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Railroad sale concerns Sen. Cullen

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FRANK J. SCHULTZ
January 10, 2012
— A local state senator is asking state and federal authorities to review the recent purchase of Wisconsin & Southern Railroad, but a railroad official said the senator should not be concerned.

Sen. Tim Cullen, D-Janesville, said in a news release Thursday that the acquisition of Wisconsin & Southern Railroad by Kansas-based Watco Transportation Services is bad for Wisconsin.


Cullen sent letters to the federal Surface Transportation Board and to Gov. Scott Walker asking for a review of the sale.


Wisconsin & Southern operates on state-owned tracks that the state has spent millions of dollars to repair and maintain, Cullen said.


"This proposed sale should be reviewed before we risk taxpayer investment in new operators and new ownership," Cullen said in a news release.


Cullen is concerned that the sale could lead to higher shipping costs and reduced service for Wisconsin businesses.


Seneca Foods of Janesville raised those concerns, an aide to Cullen said.


"The state has not been privy to the financial details of this sale," the senator said. "Wisconsin taxpayers paid for the freight rail infrastructure, such as acquiring the Five Points terminal in Janesville. As a railroad that has been dependent on the use of a state asset, Wisconsin & Southern should welcome greater public scrutiny of this transaction. I'm calling upon the federal government to delay approval of this acquisition to give the Walker Administration more time to ensure taxpayer interests are protected."


Asked for comment, Walker press secretary Cullen Werwie responded in an email Thursday: "No comment."


Ken Lucht, manager of community development for Wisconsin & Southern, said Cullen's statements surprised him, especially because the purchase has already been completed.


Lucht said meetings are set in the weeks ahead with other legislators—none from the Rock/Walworth county area—about the sale and plans, and he'd be glad to meet with Cullen, too.


Lucht said Watco now owns a majority interest in Wisconsin & Southern, and that will mean an infusion of capital to improve track and other facilities in Wisconsin, enabling the company to serve more customers, improve service to Wisconsin shippers and increase safety.


The investment should boost the state's economy, Lucht said.


Shipping costs will not increase, Lucht said. Truck and rail shipping costs are close, so the railroad would stand to lose business if it raised rates, he said.


"Watco and WSOR share long-term growth plans to expand in Wisconsin," Lucht said.


Watco officials have been meeting with numerous local and state officials for two months, Lucht said, and would continue to do so.


Lucht said he believes he could allay any concerns in a meeting with Cullen.


Watco has assured officials that WSOR will remain a strong competitor in the state's transportation industry, that WSOR's president and structure will remain in place and that Watco will make investments in Wisconsin for years to come, Lucht said.


Local rail provider eyes expansion in 2012

Wisconsin & Southern Railroad plans major investments to upgrade tracks and build an intermodal shipping facility in Wisconsin in 2012, a spokesman said.


The railroad also is negotiating with 12 Wisconsin companies that are either expanding their use of the railroad or will relocate next to rail lines, said Ken Lucht, manager of community development for Wisconsin & Southern.


"A couple" of those companies are in "the Rock County area," Lucht said, but he was not at liberty to say which companies are involved or where they might be located.


Wisconsin & Southern also is expanding its workforce. It hired 25 new people last year and expects to hire another 12 in the coming month, Lucht said.


Intermodal shipping facilities involve both rail and trucking, with semitrailers being carried on rail cars and then driven to their final destinations.


Lucht said he did not know where the intermodal facility would be located.


The investment is coming from Kansas-based Watco Transportation Services, which owns rail lines in many states. Watco recently bought a controlling interest in Wisconsin & Southern, Lucht said.


"We're expecting, with Watco's help and support, to infuse more capital, build additional facilities (in Wisconsin)," Lucht said.


Wisconsin & Southern serves more than 200 businesses in 21 Wisconsin counties, Lucht said. Plans are in the works to add more customers that are building rail spurs and/or relocating to be near the tracks.


"Major capital funds" will be invested this year and in years to come, Lucht said.


With more customers shipping more goods, the railroad is likely to increase the frequency of service on some lines, including between Elkhorn and Bardwell Junction and between Janesville and Monroe, Lucht said.


Service also is expected to increase in frequency between Madison and Prairie du Chien and to Chicago.


Businesses now served three days a week could see trains five days a week, Lucht said.


The 12 new or expanding rail customers are expected to increase shipments by 5,000 carloads a year, Lucht said.


Those new or expanding business plans represent $50 million in annual sales and more than 300 new jobs in the next 18 months with $13 million in annual wages, he said.


Wisconsin & Southern will need to invest in equipment and maintenance and improve its service plans, Lucht said.


Watco, based in Pittsburg, Kan., operates more than 3,700 miles of track in 26 states, according to its website.


Wisconsin & Southern operates on 600 miles of track throughout south-central Wisconsin and northeastern Illinois. Watco's acquisition will help Wisconsin & Southern reach new markets and establish cost-effective routings, according to a statement released when the sale was announced in November.



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