County’s Iron Horses Not Ready for the Pasture Yet

Every weekday at 5:30 a.m., a three-man crew climbs aboard a big blue and yellow Santa Fe locomotive at the Fullerton Depot, revs up the huge 1,750-horsepower diesel engine, blows the whistle and rumbles off for a 14-mile trip to the Irvine Industrial Complex.

In a county better known for its freeway traffic and computer products, the venerable iron horse still performs an important job, pulling boxcars loaded with steel, lumber, beer and other low-tech cargoes along tracks dating back to the 1870s.

Three railroad lines--the Atchinson, Topeka & Santa Fe, the Southern Pacific Transportation Corp. and the Union Pacific--move about 200 freight cars a day to and from destinations throughout the county on a sprawling network of old spur lines.

The volume has declined significantly over the years as the county’s economy has shifted away from agriculture and heavy manufacturing.

But local rail service is expected to remain a part of the Orange County landscape for years to come, according to railroad officials and companies that rely on the service.

“Are the railroads here to stay? The answer is an emphatic yes,” said Gerald Perra, a Southern Pacific spokesman.

The reason is that the shipment of many heavy commodities, such as steel, canned goods and paper products, can be significantly cheaper by rail than by truck, particularly for long-haul trips.

Trucking companies have made major inroads, however, and the railroads have responded by shifting much of their traffic to “intermodal” containers, truck trailers that are carried cross country on train cars but make the rest of the journey by highway.

In 1986, for instance, the Southern Pacific completed an $80-million yard at Long Beach that transfers truck trailers filled with goods from local companies as well as from incoming ocean ships to eastbound trains.

Yet for many Orange County companies with plants or warehouses located on the old spur lines, it still makes sense to load goods directly into boxcars.

“It’s vital that our materials and products move by rail since they are often traveling many thousands of miles,” said a spokesman for Beatrice Hunt-Wesson, which produces Hunt tomato paste and Wesson cooking oil at a plant in Fullerton.

Flexibility on Carrier

The raw materials and finished goods shipped to and from the plant fill more than 1,000 train cars a year, and the company said it would be prohibitively expensive to ship by truck.

Other firms, however, said they have the flexibility to ship by either truck or train. The choice is dictated by which offers the best price at any given time.

Miriam Brookfield, traffic manager for the Tustin manufacturing plant of Steelcase, a Michigan-based maker of office furniture, said the plant receives about 10 cars of materials a week on specially designed boxcars that make round trips between Fullerton and Grand Rapids.

The cost of shipping an 85,000-pound load of steel and construction material to Grand Rapids is about $5,000, Brookfield said. A truck can carry a maximum weight of 44,000 pounds and would charge about $2,500 to make the trip, or roughly the same amount.

The Santa Fe and the Southern Pacific haul the bulk of Orange County’s freight traffic. The Union Pacific, based in Omaha, maintains a branch line into the county, but it is infrequently used, hauling only a few cars a day.

Together, the Santa Fe and Southern Pacific maintain about 250 miles of track in Orange County. Although they are competing railroads, the two lines came under the same corporate umbrella when their parent companies merged in 1983 to form the Santa Fe Southern Pacific Corp., a Chicago-based conglomerate with vast holdings in real estate, minerals, oil and other assets valued at about $3.7 billion.

The corporation’s vast holdings have made it the subject of periodic takeover attempts in recent years, most recently an unsuccessful bid by Henley Group of La Jolla. Henley currently owns 16.7% of the corporation’s shares. Olympia & York, a Toronto investment group, owns about 20%.

A “poison-pill” anti-takeover provision instituted by the company this year makes an unfriendly acquisition unlikely. But most observers believe that should Henley or Olympia acquire the company, it would be broken up and sold off in pieces, making its rail operations candidates for restructuring.

Under the terms of the 1983 merger agreement, the Santa Fe and Southern Pacific railroads were prevented from consolidating their operations by the Interstate Commerce Commission, and they have been maintained as competing companies. The ICC mandated that one of the two lines must be sold.

The parent company has elected to sell the Southern Pacific to the Denver Rio Grande Corp. for $1 billion. The proposed transaction must be approved by the ICC.

Denver Rio Grande has stated that it intends to keep operating the Southern Pacific, although it probably will sell off some property and may eliminate some rail service, according to Susan Chapman, a securities analyst with Dillon, Read & Co., a New York brokerage.

Although Orange County freight operations represent a tiny portion of nationwide revenues, railroad officials say the county routes are profitable.

For 1987, the Southern Pacific reported net income of $143 million on revenues of $2.3 billion, although much of its profits can be attributed to the sale of real estate, according to Chapman. The Santa Fe reported net income of $117 million on revenues of $1.9 billion.

“It would be pretty hard to measure profitability in Orange County, but I can say we don’t operate lines that don’t make money,” said Morely Frank, director of business development for the Santa Fe. “Southern California is our major market, but it’s not so much domestic local traffic, which is diminishing, but our growing international business and growth of the ports.”

About 60% of both Santa Fe’s and Southern Pacific’s local business now originates as intermodal traffic.

“When passenger trains dwindled and Amtrak was born, many people in the public sector thought railroads were about to become extinct,” said Dale Reynolds, trainmaster for the Santa Fe in charge of San Diego-Fullerton and San Bernardino-Fullerton divisions. “This is not a true evaluation of the situation at all.”

