Milo area businesses feel pain as bankrupt railroad struggles to survive

Businesses along Milo's Main Street are quieter after Montreal, Maine and Atlantic Railroad idled its operation in the wake of the Lac-Megantic explosion.
Kevin Bennett | BDN
Businesses along Milo's Main Street are quieter after Montreal, Maine and Atlantic Railroad idled its operation in the wake of the Lac-Megantic explosion. Buy Photo
By Nick Sambides Jr., BDN Staff
Posted Sept. 18, 2013, at 3:49 p.m.

MILO, Maine — Fewer people come into the auto parts store where Brandon Mckenzie works. Wendy Coburn has laid off three people at her restaurant. Mike Washburn’s repair shop no longer has customers coming from as far away as Jackman.

Owners and workers at some of the most established businesses in Milo and Brownville see the same thing coming from the recent layoffs and looming bankruptcy of Montreal, Maine and Atlantic Railway:

Big trouble.

“I think [the layoffs] have affected everything in the area,” said Washburn, co-owner of Joe’s Repair Shop in Brownville. “We’re not getting very much work from the railroad.”

“I can see that there will be some businesses closing here,” said Coburn, who has owned a restaurant in Milo since 2010.

The local economy had been buoyed by the recent uptick in business caused by the Hermon-based freight hauler’s increased crude oil traffic. Then a runaway MMA train exploded in Lac-Megantic on July 6, killing 47 people in the Quebec town.

Within two weeks of the disaster, MMA laid off 60 workers, many from the company’s repair yard in the Derby section of Milo, and began the ongoing bankruptcy proceedings.

The owner of Coburn’s Family Restaurant of Milo, Coburn said she fears that the bankruptcy and layoffs will force Milo town leaders to increase property taxes to offset the loss of revenue from MMA.

Uncertain future

The MMA layoffs cost Coburn as many as 20 customers a weekday from her restaurant, which had employed about a dozen workers.

“I am not saying that my business will close but if they keep increasing costs to make up for it, I don’t know what the future will hold for anybody,” Coburn said.

Montreal, Maine and Atlantic was Milo’s top taxpayer in 2010, the last time town workers compiled a ranking for the small Piscataquis County town. It will pay $57,319 in property taxes this year for the rail yard and another $625 on a 4.2 acre property, Town Clerk Betty Gormley said.

Derby is about five miles from Brownville in southern Piscataquis County and a key location for MMA. The rail yard there serviced the 29 locomotives MMA operates from its headquarters in Hermon, plus others from other railways, company officials have said.

MMA officials declined to say how many workers were employed at the Derby rail yard but residents estimated that about a dozen mechanics or other specialists worked there until the layoffs. Still others would visit as part of their work, they said. Three or four MMA workers remain, residents said.

The railway and its predecessors have always been among the staples of the Milo-Brownville economy, residents said. Coburn, 47, said yard workers did a lot of work for local businesses unconnected to the railroad. Her father, the late John Lyford, used to get parts made at the Derby yard for his logging truck company.

“It has been a huge part of the town and its history,” Coburn said. “It’s something that has been here for years and years and it is something you thought you could always count on.”

Whether for professional or personal use, MMA workers were good customers. Anything that could be ordered or pulled off a shelf at S & L Auto Parts Inc. was fair game to them, said the 29-year-old Mckenzie, a clerk at the Milo store.

But sales have declined since the layoffs, though railroad workers still come into the store, Mckenzie said.

“It is more that the families that work for the railroad are struggling right now,” Mckenzie said. “Some guys are just waiting for the phone call to bring them back … They are just not purchasing as much as they used to.”

Railway workers came to Joe’s Repair Shop to get repaired or replaced most every form of small engine the railway used, from generators to chain saws, Washburn said.

That has stopped since the layoffs, said Washburn, although his business, which endured disastrous flooding in 2012, still gets a lively trade in ATVs, lawn mowers and chain saws.

Towns built around railways

MMA and its predecessors have almost always been a big player in the region’s economy. A history compiled by the Milo Historical Society states that the Bangor and Piscataquis Railroad ran tracks through town in the 1860s, about 40 years after Milo was incorporated, but it wasn’t until the early 1900s that the Derby yard opened.

With it came a block of 47 houses — or 72, depending on which history you read — the railroad built for railway workers that constitutes the bulk of housing in Derby. Its 86 businesses included a large paper mill long since closed.

The downward industrial spiral that has affected so much of Maine’s manufacturers didn’t spare the railroad. According to U.S. census data, Milo’s 20th century population peaked at 2,912 residents in 1930. It had jumped from 1,150 residents in 1900, at least partly due to the railways’ investment in Derby.

It was 2,600 in 1990, about the time that the state’s paper and forest products industries began a series of economic contractions that contributed heavily to MMA’s predecessor, Bangor and Aroostook Railroad, filing for bankruptcy at the turn of the new century. MMA’s parent company bought the railroad for $50 million in 2002. As of the 2010 census, the town’s population is 1,847.

Alicia Harmon, Milo’s deputy town clerk, said her grandfather worked for the railroad. Twenty-eight-year-old Casey McKusick of Milo said many of her family and friends worked or work for the railroad, but most of them have been there for 20 years. Her father in law is a retired railroad worker.

Coburn’s restaurant business partner, 77-year-old Ronald Knowles, worked for Bangor and Aroostook for decades as a conductor and engineer. Like many people in the area, he views the railway’s decline and the accident with a mixture of resignation and anger.

He said the Federal Railroad Administration and Transport Canada, the agencies that govern railroad safety, are largely responsible for the Lac-Megantic disaster.

“I worked in Lac-Megantic. I went over that railroad crossing many, many times,” Knowles said. “I can tell you this, my friend. There is a lot of blame going around everywhere but if somebody really really wanted to point blame at who had a big part, they need to look at FRA and Transport Canada because those two entities allowed these train crew numbers to diminish.”

Knowles remembers when the Derby yard ran two shifts of mechanics and Canadian Pacific Railway employed 300 workers at its Brownville Junction main terminal, he said.

“Today there is not even a main terminal there,” Knowles said.

‘Little town going nowhere’

The number of railroad workers in Milo, Brownville or Brownville Junction affected by the layoffs is difficult to ascertain. Brownville Town Clerk Kathy White said town officials don’t have an exact count of the number of workers who live in town.

“I don’t know off the top of my head that a lot live in this area any more,” White said. “There are people who come [to work for the railway] from all over — Williamsburg, Sebec, Bangor.”

White knows of one railway worker still in Milo — her husband Bruce. An electrician who joined MMA last November, Bruce White once made footwear at Dexter Shoe and was retrained, Kathy White said.

White said she and her husband hope the railroad will survive bankruptcy the way many such businesses do, with a new name and management, but she said they knew when he began working there that the railroad’s future was “iffy.”

The oil traffic MMA handled was the best sign workers saw that the railway’s long tumble back toward bankruptcy — signaled by its sale of about 240 miles of northern Maine track to the state — had started to reverse itself, White said.

“Everybody was excited about that,” White said. “They [the railway] were hiring people and they were talking about hiring more.”

White said she and her husband are well-prepared for MMA’s layoff. Their home is paid for. They have cut discretionary spending to the bone. But if the railroad doesn’t rebound, they won’t be surprised, she said.

“It has been iffy for quite a few years,” White said, “but it was close to home and it was a good job. It was worth a shot.”

Knowles is less optimistic.

Milo, he fears, “is a little town going nowhere.”

http://bangordailynews.com/2013/09/18/news/piscataquis/milo-area-businesses-feel-pain-as-bankrupt-railroad-struggles-to-survive/ printed on August 22, 2014