I’m assuming the debt load is 0 because it’s being had off a class 1. As to why they would want to get rid of it when it has blooming potential, don’t know about that one…
Currently handling an average of 15 carloads a day.
At twice a week, each “coal drag” would average 23 carloads.
The rest of the traffic would generate 8.2 carloads per day, 11.5 per day if its a five day-a-week railroad.
“Two trains a day” sounds high … and a bit expensive.
That’s 16,000 available horsepower for something between 11 and 34 carloads a day. The proposal suggests a substantially “over-powered” railroad. Is there a reason for that much available horsepower for these size trains?
Best regards, Michael Sol
I agree with Michael, sounds like a lot more power than required. Like your experience level for President and Board. It is more than I would expect.
I am constitutionally skeptical of growth projections. Shippers lie. Traffic is where my research efforts would go.
Mac
Retired or second hand/third hand SD40s…a few GP38s…Models were not listed…you buy or lease what you can get for the money you have, weather it “overpowers” your needs or not.
Before we purchased the MK1500Ds, you would find us flat yard switching with SD9s, SD40-2s, GP 30s, 38s, U30s…just about anything we could beg, borrow or lease…even had one of the last UP rebuilt SW10s for a few years…little rascal worked great, till the electrical cabinet caught on fire!
Ed
That’s about one management level employee per “worker” bee.
I created an Excel model that shows the following payscales:
- $70,000
- $60,000
- $5,000
- $50,000
- $50,000
- $50,000
- $40,000
- $30,000
Total payroll including FICA, FUTA and SUTA is $592,000. Assuming little or no deferred maintenance, that cost should run about $6,451 per mile, maybe less, or about $206,451. $21,000 to finance hyrail and other operating equipment, that leaves the locomotives to be financed over 10 years and that would have to be at $100,000 for each 2,000 hp unit, and about $500,000 for each 3,000 hp unit.
Have to do some real bargain hunting to get under $1.2 million in operating costs.
Best regards, Michael Sol
Interchange points are at a runaround and a small yard respectively. You are correct two crews. Probably 1-2 jobs daily depending upon coal flows.
Locomotives were projected at six for two reasons. One is there is a local currently that spends a great deal of its time shuttling woodchips and cardboard between a couple of plants. This would likely be one or both 4 axle units. As to the six axles there is the coal. The thought with the six axles is they are cheap now and good protect power and there is a significant possibility of pooling power with one of the Class 1s which would take 2 units off the property for a week at a time. This can create a very favorable horsepower hours situation and will help avoid downtime due to locomotive failures. The offlline move is longer than the online for these coal trains and as such these units should quickly pay for themselves. Also, not all the locomotives are needed immediately. You’d probably want 2 4axles and 2 6 axles to start and grow from there.
Owner is seeking to abandon part of this property to salvage rail. The short line makes sense only if you get the entire line. The purchase price represents a slight discout on the NLV.
LC
Exactly. Given what I know is available out there right now I’d be looking for B23-7s for the 4 axles (12cyl fuel misers) and perhaps SD40-2s for the 6 axles or possibly GEs, but I don’t care much for C30s. I have found them to not be terribly reliable.
LC
As I said, the financial structure is not set. Management might choose to take on some debt. Is there debt coming in the acquisition, no.
LC
Michael -
You can’t apply big road metrics to a short line of this size. Too few resources. See my comments below concerning locomotive reliability and the need to pool power to offline destinations. I’m not sure where the two trains daily is coming from. I’d see a local plus coal trains as needed. Coal trains now are typically once weekly and are 80 cars. Obviously, the trains will grow as the customers do. Given that this line is much closer to the coal than the loadouts that the two new customers are currently trucking to it seems likely they will use it. You’ll notice our projections are at the low end of the range given that customers tend to inflate numbers.
