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Union Pacific: Coal slowdown equals less money for Kansas infrastructure

Dozens of new wheel assemblies sit outside the Union Pacific railroad Wichita Service Unit. The railroad said Thursday it plans to spend about $71 million on Kansas infrastructure projects in 2016.
Dozens of new wheel assemblies sit outside the Union Pacific railroad Wichita Service Unit. The railroad said Thursday it plans to spend about $71 million on Kansas infrastructure projects in 2016. File photo

Union Pacific said Thursday it will pump nearly $71 million into infrastructure projects in Kansas this year.

The Omaha-based railroad company reported Thursday it will spend $70.9 million on various improvement projects, all outside of the Wichita area.

The company said two key projects in the state in 2016 will include:

▪ $9.2 million to replace about 67,000 railroad ties and add more than 44,000 tons of rock ballast to its rail line between Kansas City, Leavenworth and Hiawatha.

▪ $6.1 million to replace 12 miles of rail between Atchison and Huron.

In addition to spending $65 million to maintain rail lines in the state, Union Pacific also has earmarked $5.7 million to maintain bridges in Kansas.

The railroad said it will spend close to $3.67 billion across its network, though planned spending has tapered off since Union Pacific investment of about $33 billion from 2006 through 2015.

Last year, the railroad invested about $120 million in its Kansas infrastructure. Union Pacific spokeswoman Calli Hite said spending is lower in most of the states where the railroad operates.

“Overall, our capital spending across the company is down,” Hite said. “That’s just a reflection of our business, which is down versus what it was last year.”

When compared with the same quarter in 2015, Hite said Union Pacific’s business fell by about 8 percent during the first quarter of 2016.

Hite said much of the drop has to do with the recent slowdown in the energy sector, which includes the coal industry. Coal movement, Hite said, is down 43 percent from the first quarter of 2015 compared with the same quarter this year.

“Coal is down significantly,” Hite said. “Coal is the top commodity we move into Kansas while the top commodity we move out of Kansas, probably to nobody’s surprise, is grain.”

From 2011 through 2015, Union Pacific invested more than $262 million into its Kansas infrastructure, according to the company. The railroad’s network runs through 23 Western U.S. states.

While the railroad touts that its investments in the past decade have led to a 25 percent decrease in derailments network-wide, Hite said the company is not concerned that a drop in infrastructure spending will lead to an increase in safety concerns.

“Safety is Union Pacific’s top priority,” Hite said. “A nominal decrease in network-wide or in-state capital investments will not compromise safety.”

Union Pacific has 2,203 miles of track in Kansas and has more than 1,300 employees in the state, according to its website. The company’s annual payroll in Kansas is a little more than $146 million.

There is no passenger rail service on Union Pacific lines in Kansas, according to the Kansas Department of Transportation.

Bryan Horwath: 316-269-6708, @bryan_horwath

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