have put some fuel sur- nomic sense. If you are putting in fewer We can treat non-seasoned ties with charges in certain areas, and adjusted car than 400 ties, the 6x8 ties do not make borate, but it will require a bit of tweak- ordering and leasing agreements. All of economic sense. The smaller-scale instal- ing. It requires treatment, a period of dif- these issues are being handled to get the lations do not always provide an eco- fusion storage, paying attention to how cars moving, which has worked out well. nomic benefit; and as track densities you air-dry things, and over-treating the We have some other projects that will increase, the economics move away from borates with an oil preservative such as come down the pipeline early next year or the 6x8 ties, even for the large-scale creosote. late this year. So, we’ll get more traffic, applications. and that is the name of the game Bob Coats, Pandrol USA: Winfried Boesterling, VICTOR System Carl Vercollone, VOSSLOH: VOSSLOH— Installations and 42 North Structured A New Look At Fastening Technical Update Finance Company Systems for America Based on the results so far Let me give you one exam- In Europe, very often we in test, we are starting to ple of how this works. Let’s discuss the elasticity of the see a little bit of separation between the say some of you out there track—the bending in the track. In rolled steel base plate and the VICTOR were thinking about putting a new roof on Europe, it is more and more common to base plate. The VICTOR system is per- your house. You went out and got contrac- increase the elasticity in the fastening sys- forming better. We think that the improve- tors’ bids, and the bids came in at tem to achieve more load distribution to ments that we have achieved are starting $20,000. And, the next day, after you got the track to reduce ballast maintenance. to show up, and we expect that will be the all of the bids, one of the suppliers of the For that, we developed a special tension case as the test progresses. roofing shingles called you up and said, clamp with a high fatigue limit, which “If you use my roofing shingles, it will

14 CROSSTIES • NOVEMBER/DECEMBER 2005 convention 2005 | coverage only cost you 10,000.” That’s effectively short line industry, we would have a meet- ing up. They are going to continue to show what the opportunity is for RTA members ing with the legislatures and would have to up. You need to be showing up as well, with a railroad that is not in position to spend the entire meeting discussing what a and all of that showing up can’t be placed use this tax credit, but the supplier is. short line railroad is. That’s changed now. just on Jim Gauntt and the Railway Tie Business for the most part in California Association. Fred Simpson, is doing well. We are seeing an increase If Jim is trying to represent you without particularly in the port area. It’s just amaz- you being there with him, he has an I am very concerned with ing and mind boggling how well business impossible task ahead of him. Leaders what the capacity problems is doing in that area, and we are going to don’t listen to groups, and they don’t listen are doing to our industry continue. I appreciate the partnerships that to industry associations. They listen to the and how we respond to we have, particularly, Gary Ambrose, who individuals within those associations. Jim those problems. I’m very concerned with is in this room. Koppers has been a very can give you the tools, but you have to the impact it is going to have on carload strong supporter of ours, and we welcome show up. traffic. more. It helps when we go into our leg- I think Paul Boisvenue mentioned de- islative meetings not to have just railroads HARDWOOD RESOURCE FORUM marketing carload traffic. And you just but also to have our associate members Judd Johnson, heard Mike Smith’s comments and Steve who have employees that could be Hardwood Market Report Sullivan mentioned that the Class 1s are impacted by legislation as well. That’s I see a fundamental change refocusing on quality of revenue, which is critical, and I welcome more to join us. in the marketplace. And if it kind of a code word for yield manage- is true that we have a fun- ment, which means you manage the yield LUNCHEON damental change, it is prob- so you can get rid of the carload traffic. Bruce Vincent, ably going to take some time before the Our issue for this year going forward is The Alliance for America timber industry understands and reflects how we deal with carload traffic. Foundation, With Vision that. Meanwhile, as anybody in the There Is Hope sawmill business understands and agrees, Mike Smith, Railroads are the green the current prices and the market opportu- Finger Lakes choice, and we have to talk nities for number one common red oak are Railway Corporation to the public about that and learn to talk at unsustainable low levels. And that is the You can see that in 1929 to the public. We have to lead this discus- key. So far, sawmills have tried to avoid we had almost 75 percent sion and not just fight it. We have done a red oak and/or limit it as much as they of the total ton-miles that pretty good job at fighting. But then we possibly can—cut other species. But, I moved in this country. Today, we seem to learned that fighting makes us the three- think that what we have seen is that red have stabilized in the 41 to 43 percent ring circus or the third ring of a three-ring oak is the biggest production item that is area. That’s still pretty good, and it does circus with somebody else taking gate available to them in growing stocks, and give us a good argument with government receipts. We have to lead the discussion you’re simply not going to be able to and with our customers in terms of how on our nation’s environmental future and avoid it forever. If