Class 1 Reverse Auctions Can Reverse Supplier Profits
Many members of the railway supply community have expressed concern about a new e-commerce venture called RailMarketPlace.com. Specifically, REMSA members are concerned about the reverse auction concept, and they have expressed their concerns to REMSA.
The REMSA Board of Directors felt that representing its members on this issue was a legitimate function of the association.
RailMarketplace.com was created by a consortium of six Class 1 North American railroads to reduce spending costs, shorten purchasing cycles and increase the supplier base. The six participating railroads are BNSF, CN, CPR, CSX, NS and UP.
"Suppliers have very real concern over the reverse auction concept," said Steve Wiedenfeld, chairman of REMSA's committee on e-commerce. "Reverse auctions could drive prices so low that they may not allow a margin of profit for the offering party. In times when the economy is or has been in a downturn, reverse auctions tend to cause companies who are desperate for a sale to offer products at unrealistically low prices. If that trend were to continue, these companies would eventually have to close up shop. This only results in fewer and fewer suppliers of products and less and less competition from which the railroad industry can benefit. And those suppliers that do remain in business will have precious few dollars to reinvest in new products and product improvement."
To make sure the six railroads involved with RailMarketplace.com were aware of the problems reverse auctions can cause, the association sent a letter to the founding members of RailMarketplace.com on February 6, 2002. "As well intentioned as the railroads may have been when they created RailMarketplace.com, we don't believe they anticipated how reverse auctions would affect our industry," Wiedenfeld said. "As a proactive effort to communicate our concerns effectively, we sent each railroad a personal letter to reinforce the message that none of the suppliers in this industry has money to burn. We've received very positive responses to the position we've taken, and REMSA members are behind it all the way."
REMSA wants to hear from its members and others about e-commerce in general and reverse auctions in particular. All comments are welcome and should be addressed to Steve Wiedenfeld, e-commerce committee chairman, or to the REMSA staff at the association's office, 210 Little Falls Street, Suite 100, Falls Church, VA 22046, telephone 703-241-8514.
All comments will be kept confidential within the association. "This is an important issue for all of us in the railway supply industry," Wiedenfeld said. "We know we can't stop technology, nor would we want to try. But, as with anything new, we have to work closely with our customers to eliminate any negative consequences, whether intended or not. We can work with the Class 1 railroads, as we have since we started in business, but we need your input and your support. I look forward to hearing from you."
Just how much has the railroad industry changed in the past 10 years? For one, the aggregate horsepower of the locomotive fleet operated by U.S. Class 1 railroads increased by 31 percent between 1991 and 2000. And the capacity of the freight car fleet increased by 27 percent. Also during the last decade, 191 existing local or regional railroads were established.
All of this information and much more is contained in the 18th annual edition of Railroad Ten-Year Trends, which is available from the Association of American Railroads' Policy and Economics Department. This most recent edition presents data for the years 1991 through 2000, the final decade of the 20th Century.
Railroad Ten-Year Trends provides tables and graphs that present an economic overview of the U.S. freight railroad industry, including Class 1 industry performance, traffic, financial statistics, employment, plant and equipment and operations. In addition, the publication includes selected information on regional and local railroads as well as the websites for approximately 250 Canadian, Mexican and U.S. railroads. It also lists all U.S. freight railroads and offers profiles of rail-related organizations.
AAR is offering the publication for $100 for non-members and $50 for full AAR member railroads. Domestic shipping and handling fees are $5 per order.
Interested parties can request order forms to be received by fax by calling (202)639-2102 and pressing 1. Publications and preview files are available at the AAR website, www.aar.org.
The City of Baltimore and the B&O Railroad Museum, the only museum in Maryland and the only railroad museum in the nation affiliated with the Smithsonian Institution, are staging a 16-month long celebration of people, technology, culture and the American experienceto mark 175 years of railroading in the U.S.
Events, which kicked off in February, will feature programs highlighting the past, present and future of American railroading. The grand finale will be the Fair of the Iron Horse from June 27 to July 6, 2003.
Each day of the festival will feature a parade of historic locomotives from the Tom Thumb to modern motive power moving along the first 1.5 miles of mainline railroad right of way in the United States.
The entire event is expected to attract two million visitors to Baltimore from across America and around the world to celebrate the anniversary of the start of railroading in North America. The timing commemorates the first governmentally chartered railroad, the Baltimore and Ohio Railroad, in February 1827 and the ceremonial laying of the railroad's First Stone on July 4, 1828.
The anniversary celebration will enable the B&O Railroad Museum to restore pieces of its significant collection, including several historic steam locomotives, and make necessary improvements to its 40-acre campus. Funds raised for this event will allow the museum to rebuild its track along the first mile of mainline railroad in America and make significant improvements along its right of way through the adjacent economically challenged community.
