(The following story by Jeffrey Pieters appeared on the Post-Bulletin website on September 1.)
ROCHESTER, Minn. — Twenty-one years ago yesterday — Sept. 5, 1986 — the first Dakota, Minnesota & Eastern Railroad left the station. The departure time was 1 a.m.
“The Class 1” — the Chicago and North Western Railway, the former owner of what became the DM&E line — “had to have it off their hands,” DM&E President and CEO Kevin Schieffer said of the inauspicious start. “They couldn’t wait to get rid of it.”
On Wednesday, the trip was more or less over. A corporate news release from Calgary, Alberta, announced the sale of the DM&E to Canadian Pacific, one of North America’s half-dozen largest railroads.
Quite a trip for a company that began as refuse. DM&E formed from the ashes of the C&NW’s bankruptcy. Parts of the line, Schieffer said, had been ignored so long they were the very image of the expression “run into the ground.”
On Wednesday, DM&E was sold for the equivalent of about $2.7 billion. That’s $1.48 billion in cash, another $1.05 billion in possible incentives to come, and the CP’s assumption of about $250 million in DM&E debt.
As Wednesday was DM&E’s 21st birthday, the drink of choice would be champagne.
“We’re very proud of what the employees have been able to accomplish with something that was viewed as scrap metal a few years ago,” Schieffer said. “A lot of people are happy.”
“It was the employees who made it happen,” he said. “It was the customers who made it happen.”
When DM&E put itself on the selling block, there was significant interest. Although Schieffer declined to quantify that interest, he said earlier media reports of “20-plus strongly interested was not an exaggeration.”
The railroad selected Canadian Pacific because of assurances that it would treat employees, customers and towns along the line as DM&E would.
“This is really about the stakeholders in this thing,” Schieffer said. “Canadian Pacific is in the winner’s circle because, I think, they’re the best on all fronts.”
Interestingly, a Canadian Pacific official was quoted in an April 2000 Associated Press report, published in the Post-Bulletin, as saying the DM&E’s project to extend its line into the Wyoming coal fields would never happen.
DM&E’s happy day is tempered by the company’s losses in the August floods. Miles of rail lines and many rail beds in southeastern Minnesota were swept away by flood water Aug. 18-19. Schieffer declined to state a loss estimate, but when it was suggested that it was in the millions, he said, “most definitely.”
Full recovery is due before winter, he said.
“The guys are doing an outstanding job,” he said. “I don’t think I’ve ever seen flood damage quite as extensive and widespread as that.”
In addition, Canadian Pacific engineers identified some $300 million in track improvements that must be done to bring the current line up to standard.