November 1, 2017

In railroad-heavy Kentucky, access to tracks plays a significant role in industrial development

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Who would’ve thought a so-called legacy technology would prove itself an indispensable piece of the 21st economy? But it’s true — freight rail is a hot commodity, thanks in part to the synergistic role it plays in connecting transportation modes within industrial enterprises.

This year alone, America’s private rail companies are spending $22 billion to build, maintain and grow their network that spans more than 140,000 miles, according to GoRail, a nonprofit freight railroad advocacy group.

Researchers at Towson University’s Regional Economic Studies Institute recently quantified freight rail’s economic impact. Their study, the first of its kind, demonstrated how this private spending ripples through the national and local economies. Every dollar railroads invested in the network created $10 in economic impact. Rail spending nationally also generated nearly $33 billion in total tax revenues in 2014.

The story extends to Kentucky. According to Class I railroad CSX, Kentucky businesses together with state and economic development agencies invested nearly $24 million in new or expanded rail-served facilities on CSX or its connecting regional and short lines in 2015.

“For business and industry, like Toyota in Scott County or Braidy Industries, which will build a new aluminum-rolling mill in Northeast Kentucky near Ashland starting next year, efficient freight rail options are key to success,” said GoRail Assistant Vice President Michael Gaynor.

A dozen railroads operate across 2,600 miles of track in Kentucky, including CSX, Norfolk Southern, Canadian National and R.J. Corman Railroad Group. According to the Association of American Railroads, the industry employs nearly 4,200 people in Kentucky, with an average wage and benefit package of $103,920.

In 2015, more than 636,000 rail carloads were originated in the state, with nearly 450,000 carloads terminated here. The state’s geographic location makes it a prime user of rail. Kentucky is located at the center of a 34-state distribution area in the eastern US — placing its borders within 600 miles of 65 percent of the nation’s population.

Freight rail access has been a deciding factor in landing a number of recent job-creating projects for Kentucky.

Take Castlen, a family owned manufacturing company that designs and fabricates and installs material handling equipment and infrastructure including grain and fertilizer storage tanks, silos and storage buildings.

Matt and Laura Castlen started the company in their garage in 2008, when he was 20 and she was 19. They’ve steadily grown, and they were thrilled when the opportunity arose to acquire a 92-acre former steel mill on U.S. Highway 60 near Owensboro — a $4.4 million project that will add 30 full-time jobs with the potential for more.

The site included an existing 3,800-foot rail spur that connects to a main CSX east-west line. The setup allows Castlen to move materials by outbound rail, truck or barge, depending on which is most cost-effective. The spur, which was renovated as part of the deal, helps move goods between modes.

“Having a place to expand on the Ohio River, with all three modes at one site, was a huge driver behind us picking that site,” Matt Castlen said. “If rail hadn’t been available, we wouldn’t have gone there. I was raised here in this community, and we could not have picked a better place to organically grow a business that started in Kentucky. The commonwealth is a great place to conduct business.”

It was a similar story for Shannon Wright, president and CEO of Wright-Mix Material Solutions LLC. The company, an outgrowth of the concrete and construction company he and brother Kendall started nearly 20 years ago in Pikeville, blends products such as liquid-based chemicals, non-shrink grouts and shotcrete.

The firm spent years looking for a suitable site to expand, in multiple states, before agreeing to build an $8.5 million production facility in the Greenup/Boyd Riverport in Wurtland. The site was designed to include a spur line with rail into the port, but rail was never installed.

Shannon Wright could see the exact set-up he needed – at a chemical pant right across the river in Ohio. That state wooed him extensively, but he was happy to reach a deal with Kentucky that included the installation of rail. The project will create 130 full-time jobs.

“We distribute our products all over the US and around the world, and transportation is our biggest cost — getting materials in and out,” he said. “Being able to send things on a rail car to Chicago and transfer it to send out West — rather than trucking it — is huge for us.

“We get bulk loads in from China and Mexico. To get that into a container and into your yard without having to truck it and reload...saves us a lot of money.”

Wright said his company wouldn’t have picked the Wurtland site without the rail access. He praised local and state officials for working to make sure the expansion happened in Kentucky. He even received a personal phone call from Gov. Matt Bevin.

“The Economic Development Cabinet did a great job,” he said. “We wanted to stay here if we could. To have the governor call me at dinner and say he’d really like to have us in Kentucky, that meant a lot to me as a resident, not just a business owner. You don’t see a lot of governors doing that.”

 

INFOGRAPHICS:

  • 473 miles — The average distance America’s railroads move a ton of freight on one gallon of fuel.
  • 14.1 million — The number of additional trucks needed to move the 253.7 million tons of freight that originated in, terminated in, or move through Kentucky by rail in 2014.
  • Rail investments nationally produced $274 billion in economic activity and supported 1.5 million jobs across the country, according to 2014 figures.

Source: www.GoRail.org

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