Traverse City Record-Eagle

August 4, 2013

All aboard for rural job growth

BY GLENN PUIT gpuit@record-eagle.com
Traverse City Record-Eagle

---- — KALKASKA — Once or twice a week the Great Lakes Central railroad train rolls right by Penny Hill’s Kalkaska office.

“I’d say six to 10 cars,” said Hill, Kalkaska's village manager.

The train stops at an area business, Magnum Solvents, to drop off much-needed product. The train's importance to the business prompted Kalkaska community leaders to explore a strategy to recruit new businesses that need rail access to be cost-competitive.

“In the 1970s, when they had the gas and oil boom here, they were bringing in heavy equipment for the oil fields. They’d get the steel coming in as well, and there was a lot of welding going on in Kalkaska,” Hill said. “(Rail) has a lot of potential for the future.”

Others also are thinking about how to use rail to stimulate rural job growth. State officials are carrying out an extensive study on what's necessary to foster a climate in which businesses large and small might consider moving to northern Michigan communities served by rail.

The Northern Michigan Rail Economic Development study should be completed this year and will compliment a statewide rail plan recently developed by the Michigan Department of Transportation.

The study's express purpose is to create jobs.

"There’s a real economic opportunity here, and we need to look at how do we capture that economic opportunity,” said Tim Hoeffner, director of MDOT’s Office of Rail. “What does the private sector, the railroad, and the state need to do to turn this infrastructure into an economic engine? It’s an infrastructure that’s out there, and it's underutilized.”

Rail has a long history in Michigan and dates to 1837, when horses pulled cars. Today, the state has more than 4,000 miles of operating rail track, much of it in rural communities like Kalkaska, a blue collar town looking to revitalize its economic base.

There have been positive developments in the face of an unemployment rate that approaches 10 percent, including increased gas industry-related fracking activity in the county. Kalkaska officials also are carrying out a long-term development plan and are acquiring properties in an effort to breath new life into its downtown corridor.

Kalkaska has abundant infrastructure suitable for industry, with warehouse space, vacant land, and U.S. 131 that cuts right through the center of town.

Eighteen-wheelers roll through the village on the crowded state highway every few minutes, almost always carrying and hauling freight to somewhere else.

The trucks run on a highway immediately adjacent to a state-owned rail line. All that product, flying by day and night indicates to community leaders that train tracks are an untapped asset.

Mike Bagwell is the president of Great Lakes Central Railroad, which runs the train along tracks that lead from Petoskey through Kalkaska and south. He said the company is putting down 27,000 cross ties between Kalkaska and Petoskey, which will allow the train to maintain 25 mile per hour speeds.

He also sees huge potential. The company is working with agencies like Northern Lakes Economic Alliance to recruit new customers.

In Petoskey, one of the community's major employers, Petoskey Plastics, is proof of how the train helps sustain jobs in northern Michigan. The company makes plastic-blown film products and needs polyethelyne pellets for manufacturing. The pellets come in on train and saves money for a company that is a major employer in Emmet County.

"We get 11 rail cars per-month, versus 50 truck loads," said Sue Maskaluk, controller for Petoskey Plastics, who added that their materials supplier pays for shipping when rail delivery is used.

That's not the case for trucks.

"We wouldn’t be able to operate if we didn’t have rail," Maskaluk said. "We couldn’t be cost-competitive."