by Tracie VanBecelaereManaging Editor

During November we honor those who have fought and served in our military but at Watco we are lucky enough to work with many such individuals on a daily basis. You can travel to almost any Watco property and find someone that has ei-ther served in the military, is currently in the National Guard or who has a family member that has, or is, serving. One location, the Junction City, Kansas, mechani-cal shop, has two such team members who spent last year oversees in Iraq. Tim Gannon and Shawn Eller were accused of suf-

fering an early mid-life crisis when they joined the Kansas National Guard. “We were just ready for some new experiences and

new opportunities,” said Gannon. After three months of training their unit was

sent to Iraq in January of 2008 where they were stationed in Ashraf City, Iraq, which is north of Baghdad, at Forward Operating Base Grizzly. Both men were gun truck drivers and gunners and their main duties included: patrolling the area, serving on the Quick Response Force and securing supplies from larger bases.“The main thing you needed to do there was pay

attention to your surroundings,” said Eller. “There was a lot of debris on the side of the road so you had to be aware of what looked suspicions and needed to be investigated.”When discussing the type of situations they dealt

with in Iraq Eller described this event. “My squad was on the Quick Response Force one night when we got the call that a MRAP (mine resistant ambush protected) vehicle was hit by an IED (improvised explosive device). We had to gear up and roll out to secure the area in case there was enemy present. The MRAP was laying on its side with the front end barely hanging on, but luckily no one was hurt. We waited for EOD (explosive ordnance disposal) to arrive to blow up two more IED’s that had not gone off. After that we loaded up and headed back to base.”Base consisted of trailer court with units divided into separate rooms which were

shared by soldiers. “It wasn’t too bad where we were,” said Gannon. “We had electricity, a chow hall,

a gym to work out in and halfway through our tour we were able to receive inter-net service. We watched a lot of movies in our down time.”Movies were one item that they often received in their care packages from home.

Other items they enjoyed receiving were snacks. According to the men what was available on base wasn’t always the best and it was always nice to have something

to keep you going while out on patrol.“Candy was something a lot of guys asked for,” said Eller “Not for themselves but

for the kids out on the roads. As we would drive by they’d run after us for candy and we’d throw them what we had. Another thing the kids in Iraq wanted were soccer balls, they couldn’t get enough of those. Coloring books, crayons anything like that was really appreciated.”“Most of the people liked having us around, sometimes they would get annoyed

with getting stopped and having to answer questions, but that’s how it is there and they pretty much understand that,” said Eller.

Gannon added, “The Iraqi solders also seemed to like having us there, they were really cool. They were always trading things with us. I had one sol-dier come up to me with his wallet open wanting to trade me for cash. He kept pointing to his bills and all I had was a twenty so I traded him. Ends up I got about $3.10 out of the deal. I kept the currency and gave it to some of my family as souvenirs.”Both men agreed the worst part of being away was

not getting to be with their families. Gannon’s wife Christy and his two sons; Noah,10 and Mathew, 4 anxiously awaited his return. Holding down the fort back home for Eller was his wife Heather and daughter Katherine, 16, son Michael, 12; step-son Dwayne, 15; stepdaughter Cheyanne, 14 and stepson Tyler, 9 . Their unit was able to return in time for the holidays in November of 2008 and both guardsmen spent their homecoming week getting reacquainted with their families. Gannon went on a fishing trip with his two boys and a family friend-

while Eller spent his first week back just relaxing and hanging out with his family.Their Watco family was just as glad to see them

come back home after their year’s absence. Keith Egan, Junction City plant manager, said, “Shawn and Tim are very dedi-

cated employees with diverse knowledge and they’re always ready for the next challenge. Both take pride in the quality of work they perform and have the goals of the Company and Customer always first. Tim has been at the Junction City shop for 11 years and Shawn has been at this location for 6 years. Watco could not ask for better individuals representing them serving their country or serving their customer.”Watco CEO Rick Webb added, “We’re proud to support the great Watco war-

riors for their service to our country and for us. We want them to understand and know while they are out protecting our interests when they come back home there will be a place waiting for them at Watco. We’re proud of these two men who have served our country and are glad to have them back home safely.”

DispatchtheThe newsletter for Watco Companies, Inc. and Watco Transportation Services, Inc. November 2009, Volume 10, Issue 11

Junction City duo serves country

Pictured left to right: Shawn Eller, DCO 2-137 Abrams tank crewmember and Tim Gannon, E-4 Specialist back at work at the Junction City, Kansas, mechanical shop after serving with the Kansas National Guard in Iraq last year.

Thank you to all the members of the Watco Team who have ever served or are serving in the military. The sacrifices you have made

that allow us to continue to exercise the freedoms we have every day are appreciated. Our prayers are with you and your families.

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by Tracie VanBecelaereManaging Editor

Thanks to the team on the Kansas and Oklahoma Railroad (KO) the Wichita, Kan., S.W.A.T. team has a better idea of how to handle a hostage situa-tion involving trains.