LC
Michael -
With respect to your pay scale and payroll calculations they are very high. This is Appalachia we are talking about so your payroll numbers are also high. One other point. I’d probably start with my GM and Mechanical guy being among my 7 employees for the first line. Also, senior management will likely have to make concessions initially in exchange for later gains. The Board Member and perhaps Sr. Mgt will receive part or all of their compernsation in stock. Again, the financial structure is open for the time being.
As far as the payroll goes, I make it to be a total of $448,950 including full Railroad Retirement (Tier 1 and Tier 2). An additional $81,000 would give all employees full medical coverage. Total $529,950. People love to work for an employer with great retirement and medical benefits even if the wages are a bit lower.
Concerning locomotives.
B23-7s. I can lease these units (due to industry connections) at $40/day/unit or $14,600/unit annually. Total $29,200.
SD40-2 or SD50. I can lease these units from a friendly source for $200/day or $146,000 for two annually. As mentioned above, I will likely be able to trade horsepower hours with the Class 1 involved as part of the deal meaning I will effectively be getting the equivalent of 5 locomotives for my investment of 2 to haul the coal. This multiple keeps rising the more coal I move until I max out the capability of the available locomotives.
MOW Equipment
Boomtruck, Backhoe and trailer should be a total of about $75,000 from the right suppliers in good shape. Hirail inspection truck will be another $30,000 assuming good used vehicle with hirail mounted and FRA certified. I’d buy these with cash from the invested capital unless I was offered excellent lease terms.
So far, I’m only at $705,150 and I’ve covered many of my largest costs. I think $1.2M is not only doable, but I might have a few bucks left over, depending upon fuel costs, but a
Mike…
Yes, two trains a day.
If you are switching out local plants, in this case, a woodchip and a cardboard plant, you have two choices…send the crew with a locomotive out from the “home” terminal to the plants, or park the locomotive out near one or the other and cab the crew back and forth…handled by one of the management folks.
At some point, you will have to bring some of those cars into and out of your yard for interchange…cardboard plants need more than just wood chips.
So who pulls and spots your interchange with the class 1s assuming you generate enough cars for a daily or every other day interchange?
Even if you don’t, you still have to serve the woodchip/cardboard guys, along with any other customers, and if you throw in a coal drag, you could have the interchange crew drag out the outbound to the interchange, leave them, pick up the coal at the interchange point, take the load to the plant, and pull the empty, return to the interchange point, leave the outbound empty coal, pick up any inbound freight and head back in to the yard…someone has to switch out the inbounds…more work than one crew could do in a 8 or a 12 hour shift.
Either way, you are going to need two crews/train a day to keep everyone happy.
Assume you can use the Class 1 power that arrives on the coal train to go spot the plant, and pull the empties, perform an initial terminal air test, hang the Fred, take the whole deal to the interchange point, write the air test slip, and leave the intact train for NS or CSX to pick up at their leisure, get on your power and return with any cars they left for you.
We do somewhat the same thing with grain trains, saves swapping power, doing more than one air test, keeps thing flowing.
Another concept would be the crew that does the coal move, on the days there is no coal, works the yard, switching and lining up spots for the local, blocking out the NS and CSX cars, while the local does their thi
Hydraulic or Air tools / I-R Compressor or Hydraulic Power Unit? (Off the truck please) - Oh man have I seen the falacy of just two men, a truck and a backhoe…The small tool availability issue gets scary, especially with those who don’t take care of the equipment.
Surfacing Gang every 30 Mos? (rent/subcontract?) Availability of TSR or TKO machine? How fast does it fall apart?
Qualified Welder or are we parts changers & cannibals? (Kills your supply materials budget)
Speed? (You guys with the mirriors always wanna go faster)…Track class 1 0r 2?
Well, that’s close enough to my $592,000 estimate that regional variations in pay certainly makes $529,950 reasonable enough. Still seems like a lot of managers.
My estimate was $313,230.51 annual lease charges for all of your estimated motive power, yours for four SD-40s and 2, 2000 hp units is $321,200. Pretty close.
Well, I estimated $150,000 for the lot, a $21,356 annual cost if financed or part of a financing package.
