Conway-based railroad’s future under scrutiny

sjones@thesunnews.comSeptember 29, 2012 

— Officials in Horry, Marion and Columbus, N.C., counties have formed a committee to figure out what can be done to get the area’s rail service back on track.

The officials from government and business consider the presence of rail transportation critical to the area not only to support current jobs but also to facilitate the expansion of existing businesses, the location of new businesses and the growth of jobs associated with either.

The rail service has been shut down for more than a year, and area leaders are getting increasingly nervous by the absence.

Conway-based Carolina Southern Railroad owns 93 miles of track in the three counties and has not operated since August 2011 because of structural problems on some of its bridges.

The company has spent $400,000 so far on the seven bridges with problems severe enough to shut down operations, Jason Pippin, the railroad’s general manager and son of owner Ken Pippin, said Wednesday. The railroad has completed work on three of them, and Pippin estimated the unfinished four bridges need another $1.5 million to finish the job.

But the Pippins don’t have the money for the repairs, and in fact are dipping into their personal funds to keep open Carolina Southern’s offices in the Conway Train Depot.

Brad Lofton, executive director of the Myrtle Beach Regional Economic Development Corp., said the committee will be looking at both short-term and long-term solutions to the railroad’s problems.

Doug Wendel, EDC chairman, was named co-chair of the three-county committee, a job he will share with Tabor City, N.C., attorney Dennis Worley. Wendel said all possibilities will be open to discussion, including a buyout of the area’s railroad or a loan that will give it the money to fix its bridges and make other improvements.

Wendel and Lofton each called the railroad a critical component for some area businesses and in Horry County’s recruitment of new industry.

Lofton said industries are looking at two things as essential when scouting new locations. The first, he said, is access to an interstate highway, which Horry County cannot give them.

“If you don’t have interstates,” Lofton said, “then you’ve got to have rail.”

Lofton said that it’s not just the recruitment of new industries that is suffering because of Carolina Southern’s shutdown. Existing businesses, such as MetGlass in the Atlantic Center, are having to find alternative, more expensive ways to get raw materials in the absence of rail service. Some 800 workers in Horry County have jobs with businesses that rely on railroad service, he said.

The situation in the other two counties is similar.

Gary Lanier, director of the Columbus County Economic Development Commission, said at least one business has laid off employees because of the railroad’s shutdown and others might not expand as the economy improves. They could move operations elsewhere if the situation isn’t corrected.

“(Rail service) is a key piece of infrastructure for us,” Lanier said.

A $4 million purchase

The rail line was originally built in 1887 by the Chadbourn brothers as a way to get rice and peanuts to Conway where they would be shipped out by paddlewheel boats.

Jason Pippin said his father bought the private railroad in 1991 for about $4 million. The portion from Conway to Myrtle Beach, which is owned by Horry County, still uses rail that was manufactured in 1925 and bought used for the line in 1952, Ken Pippin said.

After his purchase, Ken Pippin waged a sometimes contentious, 10-year battle with Horry County to rent the county-owned rail, eventually securing a 20-year lease of the 14.1 miles of track.

A study done for the Myrtle Beach EDC earlier this year determined that Carolina Southern operated profitably in 2008-2010, and said a small infrastructure surcharge to its customers would allow it to repay a $600,000 loan from Horry County for infrastructure improvements as well as to build a reserve fund for future maintenance and improvements.

The study assumed the railroad would get millions in federal grant money for the bulk of the work, but so far that’s not come through.

The railroad’s current problems began in 2011, Jason Pippin said. The Federal Railroad Administration issued final regulations specifically for bridges in 2010 and in May 2011, inspected Carolina Southern’s bridges. Because of deficiencies found, the railroad voluntarily ceased operations, Pippin said, but conceded that inspectors told the railroad they likely would shut it down had the company tried to keep running.

Pippin said that despite halting operations, the company kept all its 25 employees on the payroll.

In August of that year, operations began again but were halted within weeks after a follow-up inspection by FRA officials. Shortly after, Pippin said, 22 employees were laid off. He said Carolina Southern still uses some of those employees on a part-time basis as they are needed.

