The railroad track that serves the Bald Eagle Industrial Park in Hugo was in such bad shape a few years ago that Minnesota Commercial Railway planned to abandon the line.
The 7,600 railroad ties on the 6.5-mile “short line” had rotted to the point that the railbed was uneven, and trains were in danger of tipping over, said Wayne Hall, the railway’s chief operating officer.
With just 10 to 15 cars using the freight-rail spur each month, railway officials couldn’t justify a loan to make the necessary repairs. Minnesota Commercial, which operates and maintains the Burlington Northern tracks, announced in 2015 that service would end the following year.
“We did some maintenance, but it was too big a job,” Hall said. “For the amount of rail cars, we would never have been able to recover (the costs). We would have abandoned the line.”
The news sent local officials and owners of businesses within the industrial park scrambling. Loadmaster Lubricants and JL Schwieters Construction depend on the freight-rail spur to bring in raw materials such as base oil and milled lumber.
In 2016, company officials worked with city, county and state officials to secure $1.5 million in state funding to repair and upgrade the line, which runs from White Bear Lake to its terminus in the industrial park in Hugo.
The repairs have been done in stages with no stop in service; repairs are expected to be completed by September.
During a tour of the industrial park on Thursday, officials from Loadmaster Lubricants told U.S. Rep. Tom Emmer, R-Minn., and local officials that the rail-line repairs mean their business can stay in Minnesota.
The company, which produces high-grade lubricants for mining, agriculture and other industries, ships in about 24,000 gallons of base oil each week by rail.
“Shipping costs are five times more expensive if you have to bring it in by truck,” said Butch Hitchcock, the company’s vice president of services and operations. “So it would make the price go up, and we wouldn’t be competitive. We would have had to leave and buy another plant near rail.”
The company, which employs 20 people in its 80,000-square-foot plant, expects to double its workforce in the next five years, said Josh Barritt, production manager.
In addition to being more economical, shipping by freight rail saves wear and tear on area highways, said Washington County Commissioner Fran Miron.
“It would take five 18-wheelers to ship what one rail car can ship,” he said. “Eighteen wheelers eat up roads quicker than normal traffic.”
Just north of Loadmaster Lubricants is JL Schwieters Construction. The construction company, which employs about 500 people, recently completed a new 140,000-square-feet manufacturing facility — one that wouldn’t have been built if the freight-rail spur had been abandoned, said John Schwieters, president and owner.
“If the line had closed, we would have had to move,” Schwieters said. “We were looking as far away as Rochester. We have to have rail and outdoor storage, and finding the two of those together is almost impossible.”
JL Schwieters Construction and its associated companies does $100 million in sales a year, he said. The company builds preassembled wall and floor panels and trusses, and sells them to metro-area homebuilders and commercial developers.
Using prefabricated parts cuts “build time” significantly, according to Schwieters. “We can build a D.R. Horton four-unit building in 10 days,” he said. “That’s taking a six-week frame cycle down to two weeks.”
Business is booming. Schwieters said the new $14 million plant, located across Fenway Boulevard North from its headquarters and other buildings, will allow the company to add another 100 jobs.
Those jobs, which start at $40,000 a year, would not have been created if not for the improvements to the freight-rail spur, he said.
“In the first quarter alone, we had 32 rail cars (filled with milled lumber) come in,” he said. “We’re on track to have 120 to 150 of rail cars in 2019; we had half that in 2018.”
City Administrator Bryan Bear, who joined the tour on Thursday, said loss of the short line would have had a devastating effect on Hugo.
The industrial park is in economic driver for the northern Washington County city, which has a population of almost 15,000 people. Schwieters, which opened in 1999, is the city’s largest employer.
“The city recognized that abandoning the railroad would also effectively abandon the businesses that rely on it, likely causing them to relocate elsewhere out of the city,” Bear said. “By rallying behind the project, not only were jobs preserved in the community, but it has sparked significant business expansions.”