(The following story by Joe Boomgaard appeared on the Daily News website on August 9.)
LUDINGTON, Mich. — Short line railroads have an image problem. They’re seen as slow forms of mass transportation that went out of style decades ago. Some people think of railroads as public utilities with miles of red tape and bureaucracy.
But Marquette Rail CEO Kevin Ruble said that stereotypical image is one the industry — and in particular, his company — doesn’t deserve. The Ludington-based rail company, the only majority employee-owned railroad in the world, is not a relic of a bygone era, but a key to future regional development, he said.
The short line rail company serves customers from Manistee and Ludington to Baldwin and south along the M-37 corridor to Comstock Park, eventually connecting to the CSX and Norfolk Southern hubs in Grand Rapids.
Since taking over from CSX in November 2005, the company has expanded its customer base while working on relations with its big three customers: Dow Chemical in Ludington and Packaging Corporation of America and Martin Marietta in Manistee. And while their top five customers make up 90 percent of Marquette Rail’s business, Mike Hnatiuk, Marquette Rail’s business development analyst, said the company will work with customers to haul freight as often as needed — as infrequently as once per year for some agriculture-based companies on the southern part of the line.
“Little customers make as much a difference as large customers,” Hnatiuk said. “We’re a small business, too.”
The company is also crucial for the larger businesses it serves.
“Marquette Rail is critical to Dow’s success here in Ludington,” said Bill Berrett, general manager of Dow’s Calcium Chloride business in Ludington. “Rail is very important to us as a mode (of transportation). Approximately one-third of our customer shipments occur via rail. Marquette Rail, as a shortline, connects us to various long-haul carriers, in particular, CSX.”
Ruble said he hired Hnatiuk to help the company explore ways to expand its business with local companies that might not traditionally think to use rail.
“There are a couple of ways to expand in this business,” Ruble said. “(A company can be) along the tracks or they can buy property or a spur. We’ve done that with companies in Walker and Comstock Park. But other ways to develop business is with a company that is offline.”
So-called transloading — bringing freight to a location by rail and then transferring it to truck to be taken to its final destination — opens many companies to rail service, Ruble said.
“One of our biggest challenges is educating the customers that you don’t have to be next to the rail line to get service,” Hnatiuk said. “And people have not had recent experiences with railroads. We’re hauling more freight now than in the history of the railroads. We expect to haul more as the cost of crude goes up.”
“It’s a good time to be in the biz,” Ruble said.
Future expansion
The company sees good potential for growth along the U.S. 10 corridor, where numerous undeveloped and developed properties abut the rail line.
“There’s good growth opportunity for us in our area,” Hnatiuk said. “Between Ludington and Grand Rapids, there is lots of land for sale. There’s so much land for development.”
The Mason County Board of Commissioners also recognized the importance of local rail service in its 2006 update of the county’s Comprehensive Plan.
According to the plan, “Future Land Use shows a major concentration of new business and industrial development south of U.S. 10/U.S. 31 between Ludington and Scottville. This policy is largely premised on the continued availability of excellent road and rail service, as well as public sewer and water. Quality rail service was provided to Mason County long before the current quality road service. Important employers such as Dow Chemical rely on rail service for both in- and out-bound shipments. Retention of long-term rail service to this corridor (and beyond into Lake County and then south to Grand Rapids) should remain an economic development and transportation priority in Mason County. Rail service from Walhalla to Manistee also presents opportunities for new economic development in Fountain and Free Soil and should also be retained.”
The plan and the accompanying U.S. 10/U.S. 31 Access Management plan seek to direct commercial and industrial growth along the south side of the roadway because of the proximity to the rail line.
Business culture
Ruble — a Dallas resident who holds claim to the title of “Ludington CEO with the longest drive in to work” — wants to ensure the company keeps progressing. As part of the cultural design for the employee-owned Marquette Rail, Ruble keeps his workers informed about the company’s status in monthly meetings called “huddles.” Ruble shares the financial information with employees, but first teaches them how the accounting works and what all the numbers mean.
“The way we function, we’re a highly participatory company,” said Ruble. “If they have a better understanding of the business, we’ll have 30 businesspeople out there. It breaks down barriers when you can see the whole picture, and it’s paid off in customer satisfaction. After the start-up pains, our operation has been pretty well flawless.”
Ruble said he also encourages his employees to be versed in all aspects of the business from mechanics to conducting.
“I wouldn’t want them to do any part of the job I wouldn’t do,” he said.
And because the employees have such an immersion in the business, Ruble said they’re able to think of efficiencies or better ways of doing things.
Dow’s Berrett said he’s been pleased with his company’s dealings with Marquette Rail thus far.
“Our interaction with Marquette Rail has been excellent,” Berrett said. “They have a bias for continually improving service quality, open communications with customers such as Dow and finding new innovations. We are very pleased with where they’ve gotten to since coming to Ludington.”
Marquette Rail has also started to rehabilitate and improve the railway between Walhalla and Manistee. That section of track, currently classified for 25 mph, will be upgraded in September to a 40-mph rating, like the track Marquette Rail leases from Ludington to Baldwin and south to Grand Rapids. Although the company can operate at 40 mph, it has a self-mandated cap of 30 mph for safety and fuel conservation purposes.
“We’re very fortunate to be in the area we’re in,” Ruble said. “West Michigan is a conservative area that has a solid, pro-business environment. People are growing business because they’re in west Michigan. We want to grow the business organically by adding more customers and expanding the area we serve.”
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Marquette Rail by the numbers
Duration: 1 year and 9 months (founded Nov. 12, 2005)
Employees: 30
Customers served: 28
Locomotives: 7 diesel-electrics
Operations: Six days per week, seven when needed
Crews: Four, based in Manistee, Ludington and Baldwin
Track speed, Ludington to Grand Rapids: Rated for 40 mph; travel at 30 for safety and fuel conservation
Miles of track: 126 leased from Manistee to Walhalla and from Ludington to Comstock Park, plus 7 miles the company operates near Grand Rapids