“We’ve done training on city busses, school busses, jets; almost every form of transportation except a train,” said Officer Russell Huff, of the Wichita Police Department. “I got the idea watch-ing a similar situation on television and contacted Brad Hayes, assistant general manager at the KO to see if they could work with us to get something going.”

What resulted was a week’s worth of training for 30 S.W.A.T. officers at Wichita’s South yard on various subjects like how a locomotive operates, how to disable it, what to do in a hostage situa-tion and the unique aspects of a locomotive that emergency personnel need to be aware of. The KO supplied not only the location but also the railcars

and locomotive used in the training.Officer Huff said, “We derived some valuable

information from the exercise. One thing we discovered is that the team cannot even get into the locomotive with their full gear on. That’s some-thing we’ll have to take a look at and determine a

better solution for.”“Learning how to disable the locomotive was also

very valuable. It’s much easier to control a situ-ation if it’s contained in one area versus moving through several different areas.”

Brad Hayes, KO assistant general manager said, “They let us watch and sit inside their mobile vehicle where we could see the training from the camera’s point of view. The lessons learned from this exercise were very much unexpected in my eyes.

“In addition, we also discussed situations involv-ing Hazmat cars and how we would address that issue.”

“We’ll be doing some Regional training in the Spring with 19 counties participating and we’d re-ally like to use this venue again,” said Officer Huff. “The hands on training is extremely valuable and can never be replaced in a classroom. Everyone with the KO was very helpful in educating us on locomotives, trains and the railroad in general and we enjoyed the opportunity to work with them.”

KO facilitates S.W.A.T. training

Members of the S.W.A.T. team training on the Kansas and Oklahoma Railroad’s Wichita South Yard

Extension of the Short line tax credit sought

204 Co-Sponsors218 to Majority

Rep. Earl Pomeroy (D-ND), Rep. Jerry Moran (R-KS), Sen. Blanche Lincoln (D-AR), and Sen. Mike Crapo (R-ID) have introduced legislation (H.R. 1132 & S. 461) to extend and improve the short line rail-road tax credit originally passed in 2004. The legisla-tion creates an incentive for short line railroads to invest in track rehabilitation by providing a tax credit of 50 cents for every dollar the railroad spends on track improvements. The credit is capped based on a mileage formula. H.R. 1132 and S. 461 propose the following:• Extend 45G for three years to cover tax years

2010, 2011, and 2012. • Allow eligibility for new short line railroads

created after January 1, 2005 and before January 1, 2009

• Increase the credit limitation - The proposed legislation increases the per mile credit limi-tation from $3,500 to $4,500 to account for increased construction costs since 2004

Blanche Lincoln, Senate co-sponsor of the tax credit legislation, said, “Short line railroads are an important part of our economy and they need to know from year-to-year that they can depend on funding for their improvements.”

Over 500 short line railroads preserve nearly 50,000 miles of track that otherwise would have been aban-doned by the large Class I railroads. Private and

government studies indicate it will cost $13 billion to bring the national short line system up to the neces-sary level of efficiency.

Short lines use approximately 356 million gallons of fuel less than trucks to move 10.6 million carloads of freight annually. Short lines save shippers 20% to 50% over comparable truck transportation. Short lines keep 30 million truckloads/year off the highway, sav-ing $1.3 billion per year in highway damage costs.

Look at the maps below and if your states’ Represen-tative and Senators have not agreed to co-sponsor the Short line tax credit contact their offices and let them know that their support is necessary to keep short line infrastructures at safe, efficient levels.

46 Co-Sponsors

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Customer Appreciation 2009What started out as an excuse for Watco’s CEO Rick Webb to goof-off and hunt with a couple of Customers has grown into an annual event that gives the Watco team the opportunity to thank many of our Customers for choosing to do business with us and allowing us to grow our businesses together. This year over 170 Watco Customers converged in Pittsburg, Kansas, to hunt, golf, shoot clay and build new friendships.

FX Studios

FX Studios

FX Studios

Ace Matthews, Mathews Construc-tion / APAC Inc ; Kellie Sisler, Watco

Bonnie Pittman, Greenbrier Rail Services

Ron Close, Watco and Warren Harshman, Harshman Construction

Bill White, Coffeyville Resources; Amy Parady, Watco and Steve Anders, Union Pacific Railroad

Matt Crew, Bank of Oklahoma.

Mark Schmidt, BNSF Railway and Peter Schmidt, guest.

Corey Ryan, Dan Johnson, Bill Thomson, Ed McGuire, all with BMO Capital Markets

l-r: Dennis Montgomery, D & J Plastics; Tammy Foshee, Regions Bank, Marty Day, MeadWestvaco, left to back: Tod Boothe, Luminant; Ace Mathews, Mathews Con-struction/APAC Inc.; Ed McGuire, BMO Capital Markets; Bill Thomson, BMO Capital Markets; Kelley Minnehan , RSI Logistics; Kellie Sisler, Watco; Amy Parady, Watco; Shasta Stump, Watco; Jim Weglicki, RSI Logistics.

l-r: Tipton Birch, JP Morgan Chase Bank, Becky Fear-monti, Watco; Jack Lewis, Watco, Dave Smith, Midwest Railcar Corporation.

