Western Railroad Discussion > UP Halts Construction of Brazos Yard

UP has halted construction of Brazos Yard in Texas.  No official word from UP but this has been confirmed by personnel working at the location. One source of the info said it was going halted 2022 and local management said the money would be better spent by double tracking congested areas in Texas.



Edited 1 time(s). Last edit at 03/14/19 19:35 by RabbitHogger.

I swear this company seems to function like a distracted child these days.  No direction, no purpose, then throws a tantrum after all of the toys are broken and things aren't going the way they were supposed to.  I guess that's what happens when a great company drives out all of the railroading experience and replaces it with millennial snowflakes and Harvard grads.

Where did the money for brazos yard really go?  Well, UP has been repurchasing billions in shares, even going as far as using leveraging (aka debt) to do so.  20 billion in share buybacks were anounced for 2018-2020 alone and they have been doing it for years.  That sum makes the 550 million dollar brazos yard project look like a drop in the bucket. 



Edited 1 time(s). Last edit at 03/14/19 20:01 by HogheadMike.

I guess we know what side you are on :)

I think he was just stating the truth in a world where long term planning is sacrificed for short term gain.

I am not familiar with that part of Texas, but I thought UP might complete Brazos and then downgrade some of the other facilities in the area.

Got that wrong, apparently.

 

HogheadMike Wrote:
  I guess that's what
> happens when a great company drives out all of the
> railroading experience and replaces it with
> millennial snowflakes and Harvard grads.
>
Looking at the senior management team at UP, I’m almost certain that non of them are millenial snowflakes, a term that frankly is redicously dismissive of an entire generation of young people, many of whom are going to be stuck fixing a world that the baby boomers are busy running into the ground. Most of the young people I know in railroading want to do a good job, but don’t have the benefit of having the mentoring that previous generations of railroaders had because staffs have been cut to the bone. That’s not the fault of the millenials, so perhaps if you are insistent in assigning blame for the short term focus your fear, you might want to look at the decisons of those about 30 years older. (Posted by a tired genXer.)

Posted from iPhone



Edited 1 time(s). Last edit at 03/15/19 05:36 by DJ-12.

"fixing a world that the baby boomers are busy running into the ground"
Specific examples of this?

The decision to issue more debt, or issue more stock, or issue more debt to buy back more stock, etc is often complicated. It isn't just a flip a coin decision in many places.

The bond market prices debt (how much interest do you have to pay for how long) based in part on the credit worthiness of the borrower, purpose of the debt, expectations of inflation, other competing uses of the money, etc.  A lot of railroads went into bankruptcy in the 1930s-1970s when they were unable to pay the interest or principal owed. The borowers may also have covenants which limit management's ability to make decisions.  Interest paid on debt is usually deductible on taxes, which is a big plus for the issuer.

The stock market usually requires you to pay a dividend, which isn't deductible, and may be greater than the equivalent cost of interest.  Floating a lot of stock potentially allows a corporate raider to accumulate stock and launch a raid if you're not doing a good job.  But, it's cheap, and you can cut the dividend if you need to.  And, it masks the amount of options given to management which is then coverted into shares and sold.

Combining the issue of new debt and the repurchase / cancel of stock in a buyback gives you some of each benefit.  You can issue bonds at an artificially low rate (thanks! Federal Reserve) and buy back stock that might cost you more.  But you want to assure that the purpose of the debt will produce a sufficient return to cover the cost of interest, etc.  Adding a second track or expanded yard that you won't use for years isn't usually a good idea.

 

UP halting construction doesn't mean they have giving up on the project. They do need to add a second main track on parts of the ex-T&P west of Fort Worth and it certainly looks like work will start later this year.

But halting of the Brazos Yard project certainly seems like odd timing. I'm guessing the difficult winter has blown up some budgets within the company and UP is trying to contain short term costs.

Allen

Posted from Android

CajonRat Wrote:
-------------------------------------------------------
> "fixing a world that the baby boomers are busy
> running into the ground"
> Specific examples of this?

-Unwillingness to deal with climate change
-Skyrocketing national debt
-Decaying national infrastructure with only lip service given to investment
-18 straight years of war in the middle east with no hope of stability
-and more on point to bring us back on topic: Concerns about the focus on short term profitability and immediate payback at the potential expense of long term growth in the rail industry.

