A Grand Rapids company has become the first minority-owned firm to operate a railroad, the Department of Transportation said yesterday.
The Kent-Barry-Eaton Connection Railway Co. began operating a 42-mile stretch of track on July 15 from Grand Rapids to Vermontville, Mich., which was formerly operated by Consolidated Rail Corp.
However, a Michigan Department of Transportation official said that the minority operation will be subsidized by about $750,000 of Michigan taxpayers' funds for the first nine months as opposed to about $95,000 for a year under Conrail's operation.
The stretch of track will service 11 customers six of whom will be regulars, according to Edward Goodman, adminstrator for the state Railroad and Port Facility Divison. Running the railroad for such a large amount of money to serve those customers "is not worth it," Goodman said, but it is worth keeping the jobs that might be lost if the railroad were not operated.
Goodman said he doesn't know how many jobs would be affected if the railroad were not operated.
In Michigan, "Nine hundred and seventeen miles of track are subsidized to keep people employed," Goodman said. "Otherwise we'd pay more in welfare payments."
The operation by the minority-owned firm is expected to be more efficient than that under Conrail, Goodman said. He added that, under the minority firm, subsidies no longer will be necessary after nine years whereas, "With Conrail, there's no expectation of reaching that point."
The 10-person minority firm has no experience with railroads but it has hired a consultant, Goodman said. The track services shipments of automobile parts, grain and lumber products from rural western Michigan to main railroads, Goodman said.