you’re an Eastern U.S. important we are to the overall transporta- weave ourselves into it. And, to do that sawmill, you’re going to cut red oak at tion market. But, still in all, 42 to 43 we have to remember three truths: some time. This strongly suggests that fur- percent of the total market may not be Truth number one is that democracy ther reduction in sawmill production is good enough. works, but it has been a spectator sport for going to occur. We haven’t quite seen a By the way, you may ask why I have far too long. We have let the democratic circumstance where the industry has hit 1929 in there. Well, 1929 was basically process work and griped about its outcome the wall, where it is all financial, and our last good year when you think about without being fully engaged in it. Truth banks are pulling loans and that sort of it. When we started the 20th century, we number two is that when people lead, our thing. It has been more of a voluntarily were the biggest industry in the United leaders will follow. We need to be talking scale back because of market conditions. States. By the 1920s, the auto industry had to our leaders about how we can have But that puts Eastern U.S. hardwood pro- edged us out. Right now, we are duking it clean water and creosote; you better tell duction slightly below 10 billion board out with the dog food industry in terms of them about how you can have both feet for 2005 if this holds true. total revenue. because if they have to pick between clean water and the preservation of your tie, the Darrell Beasley, Jalene Forbis, preservation of your ties is out of here. Beasley Forest Products California Short Line Their clean water is what’s important, so We’ve got several problems Railroad Association you’d better talk to them about how you as sawmillers, but one of Our association is working can have both. The final truth is that those the biggest is log inventory hard. We are actually gain- who show up run the world. There are and log costs. I think that ing momentum with legis- meetings held everyday that discuss your the railroads and the treaters probably latures. When I first started back in the industry’s future, and there are folks show- have enough problems of their own, but

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convention 2005 | coverage this is a problem that they need to take focus was on both of those operations their stockholders and make them calm seriously. You will never treat a tie that and not just one. We have had to produce and make them pleased with the com- doesn’t run through a sawmill first, and at the sawmill and bring each of those pany. So there are a lot of different rea- you’ll never treat a tie that isn’t cut by a products, lumber and ties, one step fur- sons they are doing that. One of the logger at some point. So, I am going to try ther to additional refinement. byproducts of that is that we have seen a to identify five things that affect log inven- Producing ties can only be profitable if return to dealerships. In the middle 70s, tory and then I will try to break those there is an adequate quality and quantity the dealer was a very strong part of the things down to help you understand how of tie logs at an appropriate price. That is wood industry because the dealer had the you can try to improve our log inventories. if you have a tie mill and you cut tie logs loan money to buy the chainsaw. The The first one isn’t a big surprise— you need to buy tie logs and operate that dealer was the banker. We saw that in the weather conditions. In the South, that is sawmill in such a way that you can make 80s and in the 90s the dealerships went primarily rain. We have gotten more of our money-making ties. All ties that result away. We saw independent contractors share of it. In the North, it may be snow or from sawing lumber logs simply develop. begin to merge. Now, we see the oppo- other things, but weather conditions are That is that they are not sawed intention- site side of that cycle, which is basically the first one. The second one is logging ally. They simply occur when it becomes dealerships that have contract loggers capabilities. These problems build on one economically prudent to add more saw- working for them. another. We start out with almost an inade- ing costs for the value of the lumber quate logging force in good weather and received. In almost all cases, the selling John LeBlanc, Canadian you multiply bad weather with an inade- price of ties produced from northern National Railway quate logging force, and you put on top of hardwood lumber logs does not equal the We know that we have that competition, stiff competition, for cost per board foot of the price per thou- probably been under- those products. Then, there is storage sand board feet paid for the log. In our investing in tie replace- capacity. Most tie mills that I am aware of area, it remains a delicate balancing act. ment programs when we have very limited storage capacity when look at the statistics from various rail- compared to grade mills. There are some Greg Callahan, Pioneer roads. There is also the effect of us things that we can do as an industry to Machinery/Caterpillar adding in the Wisconsin Central territory, update our storage industry. And the last The dispersement of the the BC Rail territory and the GLT prop- one is standing timber inventory. These are timberland is one of the erties. Our concrete ties are basically the five key things that affect our logging issues that we are going to replacements for derailments, cracked inventory, and we need to all be working have to deal with. In the ties and so forth, and they are coming to figure out how to improve the situation. United States now, there are 9.9 million out of CXT and are an improved design individual and family-owned timber- over