Crazy Topic - G&W in Michigan

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Re: Crazy Topic - G&W in Michigan

Unread postby Standard Railfan » Mon May 25, 2020 8:20 pm

PatAzo wrote:What Brookfield says about itself. "Brookfield Infrastructure Partners is a leading global infrastructure company that owns and operates high quality, long-life assets... We are focused on assets that generate stable cash flows and require minimal maintenance capital expenditures." .


To me, it sounds as though Brookfield buys something, runs it into the ground with no reinvestment and then sells out.
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Re: Crazy Topic - G&W in Michigan

Unread postby LansingRailFan » Mon May 25, 2020 9:00 pm

Standard Railfan wrote:
PatAzo wrote:What Brookfield says about itself. "Brookfield Infrastructure Partners is a leading global infrastructure company that owns and operates high quality, long-life assets... We are focused on assets that generate stable cash flows and require minimal maintenance capital expenditures." .


To me, it sounds as though Brookfield buys something, runs it into the ground with no reinvestment and then sells out.


Where did you read that? Sounds more like a “standard railfan” line of thinking.

The first sentence is key as it infers that they only buy quality assets that are in fine shape, as much of G&W’s assets are currently. The G&W’s cash flow is stable and doesn’t wax and wane dramatically or seasonally. And right after purchase they didn’t have any imminent major capital investments needed.
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Re: Crazy Topic - G&W in Michigan

Unread postby Saturnalia » Mon May 25, 2020 11:29 pm

LansingRailFan wrote:The first sentence is key as it infers that they only buy quality assets that are in fine shape, as much of G&W’s assets are currently. The G&W’s cash flow is stable and doesn’t wax and wane dramatically or seasonally. And right after purchase they didn’t have any imminent major capital investments needed.

Standard Railfan is taking the pessimistic view of that corporate statement...but there is definite cause to be skeptical of any statement like that. Now there may not be direct evidence in this case, but it is generally not wise to just gobble up that sort of statement, either
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Re: Crazy Topic - G&W in Michigan

Unread postby PatAzo » Tue May 26, 2020 9:43 am

Between what Brookfield says about itself and what Motely Fool says, I read it as if the property has a steady cash flow and doesn't need big influxes of capital they hold onto them. For a short line if you need millions for track work or a bridge replacement in hopes that this year sees a better harvest you might get sold off. If GLC made an attractive offer the property might get sold. If it meets their financial metrics they hold onto it.

Back to the OP I suppose it depends on performance and the potential sale price. Brookfield is a capital manager and money talks.
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Re: Crazy Topic - G&W in Michigan

Unread postby NS3322 » Tue May 26, 2020 3:38 pm

I know this will never happen (for many reasons), but why not have CPMY take over the GRE? The GRE would make for a much more scenic run (especially from Ada to Lowell) and give them 3 more customers.

At the very least, if an operator like WMI takes over, CPMY should look into having occasional excursions over the GRE.
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Re: Crazy Topic - G&W in Michigan

Unread postby kd_1014 » Tue May 26, 2020 7:23 pm

NS3322 wrote:I know this will never happen (for many reasons), but why not have CPMY take over the GRE? The GRE would make for a much more scenic run (especially from Ada to Lowell) and give them 3 more customers.

At the very least, if an operator like WMI takes over, CPMY should look into having occasional excursions over the GRE.


While I think that is an amazing idea, I don't think CPMY has the funds to purchase the line from Walker to Lowell. They might be able to lease it or have "trackage rights" from whoever the new owners might be. I think the town of Ada is a great place to have a excursion train run through with the line going right through downtown. It has always given me vibes of a town in the Cuyahoga Valley NP in Ohio where their tourist trains run.

Edit: My bad, didn't see the first few words in that post :lol: ! But it is a great idea nonetheless
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Re: Crazy Topic - G&W in Michigan

Unread postby Schteinkuh » Tue May 26, 2020 8:58 pm

NS3322 wrote:I know this will never happen (for many reasons), but why not have CPMY take over the GRE?

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Re: Crazy Topic - G&W in Michigan

Unread postby MQT1223 » Tue May 26, 2020 11:05 pm

SD80MAC wrote:Thankfully, the GRE isn’t in nearly as bad of shape as the WMI, yet....


Bring the GT high hoods to the GRE! Foam neck deep for miles around! :lol: :lol: :lol:
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Re: Crazy Topic - G&W in Michigan

Unread postby kd_1014 » Thu May 28, 2020 11:48 am

MQT1223 wrote:
SD80MAC wrote:Thankfully, the GRE isn’t in nearly as bad of shape as the WMI, yet....


Bring the GT high hoods to the GRE! Foam neck deep for miles around! :lol: :lol: :lol:


They are leased currently
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Re: Crazy Topic - G&W in Michigan

Unread postby MQT1223 » Thu May 28, 2020 7:50 pm

kd_1014 wrote:
MQT1223 wrote:
SD80MAC wrote:Thankfully, the GRE isn’t in nearly as bad of shape as the WMI, yet....


Bring the GT high hoods to the GRE! Foam neck deep for miles around! :lol: :lol: :lol:


They are leased currently


I'm aware, but I'm sure they can be swapped if need be.
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Re: Crazy Topic - G&W in Michigan

Unread postby Ben Higdon » Thu May 28, 2020 9:27 pm

The strategy where a railroad requires “minimal maintenance capital” is called “deferred maintenance”.
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Re: Crazy Topic - G&W in Michigan

Unread postby MQT1223 » Fri May 29, 2020 10:53 pm

Ben Higdon wrote:The strategy where a railroad requires “minimal maintenance capital” is called “deferred maintenance”.


