Bond between a town and its railroad is tested


POSTED: Sunday, December 27, 2009

DENTON, Mont. » The billionaire investor Warren E. Buffett, in buying control of the nation's second-biggest railroad last month, the Burlington Northern Santa Fe, said he believed in America's future and the role that railroads would play in building that future.

On a much, much smaller scale, the eight employees of the Central Montana Railroad say the same thing. In their case, the belief is drilled down to the grass-roots level and to the future of Denton, population 300, from which the Central's tiny, 84-mile empire extends.

The question facing this part of Montana, as tough economic times have stressed farming and railroading alike, is which future — the macro or the micro — to believe in and fight for.

“;If this railroad goes down, Denton will dry up and blow away,”; Dennis Ayers, 38, said as he eased engine No.1809 — an Eisenhower-era relic, like Central's five other engines, all refurbished from the scrap yard — into the shop building on a recent afternoon.

Burlington Northern officials say they understand, too, the stress that agricultural communities are under. But farmers have to survive first if towns like Denton are to have any hope at all — and cheaper rail shipping costs are the means to that end, they said.

Last month, Burlington Northern shut off payments to the Central that had been locked in for years by contract — by coincidence, company officials say, around the time Buffett took over — prompting a lawsuit by the state of Montana on Central's behalf. Burlington officials said the payments had inflated shipping costs for local farmers.

The big railroad has also been offering discounts if farmers bypass the Central and truck their wheat, the big cash crop in this part of Montana, directly to the main Burlington Northern line about 40 miles from here. A text-message system was recently established to alert growers to the best prices.

Many people have voted with their wallets. The number of railcars and bushels of wheat loaded by the Central here in Denton this year is expected to be the second lowest in 22 years, according to preliminary figures from the railroad, beating only the brutal drought year of 2003.

“;They're competing with the rest of the world,”; said Kevin Kaufman, Burlington Northern's group vice president for agricultural products, referring to Montana's wheat farmers, who compete with growers in Canada, Australia and elsewhere. “;It's our job as a transportation provider to provide a cost-effective, efficient system so that they can do that.”;

At the backdrop of everything is Montana's tumultuous railroad history. For decades, beginning in the late 1800s, it was one of the most fought-over states in the nation, with up to five major railroads at one time competing for business.

Now it is one of the least competitive, with Burlington Northern controlling about 95 percent of everything that moves on rail — a near monopoly that Montana's attorney general, Steve Bullock, said made the survival of the Central Montana more crucial than ever, to give farmers a choice of how and where to ship.

The Central Montana itself was born in the retreat of that competitive era. Its track system was orphaned in the early 1980s by the bankruptcy of the Chicago, Milwaukee, St. Paul and Pacific Railroad. The state eventually acquired the line in the bankruptcy settlement and set up the Central as a nonprofit community development corporation in 1985.

“;This is about the Central Montana and its 80-odd miles,”; Bullock said. “;It's also about the 1,800 miles that the Burlington Northern holds — and for us to make sure that that concentration doesn't increase and we become even more captive.”;

So is the Burlington Northern a bully or a savior? And is the Central Montana a railroad of small-town nostalgia, living on fumes and the memories of a simpler past, or a linchpin of community survival?

Like so many other stories at the frontier of economic life — from the local battles over Wal-Mart to the debate over how big banks did or did not bring on the housing crisis — the answers are less black and white or David and Goliath than either side suggests.

Farms have also consolidated here over the last 25 years, with fewer farmers making more high-volume shipping decisions — meaning that a few pennies more per bushel is a bigger consideration. Fewer farms also mean fewer people, which stresses local communities like Denton.

“;The railroad's trouble, depressed farming, drought — it all hits us at once,”; said Bill Phillips, the schools superintendent in Denton, where enrollment has fallen more than 30 percent over the last decade, to 102 students this year, in kindergarten through 12th grade. Phillips said that two more students were moving out before the new year.

Wheat farmers like Richard L. Barber and Ken Glass are caught in the middle of those blustering winds, and each has gone a different way.

Glass, 70, seeking the best prices he can, trucks his wheat to the Burlington elevator about 45 miles from here.

“;I have the trucks, so it makes sense for me,”; he said on a recent morning over breakfast the Back Roads Cafe, Denton's 7 a.m. social hub.

Barber, 66, sitting at the counter a few feet away, said he shipped locally, taking his wheat to the grain elevator here in Denton, where it is picked up by the Central Montana and transferred down the line to Burlington Northern and its ultimate destination on the West Coast.

“;We try to do all the business we can to support the town and the community and the businesses,”; Barber said.

Farming and railroading are also intertwined in Denton. Carla Allen, 57, Central's general manager, grew up in Denton, the daughter of a career trackman who worked most of his career on the old Milwaukee Road. But her grandfather was a farmer, she said, who hauled his wheat by wagon before the railroad first came to this part of Montana around 1914.

Her husband, Russ, is manager of the agricultural co-op and grain elevator in Denton. Russ Allen, sitting with a group of farmers over breakfast at the cafe, said he understood why farmers had to steer the best economic course. And Burlington Northern's new text-messaging system, he said, is a particularly effective tool in that. But he has a way to fight back, too, he said: intimate knowledge about each farmer and his or her economic situation and crop.

“;I know who needs the money,”; he said.

The co-op is also setting up its own text-messaging system, he added, aiming for operation by January.