(The following article by Christopher Dinsmore was posted on the Virginian-Pilot website on December 3.)
NORFOLK, Va. — Norfolk Southern announced plans Thursday to spend $938 million on capital improvements in 2005.
“Our planned 2005 capital spending budget will help the company improve service levels and handle business growth by increasing capacity, improving efficiency and ensuring safety of operations,” said David R. Goode, chairman and chief executive officer for the Norfolk-based railroad.
Norfolk Southern operates 21,500 miles of railroad in 22 states, Washington, D.C., and Ontario, Canada. About 850 of its 28,000 employees are in Hampton Roads at its headquarters and rail terminals.
The company’s planned spending includes $671 million for rail-line projects and $225 million for equipment. This includes:
$438 million for rail, crosstie , ballast and bridge programs.
$23 million for communications, signal and electrical projects.
$22 million for maintenance of way equipment.
$14 million for environmental projects and public improvements such as grade crossing separations and crossing signal upgrades.
$154 million to purchase 52 six-axle locomotives, upgrade existing locomotives, rebuild 300 multilevel automobile cars and purchase 317 leased bilevel automobile cars.
$44 million on computers and information technology projects to improve operations.
Although much of the spending is focused on maintaining its rail network, about $107 million is being spent on business development such as increased track capacity, access to coal receivers and vehicle manufacturers, and investments in intermodal terminals and equipment.
An additional $42 million is set aside for unforeseen capital needs, said Susan Terpay, a railroad spokeswoman.
Norfolk Southern will have spent more than $1 billion on capital improvements in 2004 by the end of the year, said James A. Hixon, Norfolk Southern’s executive vice president-finance and public affairs, in a November presentation at the Smith Barney Citigroup Transportation Conference.
That’s much more than the $810 million in planned spending announced for 2004 last year.
The difference is due to the railroad accelerating a $160 million purchase of locomotives from 2005 to the final quarter of 2004, Hixon said.
“As the economy improves, capital expenditures may be modestly higher than the last few years, depending on our requirements for new locomotives and equipment,” he said.
Norfolk Southern stock closed Thursday at $35.38, down 12 cents.