So basically G&W becomes the new PC and Rock Island in terms of track?
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Re: Crazy Topic - G&W in Michigan

Unread postby PatAzo » Sat May 30, 2020 8:59 am

The Marquette has been laying ballast and tamping so it would appear maintenance isn't being deferred.
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Re: Crazy Topic - G&W in Michigan

Unread postby SD80MAC » Sat May 30, 2020 9:06 am

PatAzo wrote:The Marquette has been laying ballast and tamping so it would appear maintenance isn't being deferred.

Only because at this point the have to, most of the RR is 10 mph!
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Re: Crazy Topic - G&W in Michigan

Unread postby Raildudes dad » Sat May 30, 2020 10:18 am

Here's my $0.03. These corporate holding companies have more layers of upper management than necessary. Lots of former Class 1 guys. If they were very good at what they did........ Lots of good old boys............ Maybe steering business to friends......... Same thing with big engineering companies.
All these layers cost money and gets sucked from the roads. As for deferred maintence, where else can you easily reduce expenditures? Need people to run trains, need loco's to run trains, so what can you skimp on? Track maintenance until you get to 10 mph. Marketing - have one person handle 5 RR's. The person is so busy handling existing customer issues, they can't look for new business. New business generates new revenue - novel thought. Look at GDLK, Lake States, WMRR, 2 people are pretty much responsible for all the new business.
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Re: Crazy Topic - G&W in Michigan

Unread postby AARR » Sat May 30, 2020 10:28 am

You said it well, RDD. Compared to the other short lines in MI G&W's railroads don't seem to be picking up as much new business and may even be losing traffic.
Raildudes dad wrote:Here's my $0.03. These corporate holding companies have more layers of upper management than necessary. Lots of former Class 1 guys. If they were very good at what they did........ Lots of good old boys............ Maybe steering business to friends......... Same thing with big engineering companies.
All these layers cost money and gets sucked from the roads. As for deferred maintence, where else can you easily reduce expenditures? Need people to run trains, need loco's to run trains, so what can you skimp on? Track maintenance until you get to 10 mph. Marketing - have one person handle 5 RR's. The person is so busy handling existing customer issues, they can't look for new business. New business generates new revenue - novel thought. Look at GDLK, Lake States, WMRR, 2 people are pretty much responsible for all the new business.
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Re: Crazy Topic - G&W in Michigan

Unread postby Raildudes dad » Sat May 30, 2020 11:17 am

AARR wrote:You said it well, RDD. Compared to the other short lines in MI G&W's railroads don't seem to be picking up as much new business and may even be losing traffic.

A topic for off line sometime
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Re: Crazy Topic - G&W in Michigan

Unread postby PatAzo » Sun May 31, 2020 10:40 am

Tying back to the OP if G&W would divest some of its Michigan assets. In general private equity posts better returns the public corporations. They hold higher profit expectations and are less tolerant of poor performance. As Raildues Dad points out there is now an additional layer of management. For G&W then their new owners want steady profit, G&W has to kick additional money up the chain to help pay for Brookfield's overhead and they have to cover their cost of capital.

On the MQT I'd noticed speeds around Newaygo were down. If it's a slow down across the railroad due to track condition then the deferred maintenance was occurring prior to Brookfield sale (not that it won't continue). If it was G&W syphoning cash off the MQT or poor financial performance I can't say.

Growth MQT has a limitations. There are not a lot of potential customers along the line. What potential growth there is limited by CSX being their only Class One connection. If the customer doesn't fit CSX forget about it.

Assuming G&W was going to sell some assets who would they sell them to? Watco owns a piece of the GLC and bid on the MQT before it was sold to G&W.
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Re: Crazy Topic - G&W in Michigan

Unread postby SD80MAC » Sun May 31, 2020 11:21 am

MQT is limited to interchanging directly only with CSX, but lots of MQT traffic goes via the Grand Elk as well, via the GDLK transfer jobs.
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Re: Crazy Topic - G&W in Michigan

Unread postby GLC 392 » Sat Jun 13, 2020 7:50 pm

That’s mostly due to the Sanity Killer, know best as the Sperry and Geometry trucks and the “defects” they find.



PatAzo wrote:Tying back to the OP if G&W would divest some of its Michigan assets. In general private equity posts better returns the public corporations. They hold higher profit expectations and are less tolerant of poor performance. As Raildues Dad points out there is now an additional layer of management. For G&W then their new owners want steady profit, G&W has to kick additional money up the chain to help pay for Brookfield's overhead and they have to cover their cost of capital.

On the MQT I'd noticed speeds around Newaygo were down. If it's a slow down across the railroad due to track condition then the deferred maintenance was occurring prior to Brookfield sale (not that it won't continue). If it was G&W syphoning cash off the MQT or poor financial performance I can't say.

Growth MQT has a limitations. There are not a lot of potential customers along the line. What potential growth there is limited by CSX being their only Class One connection. If the customer doesn't fit CSX forget about it.

Assuming G&W was going to sell some assets who would they sell them to? Watco owns a piece of the GLC and bid on the MQT before it was sold to G&W.
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