the old one, which had a lot of tie Dave Larson, lands. That number will probably plate abrasion problems and caused us to Webster Hardwoods increase by 10 to 15 percent in the next have to patch them a lot. The embedded Since 2001, when I started couple of years because some of the plate is supposed to really help that prob- with the company, as log larger tracts of timber are being sold off lem. One of the things that I hear a lot prices for northern hard- to both companies and individuals. from the Southern United States is that wood logs continued to National and state conservatories are our engineering guys do not like the increase, we began to operate our facility buying these lands. So, we are going to service length of wood ties that they are to maximize the production of grade see a growth again in the potential of seeing. I guess they are being attacked lumber rather than ties. The reason is individual- and family-owned forestland. by pests. that it was economically essential for us In the state of Georgia alone, better than Boultonizing isn’t their favorite word in order to recover the value from the 60 percent of the wood alone is owned either. There are many ties that are suc- log. It has been this way over that period by individuals. Timber companies are ceeding out there, but we only hear a few of time and really for probably more selling off their land base at levels that of the horror stories. Our approach to than 25 years. So, we have taken what we did not anticipate. They do this for extending tie life is to focus on maintain- was a tie mill and turned it into a lumber several reasons. One reason is to put the ing gage. For us, safety is of the utmost mill—done a 180 degree turn. That’s an cash back in the till. Let’s just visualize importance, and this breeds a low-cost important evolution. It has been a chal- that they bought this track of timber 30 operation because we have more than lenge to balance log procurement and years ago when they paid $150 an acre $100 million of costs in derailments sawmill production with the fact that our straight across the board for that land every year, and my boss is very cost con- commitment with both the log and the tie and 30 years ago probably harvested two science. And, because he is a fighter, he operations is that we have also operated growths of lumber or timber off that land has fought within the corporation to with a creosote treating plant on the and now see the capability of selling increase the capital budget for track. We premises and also have a full comple- some of the parcels for around $1,400 an have gotten rails, and he has gotten ties, ment of dry kills, planers, planer opera- acre. So, quite obviously, they can put a and he seems to have the ear of the CFO tion and a concentration yard. So, our lot of money in the till. They can reward and the CEO.

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convention 2005 | coverage

HARDWOOD RESOURCE FORUM Dale Ophardt, CSX Tim Drake, Norfolk John Bosshart, Transportation Southern Corporation Burlington Northern Here are pictures of the NS has some of the most Sante Fe devastation caused by extreme operating condi- The total number of ties is Katrina. This picture shows tions in the industry. I’m going to average some- 18 barges that moved off sure everyone else would where in the neighborhood the Mobile River and onto our railroad. say the same thing. Along with the of 2.75 million, but the boss asked me to The fact that they were 250 feet long and improved business levels, the increased ton- give you a large disclaimer. The board about 60 feet wide with 10 inches of nage, our grade and the curvature that we of directors didn’t approve this yet. water in them made them even heavier to fight, this challenges all of us to find a way Please treat this as coming from a crys- get off, and I think it was only yesterday to improve the track structure. With the car tal ball at this point. The volume that we that we got the last one cleared. This and axle load increasing, we continue to expect in the next five years will be in opens back up into Mobile from experience mechanical wear in crossties. the same range. We are above the aver- Montgomery. We continue to experience tie rot in certain age this year. We are putting in 2.95 mil- The Gautier Bridge is missing spans areas of the country on our railroad. The lion, which is actually as a result of us between girders. We have had divers in issue of broken spikes is also a growing taking ties early. We’re actually going to the water seeing if the girders twisted at problem that we experience everyday in the be delivering wood ties this September all or if we will be able to salvage them coalfields. The issue of broken tie plates, that are going to be installed in January to replace the railroad. broken fasteners, the impact of rapid gage and February 2006. Instead of us wait- In Biloxi, the swing bridge actually widening, the increase of service failures ing for that period of time, we have gang looks like a highway since there is no and the rapid rail wear—all of these real time availability, so we are actually ballast and no track. On the same bridge, life problems today strengthen the need for going to be installing some of those ties you can see that the track in the fore- premium track materials that not only sup- this year. Somewhere in the neighbor- ground just swept right off the bridge and port heavier movements but also help hood of 200,000 ties will be installed is lying in the bay there. We will be reduce or counter increased forces on our early in the year. restoring that. track structure. But within this mix are opportunities to provide fuel savings and