Fuel is a little tough to estimate because of the off-property use, but I would bet annual costs at between $110,00 and $156,000. Not sure if the estimated revenue includes or excludes a surcharge. I estimated $126,366 in annual fuel costs using a $1.76 per gallon figure.
I just got done with a business plan estimate that has generalized operating expenses at about $94,000; insurance, garbage, utilities, permits, licenses, the usual etc et
About half is Class 2 the rest is class 1 currently. We have gone the compressor route in the past. I haven’t had problems getting that gear resonably. I prefer 3 men. I usually cross train as trainmen as soon as I can. I also expect everyone to pitch in on the track to a degree (I know many of my fellow T&E folks hate it, but, cry me a river). I am a stickler on equipment. Those who don’t take care of company material and equipment, don’t last.
Surfacing gang, what’s that?! Seriously, that will depend. We will be putting in a good number of ties out of the gate and repairing a couple of small washouts on the OOS portion. Remember that initially we should have the better part of a year to reopen about half of the line and that is where we will focus. That will mean contractors and machines on the property and a good chance to get off to a great start.
We have had good luck hiring welders locally in the past. If that is not possible we have people we can send.
LC
Michael -
Yeah, your numbers aren’t too terribly out there, but I think we can still make it go. We could come in at $1.2M perhaps a little higher or lower. Again, the management team is talented enough to make it go and won’t shy from hard work. Gotta be a GOOD deal to get me out from behind my control stand. This thing could have real legs and not be a highly leveraged house of cards like some short line groups…
LC
Wouldn’t it be fun though …
Best regards, Michael Sol
I would push for at least class 2 track. Not only to go alittle faster but for the increased safety and reduced chances of pesky derailments and such. I’m a believer in keeping the physical plant in the best shape that is economically practical. I know my father in law is a qualifed welder with 30yrs experiance who’s looking for a new job but dunno if he’d want that kind of relocation . (alot of welders in my wife’s side of the family actually)
And I should say this thread gets my excitement up just talking about it.
This almost makes me wish SD59’s had been produced at all. 3000hp from a 12cyl gas meiser sounds like an awesome idea. But they didn’t go over. There are what? 10 GP59’s all in posession of Norfolk Southern?
This is an interesting thread.
I would have just one or two suggestions.
Contract out the MofW unless you can keep a “full M of W crew” busy at least 4 days a week. You can have your train crews assist, but I would not wi***o depend on them to handle most of these jobs. If you are going to need to use two train crews, I doubt that they will have much time to work on the track.
The engine and train crews will also be needed to assist your Round House Forman in the maintainence of your motors. Your RHF will also need to be versed in diesel electronics and electrical applications. Like how to locate and fix ground faults, etc.
The Bridge work requires a certified bridge engineer. I would think that you would have to hire this out to a contractor which specializes in bridges.
With careful planning, you can operate a unit train fo 10 cars. This should be considered if you can get trackage rights to the off-line destination of the coal (is it the mine or the plant that is off line?) or get an agreement with the union folk for a wage cost that you can afford and have your Class 1 provide your coal crew. You may be able to operate such a train 3 days per week (36 crew hours).
Your local crews could go on duty at “HQ”, get their cars from the Class 1’s, and head out for the paper mills and do thier shucking and jiving for 12 hours. Then, the second crew goes on duty at “HQ” and auto’s out to the local, the crews exchange vehicles, the early crew drives home, the late crew finishes up the work and motors home to “HQ”. If you can actually keep each crew to 8 hours, then the auto would be kept out at a tie-up point to auto back to “HQ” to make the crew change.
Lastly, double your cost of operations figure. You won’t exceed that, but you will certainly exceed the numbers talked about above. You have taxes, insurances, bonds yada-yada that will cost you big bucks and you won’t even think about before hand. Until you can ge
This is great! [:D] Just what we need all these people who have been there to bring this knowledge together. These are some great things going on in this thread, I’m glad to be a part of it.