Reynolds, whose office in the Fullerton depot once served as the telegraph room, has worked for the Santa Fe for 39 years. Every day, he sees 17 freight trains and 18 Amtrak passenger trains come and go from his trackside window. (Amtrak pays the Santa Fe for the right to run passenger trains on Santa Fe track.)

On one wall of Reynolds’ office is an old Mercury pendulum clock in a handsome wood case sporting a sign that evokes the confidence of an earlier era: “Santa Fe Standard Clock--This Clock Is Correct.”

The Santa Fe freight trains move through the county each day on two main lines, one extending from San Diego to Los Angeles, the other a cross-country route from Chicago to Los Angeles. Most of the cars entering the state pass through the switching yard in Barstow. The cars are rerouted again in San Bernardino before entering the county.

About 100 Santa Fe cars are “spotted,” or decoupled from the main lines in Fullerton and moved to destinations on three switcher trains, one to the Irvine industrial complex and two to the Fullerton and Anaheim spur.

Another 100 train cars move a day on Southern Pacific branch lines that connect with Southern Pacific’s main line at a large switching facility in Colton. From there, cars head north and east across the country, or to Southern Pacific’s Long Beach facility for transfer to ships.

The Southern Pacific trains move out of Anaheim, where seven “switcher” trains dispatch cars to Tustin, Costa Mesa, Huntington Beach, Santa Ana and Buena Park.

The trains move everything from ingredients used to make marshmallows at Kraft’s Buena Park plant to plastic pellets manufactured by Mobil Chemicals in Santa Ana and bound for other destinations, where they are used to make everything from food packaging to toys.

Coors and other brands of beer are shipped into the county by rail. So are the huge rolls of newsprint used by the county’s two major newspapers, The Times Orange County Edition and the Orange County Register.

Glimmer of the Glory Days

But the current volume of traffic, about half of what it was only a decade ago, provides a mere glimmer of the glory days of Orange County railroading.

In the 1870s and 1880s, the arrival of the railroads opened new markets for county farmers and allowed for an influx of new settlers. The towns of Tustin and Santa Ana competed for a Southern Pacific depot. Santa Ana won by making a $10,000 cash payment to the railroad, consigning Tustin to an economic backwater for years.

It was the railroads that brought on the first real estate boom in Orange County. In the 1880s, the Santa Fe’s Pacific Land Improvement Co. created whole new towns, such as Buena Park and Fullerton. Many others have since disappeared.

According to Orange County railroad historian Stephen Donaldson, by the 1940s, 45 freight trains a day passed through Orange County on Santa Fe’s Los Angeles-San Diego line. In the late 1940s, one Valencia orange orchard alone on the Irvine ranch filled 1,000 cars a year, providing the Santa Fe more business than any of the largest Orange County railroad customers today.

In the 1950s, the Southern Pacific and the Santa Fe acquired several thousand acres of real estate, developing about seven industrial parks. In the 1960s, the Santa Fe began building the Irvine Industrial Complex, a network of about five miles of track serving such companies as C.T. Film, a plastic products manufacturer, Champion Foods, Quality Beer and Weber Plywood.

The gradual transformation of the Orange County economy from agriculture and heavy manufacturing to services and high-technology has caused a major decline in local freight service, although the long-haul routes have thrived.

“I imagine you can load a lot of microchips on the back of truck,” quipped Michael Martin, a spokesman for the Santa Fe in Los Angeles.

According to Genevieve Guiliano, a research associate with UC Irvine’s Institute of Transportation Studies, the gradual decline of freight service in the county has not had a noticeable impact on the economy, since there are no major terminals in the county.

Clete Seymour, a 35-year veteran with the Southern Pacific and a freight clerk at the Anaheim depot since 1971, recalls that 15 switcher trains, moving about 200 Southern Pacific cars, pulled out of Anaheim each day during the early 1970s.

At the time, the Southern Pacific were still servicing the Villa Park Orchards in Orange, the Sakioka celery farms in Costa Mesa and the Holly Sugar Refinery in Santa Ana, Seymour said. All that business has vanished.

In 1970, the Anaheim depot had 32 office workers. Today, there are three.

TOP 10 COUNTY CUSTOMERS FOR SANTA FE AND SOUTHERN PACIFIC RAILROADS

SOUTHERN PACIFIC

Company, shipping site Goods transported 1. Hobbs Trucking, Anaheim paper products 2. Beatrice Hunt-Wesson, food oil, Fullerton tomato paste 3. The Times Orange County, paper Costa Mesa 4. Georgia Pacific, Buena Park and Anaheim corrugated boxes, lumber, paper 5. Reliable Wholesale Lumber, wood products Santa Ana, Huntington Beach 6. Humko Products, Buena Park food oil 7. Kraft, Buena Park food products 8. Mobil Chemical, Santa Ana plastic pellets 9. General Foods, Anaheim food products 10. Weyerhaeuser, Anaheim lumber and paper

SANTA FE

Company, shipping site Goods transported 1. Beatrice Hunt-Wesson, food oil, Fullerton tomato paste 2. Quaker Oats, Santa Ana oatmeal, cereal, Gatorade 3. Kimberly-Clark, Fullerton paper products, diapers 4. U.S.I. Corp., Anaheim chemicals 5. Coors Distributing Co., beer Tustin 6. Steelcase, Tustin material for office furniture 7. Container Corp. of America, Irvine corrugated boxes 8. Weber Plywood & Lumber, Tustin wood products 9. Quality Beer Distributors, Tustin beer 10. RB Furniture, Irvine furniture

Source: the railroads