DERBY, Maine — A few years ago, Tim Scalia was worried that he would lose his job to a slumping rail freight market. Now he worries about having enough time to get the job done.
The chief mechanical officer at Montreal, Maine & Atlantic Railways, Inc. said the company will have eight more locomotives added to its complement of 29 by the end of the year to handle a 5 to 6 percent increase in traffic that the freight rail service, one of Maine’s largest, has handled over the last several months.
“There was a really hard stretch there the last couple of years. Now business is improving. We have put more assets out there and it’s going to be good,” Scalia said Saturday at the company’s mechanical facility on BNA Avenue.
The railroad expects to increase its freight schedule from three to six days weekly within the next several weeks and has nine new hires on the job or in training, said CEO Robert Grindrod, whose Hermon-based company employs about 175 workers.
“It is a very good sign,” Grindrod said of the locomotive purchases and reactivations. “It is increasing revenue after a long period of near revenue starvation. The downturn on this railroad started on 2006. In the second half the lumber market collapsed.”
The bad news continued until 2010. Facing annual losses of $4 million to $5 million, the company was forced to sell about 240 miles of railroad tracks it owned in northern Penobscot and Aroostook counties to the state for $20.1 million.
Montreal, Maine & Atlantic could no longer afford to maintain the tracks, which had fallen into poor condition. State leaders bought them because the loss of the line would have been disastrous for northern Maine manufacturers. Track repairs should finish this summer as part of a $10.5 million project overseen by the Maine Department of Transportation.
“The hard part of the last several years was dealing with the mills’ reduced traffic. Revenue wasn’t at expectations, which dropped morale with the employees,” Scalia said.
Oil, particle board, cars and windmill parts
The loss of the 240 miles of tracks forced the rail line to concentrate on building its customer base on another 500 miles of track it owns between Bangor, Brownville Junction, East Millinocket, Searsport and into Canada almost to Montreal, Grindrod said.
The traffic increase comes from several sources, Grindrod said. Auto manufacturers in and around Detroit have increased shipments to a regional distribution center in St. John, New Brunswick. Kia Motors also is shipping more vehicles from the West Coast to St. John, he said.
The best news for the rail freighter, Grindrod said, is how it is getting a lot of new business shipping petroleum products from new or expanded oil fields in North Dakota and Saskatchewan to Irving Oil. He is hopeful that this work will continue to increase.
“It is a lot of business and it produces a lot of revenue,” he said.
Manufacturers in Maine and Canada also seem to be doing better, Grindrod said, particularly Tafisa Canada, one of North America’s largest manufacturers of particle board used to make furniture and kitchen cabinets.
Occasional large shipments of windmill parts to Searsport also have helped, Grindrod said.
Pre-loved locomotives
“We made the right decision to sell the tracks. It reduced our losses by something in the range of $4 to $5 million, made the company more viable,” Grindrod said. “We’re not carrying debt or incurring operating losses every day. Essentially it proved to us that we were losing a substantial amount of money providing the service over those tracks.”
Scalia plans to come to work for parts of next week, when he is supposed to be vacationing, to ensure that the locomotive rebuilding project stays on schedule. Three of the locomotives will be additions to the company’s stock. They’re not new machines, but new enough: General Electric C 39-8s built in 1986 that the company bought and will have rebuilt with reconditioned engines, generators and other key components, Grindrod said.
The rest will be older models that the freight company took out of circulation when they broke down, Grindrod said.
Scalia also has to work on finding more workers. The company has rehired all of the people available now who were laid off from MM&A years ago. The rest still in the area work for other rail companies or have left the industry, he said.
The training of new workers can take up to three years to complete, and Scalia worries that the company’s workload might leave the company scrambling for experienced help.
Optimistic about the future
“Morale is great,” Scalia said of the work force, which is “getting some of their salary back, if not all of it, that they lost with cuts a few years ago. They see the light at the end of the tunnel with the increased traffic.”
The rail service has to find a way to pay for the repairs of about $500,000 worth of damage done to its track in Brownville, which was wrecked by a brutal line of thunderstorms that hit the area last month, but Grindrod said he is optimistic about his company’s future. He hopes to see a lot more business if the new torrefied wood facility being developed in Millinocket gets its permits and starts shipping product by rail to Searsport and from there to the United Kingdom next year. The permit process is under way.
“I hope that GNP gets their feet on the ground and they start doing better,” Grindrod said of Great Northern Paper Co. LLC, which owns the paper mill in East Millinocket and the inactive mill in Millinocket. “I’d like to see the second machine running again at East [Millinocket] and then we have had the best paper machine in Maine sitting idle in Millinocket since 2008.”
“It would be nice to see that get going again. Very nice.”
so let’s see there making a profit cause they dumped 20 million of taxes on the tax payer that’s called corp welfare nothin to brag about
What is a form of transportation that the state and/or federal government does NOT subsidize? NOTHING! 20 mil is peanuts in a transportation budget. I say good work to the railroad if it helps reduce the amount of truck traffic on Maine highways
Whats the incentive te maintain the rest of their tracks just stick state with em what ajoke
When MMA bought the B&A they only wanted the East West route through Maine. Thats why they let the North South route deteriorate. Then they dumped it on the tax payers. That was a genius evil plan that worked. Now that they don’t have the North South route to the county they are making money.