The museum is in need of many partners and sponsorts to prepare the historic site for the celebration. Organizations such as REMSA, the Assiciation of American Railroads, Railway Progress Institute and the American Short Line and Regional Railroad Association are participating at different levels. Individuals or companies interested in becoming partners or sponsors should e-mail Stefanie Edelman, sedelman@borail.org.
Richard J. Carlson, President, UNIT Rail Anchor Co., Inc.
Carlson joined UNIT as President in 1998. He began his career in the railroad supply business with the former Railroad Products Group of Abex Corporation in 1973. He held various sales and marketing positions at Abex, including Director of Sales and Marketing, Regional Sales Manager and Product Manager.
Before joining UNIT, he was Vice President Sales and Service for the Mechanical Products Division of ABC Rail and Vice President Mechanical Products Sales for Progress Rail Services Corporation.
Carlson received a B.S. in Business Administration from Miami University in 1973.
Tony Chambers, Director of Railroad Sales, Burke-Parsons-Bowlby Corporation
Tony Chambers has spent 13 years as a Railroad Sales Manager, handling the northeast territory out of the DuBois, PA, facility. He is a graduate of West Virginia University with a B.S. degree in Forestry (Wood Industries Curriculum).
Chambers is currently a member of the Railway Tie Association's Committee on Legislative, Environmental Affairs Response (CLEAR). As committee chairman for three years, Chambers helped develop the committee into a responsive group. He also served as chairman of RTA's Marketing Committee and was the organization's President in 1994. In addition, Chambers is a member of AWPI, AWPA, ASLRRA, NRC, WVFA and AREMA.
"From the interaction with the various trade associations, especially my involvement with RTA, I will bring some of those ideals and experiences to my new REMSA position," Chambers said.
Richard Jarosinski, President /General Manager, Portec Rail Products, Inc.-RMP Division.
Jarosinski joined Portec Rail Products, Inc., then known as Portec, Inc., RMC Division, in October 1975 as a Design Engineer. He served as Project Engineer, Research and Development Manager, Engineering Manager and Marketing and Sales Manager before taking over as President/General Manager in 1998.
He is a Registered Professional Mechanical Engineer in the State of Pennsylvania and a member of the National Society of Professional Engineers and the American Society of Mechanical Engineers. The RMP Division is headquartered in Pittsburgh and the manufacturing plant is located in Huntington, WV.
Steven Wiedenfeld, Vice President, Sales & Marketing, Nordco Inc.
Wiedenfeld started his career with Rexnord Railway Equipment Division in 1981 as a Parts Order Analyst. He was subsequently promoted to positions of District Manager, Manager of Marketing then his present position of Vice President in 1992. In 1996, Mr. Wiedenfeld participated, along with four other management partners, in a management buyout of his company.
Mr. Wiedenfeld has been active in industry associations throughout his career being a member of AREMA and serving as a REMSA board director for the period of 1991 - 1994.
Larry Laurello, Jr., vice president of Delta Railroad Construction, was elected to a two-year term as president of NRC at the Annual Conference in Coral Gables, FL, in January 2002.
His railroading career began when he was 14, when he and his brothers helped out his grandfather at Delta Railroad, sorting ties and handling other chores in the yard. At 16, he began operating machines for Delta on various jobs. Laurello became a foreman for Delta at 19 and has been vice president since 1980.
His first project as a foreman was the Amtrak m/w facility and yard at Bear, Delaware. He has worked on many projects over the years, including laying track for Metro North under Park Avenue in New York City; the WMATA TW5 extension from National Airport in Washington, D.C., to Alexandria VA; track work on Wisconsin & Southern between Elkhorn and Delavan in Wisconsin, working for the state DOT; tie/rail work for the Michigan DOT in the Cadillac area; and the Houston light rail project for METRO.
Currently, Laurello is working on the Medical Center Extension Project for MATA in Memphis and Union Pacific's new intermodal facility at Rochelle, IL, which involves 40 miles of track.
Laurello has also been active on several NRC committees. Most recently, he has been involved in NRC's Transit Task Force, along with Scott Brace, Dan Foth and Philip Stout. The group is working to help standardize methods in order to make it easier for contractors to work with transit agencies. He also has been active in safety work both in his company and in NRC.
Laurello, an Ashtabula resident, has lived in northeastern Ohio for 38 years. He pursued an engineering degree at Lakeland Community College and Kent State University.
"As chairman of NRC, I would like to promote the railroad industry and help to bring about a change in perception of railroads by the general public," Laurello said. "Fifty years ago, this nation depended upon railroads for travel and transport. While there were many reasons for railroads to fall into disfavor, railroads and railroaders are also responsible for creating the public perception of quality service, timely delivery and good-natured interpersonal relations. With good public perception, railroads will regain favor and, with that, a fair share of public dollars for further promotion. We have a long way to go, but the need to improve is a mandate that all railroaders should join in."
