Hines plant closure a setback to railway Deal currently in the works potentially could offset losses By Jeff McDonald / The Bulletin Published: September 07. 2007 5:00AM PST Just when the Prineville Railway had finally begun to become profitable, it learned that it will lose one of its top customers from Eastern Oregon. The City of Prineville Railway will lose about 60 percent of the business currently in operation at its freight depot facility and about 20 percent of its total business when the Louisiana Pacific Engineered Wood Products plant in Hines, next to Burns, shuts down Oct. 18, said Dan Lovelady, manager of the Prineville Railway. The city-owned railway loads and unloads railcars and trucks at its freight depot, where it also stores products such as timber and construction materials in a warehouse at the facility. Each month, the depot handles roughly 20 loads of raw veneer from Canada and 10 loads of laminated wood beams produced by the Hines mill, shipping the finished product by rail to customers across the nation, Lovelady said. The railway started hauling Louisiana Pacific’s wood products in and out of Prineville by train in 2005, and the business had grown to 360 loads per year, Lovelady said. In total, the freight depot facility currently handles about 500 loads per year, he said. “It’s unfortunate for us. We were building some base customers and getting to the point where the railway would again be profitable,” Lovelady said. “It’s unfortunate that we’ve lost some of the gains that we had made, but it’s even more unfortunate for Burns. The loss of jobs is going to be very difficult.” Once dependent entirely upon timber-based companies, the railway has diversified both its freight depot and its railway operations, adding Les Schwab Tire Centers as its largest customer last year, Lovelady said. The Prineville Railway’s freight depot has 15 customers besides Louisiana Pacific, including a company that converts local restaurant waste into biofuels and several construction-based companies, he said. “Some of the customers use the facility on a regular basis, some only when they have shipments come in, but none as large as Louisiana Pacific,” Lovelady said. Lovelady is currently working with the Oregon National Guard to handle shipments of about 35 Bradley tanks that need repairs in the southeastern U.S. He’s also had conversations with fuel distribution, aggregate and cement companies, he said. Prineville is unique in having its own municipal railroad, which was formed in 1918 and is the nation’s oldest continuously operated short-line railway, according to its Web site. The city operates a 15-mile track that runs from Prineville to Redmond, where it hooks up with the Burlington Northern Santa Fe and Union Pacific railroads, allowing customers to ship to and from Prineville and many areas of the United States, Canada and Mexico. The loss of a wood products company’s business is a familiar refrain for the Prineville Railway, which has not turned a profit since the 1990s, Lovelady said. Prineville city officials said in June that they had expected the railway to turn a profit this fiscal year, which started July 1. The railway’s success is pivotal for the region’s small manufacturing companies that need rail connection in and out of the region, said Roger Lee, executive director of Economic Development for Central Oregon, a regional agency. “Many of the smaller manufacturers are not going to get attention from the (Burlington Northern Santa Fe and Union Pacific) railroads, whose ideal customers have 80 carloads at once,” he said. “They prefer dealing with larger customers.” As older industrial areas are redeveloped and more of Central Oregon’s rail spurs get taken out, the Prineville-based railway could handle incoming and outgoing freight for the entire region, he said. “It’s one of those things where the Prineville Railway could be a consolidator,” Lee said. “Instead of having five to six spurs in Redmond used by different companies, Prineville could handle that for them at their transfer station.” The loss of Louisiana Pacific could be offset by the addition of a potential new customer. That customer would exceed the total number of shipments produced by Louisiana Pacific. The deal has not been finalized, but the company would bring three to five rail car loads per day, resulting in roughly 600 carloads per year, Lovelady said. “It would be a lot more than what we’re losing,” he said. The Louisiana Pacific mill shutdown will result in the loss of 92 jobs at the facility, located near Burns, said Jim Campbell, plant manager for Louisiana Pacific, which announced that it would cease operations last month. A slowing national housing market and a need to consolidate operations into other Louisiana Pacific Corp.-owned plants has been the main cause of the closure, he said. “We’ve had a great relationship with the Prineville Railway,” Campbell said. “They’re awesome people.” Jeff McDonald can be reached at 383-0323 or at jmcdonald@bendbulletin.com.