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convention 2005 | coverage additional service improvements if we accuracy of the measurements. But the Walt King, choose materials wisely. These are some electric conduction heating has proven to Norfolk Southern Corp. of the things that Norfolk Southern is be very successful. The key to ensuring that the involved in to combat the stressed state of wood tie maintains its dom- our physical plant. CLASS I PURCHASING FORUM inance as a tie of choice in Mike Aarstad, Burlington is that it Mike Hazen, Northern Santa Fe remains cost competitive. This means that As I said before, this is the everyone in the supply chain should dili- We looked at the economic first full year without Kerr- gently do their part to find ways to mini- factors of different tie sys- McGee. In 2004, we still mize cost by improving their understanding tems using the following had some inventory that we of the business and exploring new methods parameters: per mile of four- could utilize, which helped us try to get of production and treatment. It is the indus- degree curve, 75 MGT per year and life- through the year. But this year we didn’t try’s responsibility as a whole to ensure that cycle costs over 35 years. Hardwood ties have that luxury. It’s been a struggle, but artificial or inflationary costs are not cre- and track spikes costs were $1.33 million we’ve been able to make it through. ated within the market costs that eventually U.S, while with hardwood ties with screw Several of you know about the become the burden of the railroad cus- spikes we are looking at $1.26 million U.S., Springfield seasoning yard that we put in; tomers. This often calls for a collaboration and with concrete ties and the additional it’s helped us quite a bit. Without that between industry partners. Remember that ballast required it was $1.32 million U.S. seasoning yard, we wouldn’t be able to costs must be managed to avoid passing What we found was that the economic make it. We’ve got about a million ties along excessively high prices to customers. crossover point for using concrete ties was drying there right now; I think we send High prices provide incentive for customers at 90 MGT. about 80,000 ties a month out of the to both lower demand and seek alternative For our expansion projects, we will be Springfield facility to whichever treating materials—both of which the rail customers using pre-plated ties. We tried that in 2005, plant we need. are seeking and both of which could be and it was very successful. We have per- detrimental to the long-term survival of the formed lab testing on Lewis Evergrip Gary Hunter, wood crosstie industry. spikes, and we will be field testing them this fall in Western Canada. We see this Our wood tie numbers are John LeBlanc, spike as a possible improvement over our right at 4 million. The Canadian National present screw spike. kicker there is that what- Railway ever we don’t provide on We’re around the 1.4 mil- Craig Domski, the composite side will have to be pro- lion mark. We’ve ramped Union Pacific Railroad vided in wood, and our production of up from somewhere around The TRT909 was built by composite ties has been disappointing at 600,000 in 2002, and we’re at about the 1.4 Harsco Track Technologies best; it’s quite an effort on a lot of peo- million mark for the foreseeable future. We in their Columbia, S.C., ple’s part to have enough ties for 19 tie know that we’ve underdone the track tie plant at a cost of $11 mil- gangs going on at one time. I mentioned replacement—that’s been recognized. And, lion. The 909 is contracted to install 14 earlier that the second quarter was proba- now with the 286,000-pound traffic more ties a minute on a minimum six-hour day, bly the toughest quarter that I remember and more, there’s a lot more emphasis on so we expect to be putting in 5,000 ties a as far as feeding tie gangs and being able the basic track structure. We’re putting a lot day with the new machine versus a pro- to come up with the ties. We had a lot of of money into rail, and we’re putting a lot duction rate of 2,500 ties a day with the conference calls with treating plants and of money into crossties. prior P811. also with our engineering department. The thing that really forced us into After one tense conference call late in Rob Churma, developing this new machine was that the May, things were starting to go a little bit Canadian Pacific Railway P811 had to stop working when we were better and one of the engineering folks at Canadian Pacific is very working on narrow track centers—13-foot the end of that meeting said, “Well, I feel consistent in the overall track centers. With the development of the much less worse now.” Everybody real- demand year after year— new machine, we can continue installing ized that we had gotten through on that just at a million plus ties. As ties and laying rail while pass us on particular project. With 2006, 4 million our tonnages go up, we’re starting to switch 13-foot track centers, which is the major- wood ties, that’s where the number’s over from softwood to hardwood, so the ity of our East-West corridor. going to be. We appreciate the hard work hardwood is making the difference in terms One of the really exciting technologies of all of our suppliers in making that hap- of handling that extra tonnage—that really that was developed as part of this machine pen, and what I’m hearing is that the helps us. Secondary suppliers will continue is the use of electric conduction heating Union Pacific is going to have a 4 million to support primary suppliers. And, next of the rail versus the old propane or gas tie program for the foreseeable future. year, there’s going to be additional expan- flame method, which caused everybody sion capacity and more pre-plated ties problems—a lot of questions about the required and additional switch ties. §

18 CROSSTIES • NOVEMBER/DECEMBER 2005