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CSX renews commitment with W.Va.

Chamber
May. 01, 2013 @ 08:39 AM

HUNTINGTON -- It's been 17 years since CSX CEO Michael Ward has lived in Huntington, and he likes what he sees here now, he told the crowd that gathered Tuesday for Huntington Regional Chamber of Commerce's 122nd Annual Dinner.

"I can sense a vibrancy here in Huntington, which is great. Huntington is very important to CSX, and West Virginia is very important to CSX," Ward said in his keynote address at the event, which highlighted some of the history, challenges and developments for CSX and the railroad industry.

Renewal is something those in the railroad industry know a little something about, said Ward, who has been president, chairman and CEO of CSX since 2003. He's been with the company 34 years, spending 1995-96 stationed in Huntington.

Since the 1980s, the railroad industry has been reevaluating, reinvesting and renewing itself to adapt to changing times, he said.

In the 1970s, the railroad industry basically was going out of business, Ward told the businessmen and women at the event. It was facing heavy regulations, providing poor service and grappling with the growth of the interstate system and increase in trucks moving its freight.

The Staggers Rail Act of 1980 freed the railroads up to start competing, he said. Since then, railroad companies have become slimmer and stronger.

As stated by U.S. Rep. Nick Rahall, D-W.Va., who introduced Ward at the event, "Little investments go a long way," he said.

And big ones.

CSX now serves 70 ports and has 4,000 locomotives. It operates in 23 states and two Canadian provinces. It has 32,000 employees. It can move a ton of freight 450 miles on one gallon of fuel.

"One train takes 280 trucks off the road," he said.

Huntington is CSX's division headquarters -- home to 550 CSX employees. West Virginia has 1,600 CSX employees, and the Mountain State annually moves 1.5 million carloads of product, mostly coal, Ward said.

Coal has long been the lifeblood of the rail industry, he and Rahall said.

"Coal is the railroad's bread and butter," Rahall said. "It's a lifeline in West Virginia. It's in our DNA."

The downturn in the coal industry has been a blow, Ward said. One year, the coal business was off 29 percent, he said, adding that CSX's peak year for coal shipments was 2006, and the company is down to about half of that now.

"We think domestic coal will be down 5 to 10 percent this year and then it will level out," he said, adding that there's good news in the fact that other parts of the world, such as China and India, "still like coal."

CSX did have to furlough some employees, but decided not to go the route of layoffs. Even with the decline in coal business, CSX has invested $2.2 billion in infrastructure and focused heavily on safety, service and productivity, Ward said. Its customer satisfaction is the highest it's ever been, he said. CSX also had its best first quarter in safety and earnings, with an increase in dividends to 15 cents a share.

In an overview of other markets served by CSX, Ward said that the automotive industry is doing well, with a 15 percent increase last year; natural gas has enjoyed a tremendous boom; the housing market is recovering, though it has a long way to go; and, the intermodal industry is growing. The agriculture industry is down after farmers reduced their number of cattle in response to the drought raising corn prices. The paper industry is declining as well, he said.

Trends that have favored the rail industry are high fuel prices and highway congestion, Ward said. Companies are more conscious of their carbon footprint, which can be reduced with rail transport, he added. Also, trucking companies are facing a shortage of drivers. The average trucking company has a 100 percent turnover every year, he said. That has shifted some freight movement to the railways as well.

With its access to the Ohio River and its abundance of coal and natural gas, West Virginia has and will continue to be a key player in the rail industry, Ward said.

Bill Dingus, executive director of the Lawrence County (Ohio) Economic Development Corporation, attended the event and said Ward's comments reaffirmed his belief that this region's importance in freight movement will continue to grow in years to come.

The possibilities with rail and water in this region are "phenomenal. ... I believe we'll be a center for logistics in the Midwest," he said.

The Chamber was fortunate to be able to bring in such a tremendously knowledgeable speaker for the event, said Mark Bugher, president and CEO of the Chamber who recently announced his plans to retire this year.

"CSX is a mainstay in this community," Bugher said. "Having the CEO of a multibillion industry here to talk is a big deal. (His outlook) was realistic. Some things are up, some things are down, and it's always interesting to see how a big company reacts to that."

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