Correct Dana. That track is now owned by the DOT Rail folk’s, who lease the track’s capacity 80% to Irving. That the MM&A rail’s are now working,and clearly expanding with the addition of more engine’s and crew’s, is also a good thing, more so since MM&A here are claiming that they are carrying a huge amount of the Canadian oil traffic to the Maritime’s as well as an increasing load of regularly scheduled car’s and auto part’s. Regularly scheduled rail service that is increasing in load capacity and car requirement’s is a very good thing. It means both job’s and revenue. It also punches huge holes in the E-W Highway arguement also.
That it was a bad thing that the Northern rail’s were ‘let go’ is still under debate. Is it MM&A’s fault ? No, and we all know it. It was a bad economy and there just wasn’t enough traffic to support the line, and the line maintenance cost’s, so, to all the whiner’s and cry’rs, GET OVER IT and move on. Maine rail is coming back. Maybe not as fast we all would like but it’s coming back. And with MM&A’s statement that they need new rail folk’s, for the short and long-term future, should be something that we all should be thrilled about. Needing people for the long term is a very good sign of improving economics. Long-term hiring and training (Gee, didn’t the Governor just make a speech about this the other day ? ) is what Maine has needed for a very long time. And since, to remind everyone, the DECD has been working on the Bombardier Project, and ‘Bomby’ does make railcar’s, this might be a good time for the DECD folk’s to ‘remind’ Bombardier that Maine rail, and the clearly positive aspect’s of it, are both back and improving as far as labor force availability is concerned. The car’s got to be built in order for the freight to move. And that’s what Maine rail folk’s can, and are now looking forward, to doing.
Good dem logic down east Dave were already trillions in debt so what’s a few billion more
I am fully aware of the debt, Ace. But, we need to set our priorities straight. Investment in infrastructure (specifically rail here) generates job and helps business here in Maine. It offers payback unlike things like defense where we truly do waste trillions. Investing in things that are important while cutting expenses of things that are not is the key.
So you think the billions in defense contracts that go to Bath Ironworks ought to go away, shutting down one of the largest employers in Maine?
It’s hard to justify the expansion of our surface fleet, when our navy is larger than the next 13 largest navies in the world combined, and 11 of them are our allies. BIW does great work, it’s too bad they can’t retool for civilian work (hell they built a dredge in the 60’s). The offshore sector is booming, with no end in sight for newbuild drilling rigs, supply boats, and drill ships. Regardless of your political persuasion, you have to admit the Gov’t contracts BIW gets are pure Pork.
When we hit the fiscal cliff at the end of the year, and defense spending is slashed, BIW better have a plan to segue into civilian work.
The salvage value of the tracks is greater than the $20 million spent by the state to acquire them.
All transportation is subsidized, aceman. You drive on public roads, you fly into/out of public airports, and rail transport is subsidized as well. The private sector benefits from the public transportation system.
More corporate welfare.
Hardly. I guess you would rather see companies fail and people unemployed.
The east and west rail lines seem to be gaining in momentum and profit hopefully this will be noticed by lawmakers not vigues pocket and keep the toll highway on paper instead of in the maine woods.The govs stock in cianbro would go down
What on earth do all you folks have against Cianbro and Peter Vigue? I don’t get it.
The only explanation I can come up with is that there are a lot of posters that despise successful Maine companies, run by intelligent people, that provide lots of jobs.
It’s a non union company, thats why. And Vigue is a Republican, thats why.
Vigue seems to be the only one pushing for this highway to put his non union workers to work at a lower wage and feather the nests of republicans who have stock in the company along with the gov.He could get as much work on a railroad as a toll highway.Oh then he and his cronies wouldnt get revenues for the rest of their lifetime and beyond
Instead of politicians and union workers? At least he’d doing it with HIS OWN MONEY, not mine.
Where do you think the money is coming from to fund his feasability study.He surely isnt putting his money into it you are.He puts 300,000 in his pocket and says oh well thanks a lot.Studies never get paid back
If he is putting it in his own pocket, then how is the study being paid for? I suppose the consultant will do it gratis. Please tell us all about it, since you are “in the know.”
Irrationality knows no bounds.
Cianbro is doing the dirty work for the Canadian Trucking Industry. Their make believe status as a so called Maine Company is being used by the Canadian Billionaires to condemn and confiscate Mainers Homes, Farms and Land to build a Private Expressway for Canada through Maine.. Canada and the Canadian Billionaires cant pull this deceit off with out Cianbro as their bought and paid for Stooge..
Ah, conspiracy theory. You forgot the Rothschilds and the Freemasons. Who are the political bogeymen – Republicans or Democrats? Can’t be the Know Nothings, because you appear to Know Something.
Its the “open-minded” liberals attacking a good idea because a conservative thought of it first and doesn’t want to take tax dollars to do it.
Agree. I just encourage conservatives not to fall prey to the same fallacy of generalization.
Profit? When you don’t maintain your tracks and rolling equipment how can you say your making a profit? They cross their fingers every time a train rolls, that it won’t derail a few hundred feet down the track. They have also been selling off most of what track they have left. Soon they will have no track going anywhere. They will just play train in the rail yard. This is just another hollowed out American company headed towards Bankruptcy and scrap going to China.
GO Rail!
Let’s expand the Downeaster to Bangor! I’d rather ride the train to Boston than drive any day.