I don't want to get into a generational or political argument here, but my point is that millenials are not responsible for any of this, yet I see a lot of swipes being taken at them, often by people in the demographic that has the most folks in charge of making these decisions that are being bitched about. Millenials aren't perfect by any means, but the boomers who complain about them best take a long look at their own generation for the cause of their own problems instead of griping people who are barely out of college and haven't begun put their stamp on the world.
 



Edited 3 time(s). Last edit at 03/15/19 07:04 by DJ-12.

Right on point....THE BOOMERS ARE STILL IN CHARGE.... I'm a boomer

I would think that UP has given up on the idea of double tracking some parts of the old T&P west of Ft Worth.  I say that because for some time it has been lengthening passing tracks to around 9000+ feet and currently is still doing it on the Baird Sub with Eastland and Eskota currently being worked on with Iona also to come...  Finishing those will complete all passing tracks into the 9000+ ft range allowing longer trains.  But then, that is just my guess.

tomstp Wrote:
-------------------------------------------------------
> I would think that UP has given up on the idea of
> double tracking some parts of the old T&P west of
> Ft Worth.  I say that because for some time it
> has been lengthening passing tracks to around
> 9000+ feet and currently is still doing it on the
> Baird Sub with Eastland and Eskota currently being
> worked on with Iona also to come...  Finishing
> those will complete all passing tracks into the
> 9000+ ft range allowing longer trains.  But then,
> that is just my guess.

Conrail, and later CSX, did that with the River Line in NY state.  Extended sidings to enable much more passing on the 120 mile plus, mostly single track.  Combined with good dispatching, it loosened the entire line.  Made a world of difference in a situation where much of the line was in extremely sensitive riverfront, marsh, or military area.

tomstp Wrote:
-------------------------------------------------------
> Finishing those will complete all passing tracks
> into the 9000+ ft range allowing longer trains.
> But then, that is just my guess.

There will still be 8 'underlength' sidings on the Baird once the current extensions wrap up.

Projects get put on hold all the time. I recall in the late 1970's the big push to daylight the Hermosa Tunnels on Sherman Hill in Wyoming, and in the process making Track 3 continuous from Dale Creek Jct. to Hermosa proper. All kinds of workers and equipment there, they began scraping overburden from the top, widening the cuts and building a "shoo fly" around the tunnels, it was certain to be their end. Then inexplicably everything evaporated, the equipment left, and now 40 years later, they still run only two tracks through the tunnels. The word was that the budget was cut. So changes can and do happen, this example and hundreds more. As far as buying back stock, I think that is protection against unfriendly takeovers by corporate raiders, not a bad move actually. === === = === JLH 

Some of those 8 you mention will probably be eliminated.  For example:  UP built  new sidings at Putnam 9880 ft so Jayell just 3 miles away and 6700 ft will probably be torn out.  In addition the new siding of Gilbert 10284 ft will probably mean Brazos only 3.4 miles away  and 6672 ft will probably be torn out.

Those changes will mean there is no long stretch of track with short sidings making the Baird sub more fluid.  With heavy traffic being basically Friday thru Sundays you have to wonder if any double track is necessary.  On the slow days you can wait about 3 hours for a train.  Then see a couple in an hour and then wait some more.

Allen used to give the train starts on the Baird sub and I wish he would again.

1st they put over 400 million dollars worth of new locomotives in long term storage, now this. Will the project start again when the weather gets better or will they just rip up what they have already built. Is u.p. on the road to be the next PENN CENTRAL with there recent management decisions?

Posted from Android

CajonRat Wrote:
-------------------------------------------------------
> "fixing a world that the baby boomers are busy
> running into the ground"
> Specific examples of this?

The White House

The-late-EMD Wrote:
-------------------------------------------------------
> 1st they put over 400 million dollars worth of new
> locomotives in long term storage, now this. Will
> the project start again when the weather gets
> better or will they just rip up what they have
> already built. Is u.p. on the road to be the next
> PENN CENTRAL with there recent management
> decisions?
>

The answer to the last part of your statement is a big fat no, as long as they don't mess with the Houston terminal area. They have millions of dollars worth of locomotives taken out of service but on the flip side they are saving millions of dollars in fuel costs.

I continue to say we really won't have a good idea how PSR is going to work until late spring or early summer. Everything is pure speculation at this point, except that UP is serious about adding more second track and sidings at various locations mostly in Texas.

Allen

CajonRat Wrote:
-------------------------------------------------------
> "fixing a world that the baby boomers are busy
> running into the ground"
> Specific examples of this?

Take a look out the window.