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Railroad Contractors in Midst of Full-Throttle Revival

Railroads are rumbling through some impressive growth years and spending billions of dollars to keep trains on the tracks.

Mon March 03, 2014 - National Edition
Giles Lambertson

Railroad contractors in midst of full-throttle revival

Railroads are rumbling through some impressive growth years and spending billions of dollars to keep trains on the tracks. It’s good news for some construction contractors.

The old choo-choo has been written off as a symbol of yesteryear when, in fact, the industry is enjoying a booming revival. Railroad companies invested billions of dollars in new technologies to become less threatening environmentally and more efficient and quick. Consequently, their locomotives today can move a ton of goods 500 miles on one gallon of diesel fuel.

That reduced cost has attracted new customers who previously relied on trucks to move their goods. Railroad revenues are climbing as a result and are expected to rise 20 percent more in the next two decades. What this means for construction contractors is new business opportunity.

Last year alone, railroad companies spent more than $22 billion to build, upgrade and maintain track and bridges. Since they own the lines, railroads spend their own money to keep them runnable. This is refreshing in an era of public debt, and compares to $90 billion in tax dollars spent each year on highways, with perhaps twice that much actually needed to head off deterioration.

So the hundreds of contractors who build and repair railroad systems or supply signals and such find themselves in a growth industry. It wasn’t supposed to be this way. Lumbering old diesels were supposed to be dinosaurs heading for a common grave. But savvy investors like Warren Buffet knew better and plowed billions into railroads and rolling stock manufacturers.

Then fracking happened. Customers suddenly needed urgent transfer of massive amounts of sand and materials to oil and gas fields. Then the Keystone pipeline ran into a political thicket; railroads jumped in to fill their tankers with Canadian oil. Mandated safety and efficiency regulations forced railway executives to re-engineer their systems—and reaped new fuel savings and customers.

Now it’s let the good times roll…including for railroad right-of-way contractors.

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