Service Industry...People Business
By Betsy Cohen of the Ravalli Republic - Although he is not a millworker, Jim Lewis is keenly aware of the economic wallop that hit Frenchtown when Smurfit-Stone Container Corp. closed its Montana paper mill just over a year ago.
The Frenchtown resident with three children in the school district is also Director of Marketing and Sales for Montana Rail Link.
When the mill shuttered for good in January 2010 and left 400-some workers in need of a job, Lewis' company was forced to layoff 46 of its railroad employees.
Smurfit was one of Montana Rail Link's top customers, and the loss of the mill contract meant a reduction in railroad workers.
It was a grim time, Lewis said, but thankfully things at the railroad company have turned around for the better.
Since last June, demand for commodities in the global market have increased prices for coal, wheat and copper, and that demand has translated into increased railroad transportation service.
American goods are sought after, in large part, because of natural disasters that have occurred in other parts of the world, such as the flooding in Australia, which swamped coal mines and halted production, and fires in Russia, which devastated wheat crops.
More to the point, the worldwide bull market for these products led to the hiring of 108 employees at Montana Rail Link. And the company is still hiring.
"All of the 50 people we furloughed last year we brought back, and in addition we hired 45 more people," Lewis said. "Our mechanical department got hit hard too during the last year, and of the 51 people we furloughed in that department, we brought back 23."
"We are definitely in growth mode on the operations side because of the additional train traffic we have," he said. "As far as our Montana traffic, we are up 4 to 5 percent, and our bridge traffic is up about 18 percent."
Most of what is being hauled is headed for the West Coast, where the commodities will then be shipped overseas.
The biggest consumer is China, Lewis said.
"China's demand for coal is growing, and right now they are burning more coal than the United States, Japan and Europe combined," he said. "They have a huge market for energy over there and they don't have enough coal of their own."
As the Asian country grows and invests in its infrastructure, economists estimate that half a billion Chinese will move into the middle class in the next 10 years,
"That growing middle class in China is going to want all the good things the American middle class has, things like good food and paper products," Lewis said.
The ripple effect?
Increased demand for corn - as a food source - and increased demand for wood fiber. All of which are trends that bode well for Montana, Lewis said.
The world is calling for things that are made, grown and harvested in Montana, and the railroad is eager to help deliver the goods.
"Russia put a 25 percent export tax on its raw logs and forced the Chinese to look elsewhere for wood fiber," Lewis said. "Because of that, we are getting a lot of interest for Montana wood fiber to meet that Chinese demand."
"Right now, we are pretty optimistic regarding the future of what rail traffic will do," he said. "There is life after Smurfit, and there are other opportunities for Montana to develop, especially in the wood products industry."