The Pippins have sold four vintage passenger rail cars that were parked on a siding at the Conway Train Depot. Jason Pippin said the family will buy more when good times come again, but their sale also represented an emotional loss: He was married in one of the cars and the family celebrated birthdays in others.

Today, the company’s offices inside the depot are quiet -- Jason Pippin was the only person in them at midday Wednesday -- but still gleam with old, highly-polished wood and impress with numerous railroad and other antiques.

Not invited

The Pippins were not invited to the three-county meeting early last week that resulted in the formation of the committee, and in fact were asked in an email not to attend.

Lanier, who sent the email, said several people primarily from Horry County wanted the Pippins be excluded, even though it was a public meeting, because they felt the discussion could be more frank and open without them being present.

“There does seem to be an undercurrent with some people that they’re not happy with the way things have been going with the railroad over the last few years,” Lanier said.

He wouldn’t specify who asked him to exclude the Pippins, but when asked specifically, he said that Wendel was not among them.

Wendel said he was surprised when he saw the Pippins were not at the meeting.

“They’ve got to be a player at the table,” he said.

Ken Pippin said he didn’t take offense at being asked not to attend, noting that he is glad the three counties have met and that it seems to be coming out positively. He said Friday afternoon that he had spoken with Wendel since the meeting and that Wendel invited him to the committee’s first meeting on Oct. 8.

The railroad study done for the Myrtle Beach EDC noted that a prolonged shutdown could deteriorate Carolina Southern’s operations to the point that it will threaten its ability to do business. The study honed in particularly on the amount of business the railroad had hauling coal to Santee Cooper’s Grainger plant in Conway -- at the time the railroad’s biggest customer -- and acknowledged at that time that Santee Cooper was considering closing the plant.

Santee Cooper spokeswoman Mollie Gore said Friday the plant is officially listed as idle and doesn’t need any coal deliveries. The company has moved about half the plant’s employees to other locations, leaving just 20 in Conway while the company ponders the plant’s future.

Similarly, the Georgia Pacific operation in Columbus County is in an idle status, Lanier said, but that is expected to change as the economy improves. Should the railroad not be operational when the company needs it, Lanier said Georgia Pacific could move the operation elsewhere and permanently close the Columbus operation.

Ken Pippin said that while the loss of business from Santee Cooper would be a blow, there are possibilities for the future of the plant, which he wouldn’t discuss but said could provide substantial business for Carolina Southern.

Grant refusals

Carolina Southern was turned down for two federal grants to fix its bridges and other infrastructure, and Jason Pippin said he doesn’t know how much longer Carolina Southern can hold out awaiting rescue.

Lofton said Pippin’s $1.5 million, bridge improvement estimate was a good one for the work it is to do. But he said that about $4 million is needed to upgrade the bridges to safely carry the heavier loads common in today’s rail industry. The study says the entire system should be upgraded for the heavier loads at an estimated $14 million because the bigger loads per car will result in lower charges to customers.

It would cost $177 million to build the 93 miles of rail line from scratch today, the study said.

Lanier is a proponent of spending the extra money for higher upgrades, because those that cost less require essentially the same work. So why not build for the future rather than the present, he said.

Some involved in the discussions feel that public money can’t be spent on a private entity such as Carolina Southern, he said, but at the same time agreed that public-private partnerships are common these days.

What he believes the committee could do is to create a structure to lend Carolina Southern the money it needs while protecting the public’s investment.

But, as with others, Lanier said he doesn’t know what may happen.

“I’d consider anything,” Ken Pippin said when asked if he would consider a buyout. He said he hasn’t thought about selling Carolina Southern and has no idea how much would have to be offered for him to take it seriously.

And he said that Carolina Southern will be OK for a while. He pointed out that since the railroad is not running, it also doesn’t have the operating costs.

“I think anything is a possibility,” Wendel said. “It’s going to take us all pulling together to make this happen.”

Contact STEVE JONES at 444-1765.

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