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Monday, August 10, 2009

Illinois locals line up for rail bonanza

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Jim Coston is betting that the billions of federal dollars aimed at a high-speed rail system could reassert Chicago's place as the nation's rail center — and jump-start his attempt to resurrect a business that flourished here a century ago: building passenger rail cars Crain’s Chicago Business reports.


Coston, a Chicago lawyer and railroad veteran, is just one of the entrepreneurs and business owners lining up to share in what could be a huge boon to the region, in terms of jobs and transit improvements, once President Barack Obama unleashes $8 billion in high-speed rail funds.


"This is the real deal," says Joe Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University. "The Midwest has become the odds-on favorite to bring home big dollars."


The competition could be fierce. Already there are about 300 applications from around the country with a collective price tag of more than $100 billion chasing the feds' $8 billion. But insiders say Illinois could snare as much as $2 billion, leading to thousands of jobs in manufacturing, construction and railroads.


Much of the high-speed rail money likely will be spent on laying track, says Joseph DiJohn, director of the metropolitan transportation support initiative at the University of Illinois at Chicago. "The first step toward high-speed rail is to separate passenger traffic from freight."


The Chicago-St. Louis corridor, for instance — at the top of the Midwest's high-speed rail plans — would require a second line of track from Joliet to St. Louis that would be laid by railroad employees. Such an extensive project would require hiring, says Mike Payette, vice-president for governmental affairs at Union-Pacific, which owns the line.


The plan also would require investment in new cars. The Chicago-St. Louis route alone would double the number of trains to eight daily from four. That's where Coston comes in. With the stimulus, he figures, the state of Illinois will finally have the money to order the dozen Amtrak trains that have been on its wish list since last fall. "We see the stimulus as a way to restart the rail-car industry in this state," says the head of Chicago-based Corridor Capital, an investment company that bought options on 50 former Amtrak cars that he says could be rebuilt within the two-year time frame required for stimulus projects.


If he won even part of the order, Coston says, he could immediately put 25 people to work, doubling employment at Gateway Railcars in Madison, near St. Louis, a contract partner. Since Pullman Co. ceased production in 1981, Gateway is the state's sole maker of passenger rail cars.


New train orders also could help National Railway Equipment Co., a locomotive manufacturer based in Downstate Mount Vernon, return to full employment of about 1,100. Its workforce has dropped 20% since last year because of the downturn. "It would fill the void," Vice-president James Wurtz says.


Stimulus funding also would mean additional hiring at Kustom Seating Unlimited Inc., a Bellwood company that makes seats for Amtrak, Metra, the CTA and rail operators across the country. Employment already is up about 20 percent to 120 workers because of a surge in mass-transit spending, says Gene Germaine, director of business development, and stimulus funding is fueling additional demand. The company expects to boost its payroll by another 20 percent next year.


Illinois hasn't put a number on the jobs that stimulus money would create if its projects were funded, though the Midwest's high-speed rail plan could generate up to 15,000 construction jobs and 57,000 permanent ones, Michigan Gov. Jennifer Granholm has estimated. Chicago is at the heart of that plan, which includes high-speed lines to St. Louis, Madison, Wis., and Detroit.


The biggest stimulus winner likely will be the six-year-old Chicago Region Environmental and Transportation Efficiency program. It includes 78 rail projects to speed up freight traffic, separating passenger and cargo trains from each other and from vehicles. Until now, it only had about $200 million in funding, mostly from five freight railroads and the federal government, to pay for an estimated $1.5 billion in improvements, leaving the major construction projects waiting for backing.


Already the state has set aside $322 million in its capital budget to fund projects under the program. If the big-ticket items, such as highway overpasses and railway "flyovers," get stimulus funding, it will trigger a flurry of work for construction companies, says Tom Livingston, a vice-president at CSX Corp. And while it would take years to complete all the rail work, more jobs could be in the offing once the trains start rolling.


"Eventually, after all the infrastructure work is done, that means operating jobs at the back end," says Bob Guy, legislative director in Illinois for the United Transportation Union, which represents railroad workers. "If everything comes through, it should be a boost in railroad employment across the board."

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