The Politics of Positive
Thursday, November 5, 2009 at 12:32PM
In NH politics I think it’s easy to become cynical and negative. Regardless of what the issues are or what the campaigns say or don’t say, anyone that has spent time in the Statehouse knows what I mean.
A day at the Statehouse:
Lobbyists, agendas, ideas, legislation and more lobbyists. Deal making in the hallways of the LOB. More legislation. Lobbyists and more ideas. And like former Deputy Speaker Stacey Cole used to say “Two things in this world you don’t want to see get made. Policy and sausage.” And all in a day's work.
So where am I going with this?
I’m interested in transportation issues in New Hampshire and the Northeast. And more specifically rail and its important role. I’m very critical and I think at times negative towards some of the projects in New Hampshire including the NH Rail Authority. I think much more could be done but for political reasons it isn’t.
In any case, several days ago I was reading the Laconia Evening Citizen Newspaper about the Executive Councilor Ray Burton “Railroad Promotion and Marketing Day.” This is a train that runs from Laconia to Plymouth. It has a catchy title but it’s a campaign train.
It would be negative for me to attack the very idea of this train. It’s probably even more negative for me to attack the NH Rail Authority. And the reason is because not only have I not challenged either of these positions tactically or strategically, I have not advanced a viable alternative to their ideas and positions.
Today this starts to change.
In the next several weeks and months I hope to blog several articles related to rail and policy in New Hampshire. I’ll outline several projects and demonstrate why they would be successful. This will include, as applicable, the underlying financial analysis. The end question will be hopefully answered as to why NH taxpayers are making a good investment in the described rail project, and how rail ultimately leads to taxbase and jobs for New Hampshire.
My first stop in this venture I think is going to be the Port of Halifax, Nova Scotia. A deepwater port, one of only two on the east coast that can accept high-density container ships for both import and export markets. The movement of containers is a profit center for railroads and New Hampshire has a strategic route that could facilitate this.
This video below beyond the explanation shows a Burlington Northern Santa Fe (BNSF) intermodal train. It’s called intermodal because the double stack containers have moved on one or more modes of transportation. It’s not uncommon for a container to move from ship to railcar and then to truck for its final destination. This is intermodal.
This is the same BNSF railroad that is being purchased by investor Warren Buffett. The media reports states that he is basing his investment on “U.S. economic recovery.”
There is some risk involved.
Source: YTTrucking.com
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Reader Comments (4)
First, most politics is negative, corrupt and frustrating. Maybe that’s’ the reason people remain ignorant, laid backed, become lapdogs and slaves to the system. The station in Plymouth doubles as senior center. Guarantee there will be entourage of seniors and heads of social agencies to meet Ray’s arrival. These people represent votes. He’ll throw out the hook, line and sinker, they’ll be reel in. Ray will chum the waters with promises of giving taxpayers funds to these groups. It works, taxpayers dollars for votes. Can railroads provide votes and funds into Ray’s campaign coffers? Maybe.
I hope your analysis and articles favor private enterprise. Railroad’s competition, trucking, is private, railroading should be too. I know railroads pay a state fuel tax,(Ct., NY., &Ma.) for what purpose unknown. Does NH. or Vt. collect any RR tax. Do railroads pay a tax on their infrastructure (rail beds, bridges etc)? Is this the tax base you mention? I do realize an influx of manufacturing will expand a tax base. Do you think our present system can support the weight and pressure of double decked railcars? Will analysis separate freight from passenger service? A figure I like to see, if possible to calculate, the cost of moving 400 passengers 100miles at 50 mph versus the same, at 150 mph. Are high speed trains possible without electrification? Overhead wire structures are hideous at best, I enjoy the nostalgia of open tracks. We need manufacturing or a product to ship, the money is in freight not passengers. Railroads are not the only ingredient to attract business, a skilled work force, low taxes and cheap electricity. Warren Buffett says he purchased Burlington Northern Santa Fe, cause it will be difficult for a competitor to build a new railroad. Some advice here?
Venture capitalist are ruthless and make their investments work. Private money talks and sometimes screams.
In any case, NH politics can be frustrating. Especially in District #1.
In response to the rail issues. Currently, I'm writing a post titled Halifax Precis relative to the deepwater port of Halifax, Nova Scotia and the movement of containers through the Granite State. I think it will show at least initially that the effective movement of freight builds taxbase, jobs and economic development all along the rail corridor.
Once the profitable freight corridor is established then the next logical step would be more advanced projects like high-speed rail. The starting place in this whole discussion has to be freight. Freight is the cash crop for the railroad industry. Passenger operations are all money losers but if the rail route itself is profitable than this can mitigate some of the losses and especially so if economic development and taxbase happens along the described route.
In terms of aesthetics. I'd encourage you to ride the Amtrak Acela and view the work Amtrak did on the electricification between New Haven, CT and Boston. Amtrak should be given alot of credit especially with the politics in Washington, D.C.
The last arguement I'd make about privitization is that is trucking really private? Trucking uses the taxpayer financed interstate system and does far more damage to roadways and bridges than is collected by the government in taxes like the fuel and excise (weight) taxes. Trucking companies use intermodal terminals, as does rail, that are ofen paid for by public funds. Meanwhile the railroad companies have to compete against trucking, maintain their rights of way, pay substantial taxes on real estate and live under the constant veil of powerful rail unions and the possibility of being re-regulated by Washington, D.C.
As seen on this very board I'm a supporter of both the rail and trucking industries I think the challenge is to get both of these industries to act in concert with each other to bring lower prices onto the transportation market. This is in addition to the projects I've already described.
This would be a good investment except for the primary rail competition.
Union Pacific. (UP)
The UP is stronger financially, tactically and operates in the same markets as does BNSF. To compound this the UP is now making inroads into Mexico where BNSF isn't. Mexico is a major growth market, and a lucrative one. Especially the Port Lazaro, Cardenas and the creation of the so called NAFTA route up to Ontario.
To compound the issues for BNSF is its cyclical commodity mix that it hauls. Intermodal containers from Long Beach, CA to the dwindling amts. of soybeans, lumber and ethanol. The BNSF once had a shot at greatness through its proposed merger with the powerful Canadian National railroad which was ultimately nixed by Washington, D.C.
I think Buffett has two choices to create shareholder value.
1. Make another attempt at a merger. It won't be a mega merger like the CN but I'd guess he'll try with an eastern road like CSX or Norfolk Southern and finally the U.S. will have a transcontinental railroad under one flag.
2. Rationalize system design and cut costs. This will be difficult. The railroad unions are powerful and even if he can find a buyer for some of the underused railroad lines I don't think this is enough to boost shareholder value or the stock price.
I have to agree with all of the commentary about this railroad deal. Mr. Buffett is very good a valuation and purchasing assets for less than they are actually worth, at least on paper. Some are saying the BNSF was purchased for 30% below what it's actually worth. I think this is fair. But with the risks that are ahead that 30% might not be enough margin to gain any real profits at all.
Steve;
Your post's are always loaded with visions of reality and great information. I hope other readers appreciate your work, as I do.