SAN ANTONIO — Union Pacific Railroad officials said Tuesday they aren’t prepared to allow a competitor to use their tracks in San Antonio to service a proposed Toyota truck factory, the San Antonio Express-News reported.
The stance hurls a potential stumbling block in the way of the massive local effort to woo the Japanese automaker.
“We built it. Why should we let ’em (use it)?” UP regional spokesman Mark Davis said, referring to the company’s rail network that serves San Antonio and Laredo and runs by the prospective site for the $750 million plant.
County officials, who today will consider the creation of a rail-financing district that would have the power to build rail lines and acquire existing ones, said the situation with UP has emerged as a major concern.
The existence of a second rail carrier is considered to be a priority of Toyota in order to keep its shipping costs down.
“Whether it’s a deal breaker or not, I don’t know,” County Judge Nelson Wolff said.
The crux of the issue involves a tracking rights agreement that federal regulators forged in 1996.
As a condition of Union Pacific’s acquisition of Southern Pacific Railroad in that year, the U.S. Surface Transportation Board required UP to execute an agreement to preserve competition in the areas previously served by Southern Pacific. It allows shippers the option of obtaining rail transport from carriers other than Union Pacific.
For instance, although Burlington Northern owns no railroad tracks in Bexar County, it serves customers in San Antonio, Elmendorf and Eagle Pass on tracks owned and maintained by Union Pacific through the agreement, Burlington Northern spokesman Joe Faust said.
But Davis said by phone from his Omaha, Neb., office that things have changed since 1996. As a result of the North American Free Trade Agreement, Union Pacific has invested millions of dollars to maintain the tracks, which already carry 17 trains a day.
“That’s about the maximum those tracks can hold,” Davis said. In addition, he said there is a question of whether a new Toyota plant would fall under the parameters of the current accord.
“Some tracking rights agreements are written so that any new business is not fair game,” he said.
Wolff said he participated in a meeting Tuesday presided over by Jeff Moseley, executive director of the Texas Department of Economic Development, to look into the issue of rail service in the area under consideration for the plant.
Speculation on the location for the plant has centered on an area southeast of Interstate 35 South and Loop 410. Wolff declined to say who else was at the meeting, but a Union Pacific spokesman confirmed that company officials also were in Austin, meeting with Moseley to articulate the railroad’s position regarding service to a prospective new industrial customer.
In scouting out prospective plant locations, Toyota officials have confirmed that service from at least two competing rail lines is a must, along with sufficient water supplies, cheap electricity and a quality work force.
“It’s been an issue all the way through this, but this is the last remaining major issue,” Wolff said, referring to the lack of competing rail lines.
By creating the rural rail transportation district today, Wolff said the county would be putting into place a mechanism for developing the additional rail service.
“One option is to negotiate a new agreement between Union Pacific and Burlington Northern, and the other option is to build a track from the Burlington Northern line,” Wolff said.
Even if the two railroads work out a new agreement, Wolff said a new switch and railroad spur likely would have to be installed to serve the plant, and the rail district would serve as the financing vehicle.
Legislation allowing creation of the districts was passed in 1981 in an effort to allow local communities the chance to preserve existing tracks and rail lines being abandoned by the major carriers.
Since the news broke two months ago that Toyota was considering San Antonio as the site for a new U.S. assembly plant, the Japanese automaker has confirmed only that it is looking into building a sixth plant in North America.
A Toyota spokesman said Monday he believes the decision is several months off, but the contest is believed to be between a proposed site on San Antonio’s southwest side and a 2,000-acre site in Marion, Ark., west of Memphis, Tenn., according to elected officials and economic development boosters in Arkansas and Texas.
Toyota Motor Corp. is expected to build the new plant to produce pickups and sport utility vehicles, perhaps as soon as 2005. Texas economic development officials have estimated the plant could have a total annual payroll of $265 million and generate 16,000 new jobs at the factory and at local suppliers and support businesses.