He continued: "On a more personal level, I would like to see the railroad construction and maintenance industry continue to grow as a viable solution for our national railroad system."
Laurello sees continued close relations with REMSA and its members. "The entire NRC Board considers REMSA the closest partner to our association," he pointed out. "We've always felt that what's good for REMSA is good for NRC. We should continue close contact so that we can work together for the advancement of both our associations and the railroad industry."
Sending a son or daughter to college with today's costs of higher education can put a serious strain on a family's budget. To help ease that burden a bit, REMSA once again is making scholarship money available to some deserving students.
For 2002, REMSA is offering five undergraduate scholarships of $2,000 each for students who have a potential interest in railway-related careers. The student's orientation should be toward working for a railroad, a rail transit system, a contractor whose primary business is construction and maintenance of railroad track and structures or for a railroad-oriented supply company.
All necessary materials must be submitted to REMSA by May 1. To be eligible for consideration, an applicant must:
- be an employee or the spouse, son, daughter, grandson or granddaughter of a current employee of a REMSA member company;
- be enrolled and in attendance at the time of application as a full-time college student at an accredited two-year college offering an associate's degree or an accredited college or university offering a bachelor's degree; and
- demonstrate successful completion of the previous year of study and a willingness to continue.
To apply, candidates should send the application, available from REMSA headquarters in Falls Church, VA, and all accompanying materials to the Executive Director of REMSA postmarked no later than May 1. The absence of any of the required materials renders the application incomplete.
Required materials include:
- A completed Application for Undergraduate Scholarship Program form, including the narrative requested in the application.
- A letter written on official REMSA-member-company stationery confirming REMSA sponsorship as requested in the application and stating the relationship of the member company employee to the applicant, e.g., mother, father, grandfather, etc.
- An official transcript from all schools attended, including high school and all college-level work completed through January 31 of the year the application is made. The transcript(s) should list courses taken or in which currently enrolled that may apply to a possible railway-oriented career.
- A 500-word essay on the topic, "While railroads have historically paid for their own right of way, they are now thinking about seeking government funds for public/private partnerships. Would you be for or against this? Why?" The essay should be double-spaced on a separate sheet with the applicant's name printed at the top.
- Two letters of recommendation written on official letterhead as explained on the application form. College students must provide at least one letter from a faculty member of the college in which the applicant is currently enrolled.
REMSA asks that applicants submit the application, narrative statement and essay in one envelope. Transcripts, letters of recommendation and letter of sponsorship should be sent directly to REMSA from the appropriate persons.
Current REMSA scholarship recipients are eligible to be considered for renewal of their scholarship assistance each year. They must submit a new application form, narrative statement, two letters of recommendation (one must be from a college faculty member), letter of sponsorship from REMSA member company, an updated transcript including courses taken and grades received since their initial application and an essay on the topic listed in Item 4 above.
A Scholarship Committee appointed by the REMSA Board of Directors will base its evaluation for awards on the materials submitted. All applicants will be informed of awards in July. Scholarship recipients will be required to submit a final official transcript including grades for the spring term.
REMSA recommends that applicants call the headquarters office (703-241-8514) around mid-April to inquire about the status of their applications with regard to receipt of the materials required for consideration. If any materials are missing, the application will be incomplete.
John Thomas (Tom or Fergy) Ferguson was born in Columbus, Nebraska, on April 4, 1935, and died suddenly December 15, 2001, in Sun City West, Arizona, at the age of 66.
Ferguson hired on with Union Pacific as a truck driver on February 1, 1955. He worked as a rail inspector, detector car operator and chief detector car operator until he was promoted to Superintendent Rail Testing in 1972. He served as Manager Rail Welding & Track Testing in Laramie, Wyoming, from 1979 until 1984, when he was promoted to Director Rail Welding & Track Testing for the combined UP-WP-MP System in Omaha. He directed UP's rail welding, track testing and inspection staffs until his retirement on December 31, 1992.
Ferguson was a member of AREMA and its predecessor organizations for almost 30 years. He was extremely active on Committee 2, Track Measuring Systems, and Committee 4, Rail, for many years. He was also heavily involved in CORT (Committee on Rail Testing).
After retirement, Ferguson worked as a consultant in the railroad welding and testing field until his death. He was an excellent golfer and played continuously from the time he retired right up to his death. He will be missed by all those in the railroad maintenance field.
Ferguson is survived by his wife, Beth, 15430 West Desert Stone Lane, Surprise, AZ 85374.
Report Submitted by Keith Hartwell
Railroad Day on the Hill
On March 13, the railroad industry held its most successful Railroad Day on the Hill ever. This day-long lobbying event is jointly sponsored by the Association of American Railroads (AAR), the American Short Line and Regional Railroad Association (ASLRRA) and the Rail Supply and Service Coalition (RSSC).
