Railroad track removal would affect Tetra Pak

Business Today

SIKESTON - Over the years, urban planning specialists and others have discussed how getting rid of the railroad tracks alongside Malone Avenue would benefit Sikeston and its potential for growth. But then, there is the other side of the story -- jobs.

This summer Union Pacific moved the idea from mere discussion to heated debate with the announcement it would like to abandon the tracks, which are now a dead-end spur ending at Steward Steel in Miner. "It used to go to all the way to Charleston," Mayor Mike Marshall recalled.

But now only two business remain that still use the tracks -- Steward Steel and Tetra Pak.

"The shipper (Tetra Pak) takes very few cars, very low density traffic, and the traffic is very short-haul," said Michael Payette, assistant vice president of government affairs for UP's central region. "If this were a high-revenue track, there would be no issue."

While Steward Steel has advised the city it does not want to lose its rail access, Tetra Pak says the tracks are indispensable for its operation.

"Tetra Pak's position is that this is not a burden on Union Pacific and it's critical to Tetra Pak," said Joe Blanton, legal counsel for Tetra Pak.

"Our raw material is paperboard and it comes in by rail, " said John Bryant, plant manager for Tetra Pak. "If the Union Pacific Railroad abandons this line, it will greatly increase our cost of obtaining this material and put us at a tremendous disadvantage in an extremely competitive market. We're very concerned about it and we've asked the city for help."

Tetra Pak takes in about 35 rail cars per month in supplies.

"Shipping paper by truck is cost prohibitive," Blanton said. "Tetra Pak's position is that the status quo should be continued."

To abandon the track, Union Pacific must request permission from the Surface Transportation Board. If such a request is made, Tetra Pak will oppose it, Blanton said.

Several Tetra Pak plants have already closed over the last two years, Blanton noted. "There are only nine remaining in the whole world, three in the United States," Blanton said. "It is important for Tetra Pak to protect its investment and important for the city to protect one of its major employers."

Sikeston officials already gone on record that "if abandonment of the spur is going to hurt local businesses and industry, we don't want it to happen," according to city manager Doug Friend. "When the end result is minus 100 jobs, that's not a good thing. We've got to support Tetra Pak. We can't lose those jobs."

A letter from Scott Ringler, director of Union Pacific's marketing and sales center, to Tetra Pak officials confirms the railroad has targeted March 1, 2005 for abandonment of the track extending east that serves Tetra Pak.

Ringler advised in the letter that the railroad "is willing to absorb the transloading costs that will be incurred" on shipments from Tetra Pak's main supplier, Weyerhaeuser in Longview, Wash., for one year following the abandonment date.

"We will work it out with the shipper one way or another before we do anything. In the best possible world, we would like to abandon it," Payette said. "But we're not going to push this if we can't work it out."