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Published: Monday, 1/7/2013

Kansas firm looking to buy Ann Arbor Railroad

Transaction would be 3rd in area since Christmas

BY DAVID PATCH
BLADE STAFF WRITER

A Kansas-based company has applied for regulatory permission to buy a railroad that links Toledo and Ann Arbor.

If Watco Railroad Company Holdings Inc.’s petition to the federal Surface Transportation Board to buy the Ann Arbor Railroad from the Howell, Mich.-based Ann Arbor Acquisition Corp. is approved, the AA would become the third railroad in the Toledo area to change hands since Christmas.

Last week, Pioneer Railcorp. completed its purchase of the Maumee & Western Railway — a line that links Napoleon, Defiance, and Antwerp, Ohio, with Woodburn, Ind. — from RMW Ventures Inc., and Genesee & Wyoming, a conglomerate of shortline and regional railroads, completed its acquisition of RailAmerica, a similar company whose railroads include the Indiana & Ohio line that runs through or near Riga, Mich., and Delta, Hamler, Leipsic, Ottawa, and Lima, Ohio.

A sale price for the Ann Arbor transaction was not disclosed.

Ed McKechnie, a Watco executive vice president and chief commercial officer, said his company expects to receive regulatory approval for the acquisition by early February.

The Ann Arbor Railroad operates a 50-mile line linking Toledo with its namesake city, plus a branch in the Saline, Mich., area and a rail yard off Laskey Road that supports the General Motors Powertrain plant.

Its main Toledo yard in North Toledo is a base for railcar switching at Chrysler Group LLC’s Toledo Assembly complex, and several other automotive factories are key customers elsewhere on the line. The Ann Arbor has interchange connections with four other railroads in Toledo and connects to the Indiana & Ohio near Dundee, Mich., Norfolk Southern in Milan, Mich., and Great Lakes Central Railroad in Ann Arbor.

A Watco statement announcing the purchase noted the automotive industry’s importance to Ann Arbor cargo, as did Mr. McKechnie.

“It’s very well run today, and it’s very much tied to the auto industry,” he said.

“We have to be responsive to the auto industry’s needs on short notice.”

Although a Watco regulatory filing said the company views the railroad “as an investment in order to reduce overhead expenses, coordinate billing, maintenance, mechanical, and personnel policies and practices of its rail carrier subsidiaries,” Mr. McKechnie said no layoffs of Ann Arbor employees are anticipated.

“You may have some people doing different things, but we expect to have the same number of employees, if not more as we pursue opportunities for growth,” he said.

Great Lakes Central now operates the remainder of the historic Ann Arbor Railroad, which once continued northwest across Michigan to a Lake Michigan ferry dock at Frankfort.

Great Lakes Central’s line, operated under a state lease, now ends at Yuma, Mich., home of a quarry that ships industrial-grade sand by rail.

Maumee & Western, a former Wabash Railroad branch line, is to become part of Pioneer Railcorp.’s Michigan Southern Railroad, although it is not connected to that company’s lines in south-central Michigan.

The Maumee & Western serves several customers in Henry, Defiance, and Paulding counties, although a portion of its track between Defiance and Cecil, Ohio, is out of service because of its poor condition and the rest of its track is in only marginally better shape.

Indiana & Ohio’s northwest Ohio line is the former main line of the Detroit, Toledo & Ironton Railroad. Its major customers include North Star Steel near Delta and Metamora Grain in Metamora.

Indiana & Ohio is one of 45 shortline and regional railroads RailAmerica operated in 28 U.S. states and three Canadian provinces. Genesee & Wyoming’s stable already included 66 railroad companies in the United States, Australia, Canada, the Netherlands, and Belgium. The closest of those to Toledo had previously been the Ohio Central lines east of Columbus.

Contact David Patch at: dpatch@theblade.com or 419-724-6094.



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