Railroad executives from around the country participated in more than 150 individual meetings with Congressmen and their staffs. Infrastructure funding and tax policy were the primary issues discussed. This one-on-one constituent contact is one of the best ways to get the rail industry message heard, and all the participants agreed that we made significant progress in educating the Congress on issues that matter to our businesses.
Participation by railroad suppliers is particularly important because the supply industry generates lots of jobs and economic activity – two things that really matter in Congress. If you didn’t participate this year, get it on your schedule for next year. You will be doing your railroad clients a huge favor by helping them make this an even more effective event.
Short Line Infrastructure Funding
The top legislative priority of the short line industry remains passage of H.R. 1020/S.1220, which provides $350 million/year for three years for track rehabilitation. Although the legislation was unanimously reported by the House Transportation and Infrastructure Committee last year, supporters have been unable to secure a commitment from the House Leadership to bring it to the floor for a vote. The primary stumbling block is a provision that required Davis-Bacon prevailing wage standards to apply to the spending. The fact of the matter is that Davis-Bacon applies to virtually all federal transportation spending.
Furthermore, short line industry wages are generally equal to or above Davis-Bacon standards. Unfortunately, this issue matters greatly to a core group of conservative Republicans; and they have convinced the House Republican Leadership to postpone the floor vote.
ASLRRA is endeavoring to secure as many House Republican supporters as possible so as to convincethe Leadership that they should let this bill go. To date, 85 Republicans have co-sponsored the bill or committed to voting for it. This is a continuing effort, and the short lines would surely welcome help from rail supply companies. If you have a Republican Congressman and would like to know if he or she has not yet signed on to the effort, contact me at keith.hartwell@cchinc.com and I will send you the list of those we need to win over. This is a critical issue for short line railroads, and your help will be noted and greatly appreciated.
Amtrak
Amtrak continues to be a punching bag for critics in and out of government; and although the fight is still in the early rounds, the passenger company is taking some heavy hits. Following on the heals of the Amtrak Reform Council's (ARC) recommendation that Amtrak be split up and partially franchised to private operators, the U.S. DOT Inspector General Kenneth Mead said Amtrak will have to shut down if it receives only the $521 million requested by the Bush Administration in next year's budget. Referencing Amtrak's previous threat to end all long-distance service October 1 if it doesn't get at least $1.2 billion, Mead said savings from ending most other train service around the country would be only "chump change" compared to the needs of the Northeast Corridor. Mead concluded that even $1.2 billion would only be a "limp-along budget to get Amtrak through fiscal year 2003."
On February 27, the House Transportation Appropriations Subcommittee entered the fray. Subcommittee Chairman Harold Rogers (R-Ky.) noted that Amtrak is losing $347 per passenger on its Los Angeles to Orlando route, and that it is making just an average of $19 per passenger on the Northeast Corridor. Rogers was critical of both the Administration and the House Transportation & Infrastructure Committee for failing to come up with a plan and concluded that his own subcommittee may have to create that plan. Rogers' subcommittee makes the initial decision on the Amtrak subsidy level.
Outside of Washington, critics are also multiplying. As previously reported, UTU President Byron Boyd has been harshly critical of Amtrak management, saying "There is no vision at the top and no understanding of how to operate a user-friendly system." Now Trains Magazine editor Bill Stephens says Amtrak CEO George Warrington is doing nothing to fix the problem. Says Stephens, "Amtrak management is taking a knee and running out the clock. If you don't believe you can win -or at least try to- you never will."
Warrington himself finally surrendered, announcing on March 6 that he would leave Amtrak to become head of New Jersey Transit.
Care to amaze your friends at cocktail parties with arcane factoids about the railroad industry? For example, railroads invested more than $32 billion in capital improvements over the past five years. Or railroad fuel efficiency has improved by more than 68 percent over the last two decades. You can find this information and a lot more in the 2001 edition of Railroad Facts, recently published by the Association of American Railroads' Policy and Economics Department. This pocket-sized reference focuses mainly on Class 1 railroads and contains statistics and graphics for 2000 and selected prior years, in some cases as far back as 1929. Within its 80 pages, there are facts and statistics on finance, traffic, operations, plant and equipment, employmentand compensation, fuel consumption and cost and loss and damage. The booklet also contains a profile of each U.S. Class 1 railroad, Amtrak, the two major Canadian railroads and the two largest recently-privatized Mexican railways.
Copies of Railroad Facts are available to non-AAR members for $15 for one copy, $12 per copy for two to ten copies and $10 per copy for orders of more than 10 copies. The cost to AAR members is $5 per copy.
Order forms are available at the AAR website, www.aar.org, or can be received by fax or mail by calling (202)639-2125.