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Grand Elk advisory team “cleans up”The moss definitely doesn’t grow under the feet of

the Grand Elk Team in Michigan. The Grand Elk Employee Action/Advisory Committee (EAAC) was formed on September 25, 2009 and their first action plan went into effect on October 9.

The committee was charged with helping the Grand Elk Railroad (GDLK) become a better railroad. The first meeting was an amazing success and at that meeting the committee decided that their first action

should be to clean up the right-of-way on the main-line in Plainwell, Mich.

The team set up a day and the entire committee and additional helpers showed up to clean up the right-of-way which was damaged by a strong storm earlier in the year. The primary clean-up was completed by the track department but the EAAC felt additional work needed to be done to complete the project.

The team met early in the day on October 9th and

started the clean-up of over 15 fully matured hard-woods and other branches and debris that cluttered the right-of-way. With a couple of chainsaws and a boom truck they had completed their task by lunch-time.

Carl Gearhart, track inspector and EAAC member said, “With the enthusiasm and spirit of team work we have, there are many more good things to come. Safety first, excellence always.”

Committee members include:Carl Gearhart Track InspectorShaun Lautner MachinistMark Moorlag Track LaborerCharles Powell Train ServiceDan Crow Train ServiceMike Spencer CDL Maintainer Assisting them for the day were:John Teglovic Regional Safety ManagerJon Parker Office ManagerRyan Laws MachinistJoe Grupczynski Track Laborer

Rodney Gordon, Grand Elk general manager said, “We are all very proud of the EAAC and their dedica-tion to making the Grand Elk a great place to work.”

Members of the Grand Elk Employee Action/Advisory Committee and helpers gathered to clean-up the right-of-way along the mainline track at Plainwell, Mich.

Watco donates former Frisco cement car to Heartlandsby John ChambersHeart of the Heartlands Historian

The Heart of the Heartlands Corporation (Heartlands) recently became the proud owner of a former Frisco cement hopper thanks to a donation from Watco Companies. On October 15th Watco chief executive officer Rick Webb approved the donation to the Heartlands so that they could add it to their railroad museum located in Carona, Kansas.

The car, currently lettered SKOL 84184, was built by the Pullman-Standard company in November of 1959 as a two bay covered cement hopper and was numbered SLSF 84184. The SLSF, known as the Frisco, was

purchased by the Burlington Northern (BN) in 1980. The car was never renumbered by the BN and they sold the car to the South Kansas & Oklahoma (SKOL), a Watco owned line, in 1996. It has been used on the SKOL in cement service since that time. The car is still in its as delivered paint scheme of Frisco gray with black billboard Frisco lettering on the sides and the numbers are in Frisco black script.

The Heartlands will add it to its display track at Carona in the near future to commemorate the cement industry and the impor-tant role that it has played in the growth of Southeast Kansas.

The Frisco cement car donated to the Heart of the Heartlands Corporation by Watco Companies heads toward its destination of Carona, Kansas.

Photo by Larry Spahn

The Federal Railroad Administration released a preliminary National Rail Plan (NRP) in mid-Octo-ber which addresses both the freight and passenger components of the national rail system.

Quoting from its executive summary, the prelimi-nary plan aims to “lay the groundwork for develop-ing polices to improve the U.S. transportation sys-tem. Its goals are consistent with the chief goals of the U.S. Department of Transportation: to improve safety, to foster livable communities, to increase the economic competitiveness of the U.S., and to pro-mote sustainable transportation.”

The preliminary plan covers the objectives for rail as part of a national transportation system, the need for a long-range plan, the importance of integrating state plans with a national plan, and a framework and outreach strategy for its development.

It goes on to note that a long-range plan "must be developed with an awareness of the transportation needs and demands of both passenger and freight, both of which increasingly move ‘intermodally,’ that is they use the most suitable mode of transportation for each segment of a particular journey."

The preliminary plan totals 33 pages and the FRA is soliciting input from states, freight railroads, and other transportation stakeholders about it.

For more information on the plan, log onto www.fra.dot.gov and click on “Preliminary National Rail Plan” on the site’s home page.

National Rail Plan released

This section is dedicated to the Watco Team members to give you a chance to share what’s happening in your corner of the Watco World.

BirthsJack William Fadler Courtney (Roach) and Bed

Fadler of Kansas City, Kan., are proud to announce the birth of baby boy Jack Wiliiam. He was born September 30 and weighed 8 lbs., 1 oz. and was 19 inches long. Grandpa Allan Roach is senior vice president of business development work-ing out of Springfield, Mo.

Rider Jax RileyJack and Stacey Riley of

Germantown, Tenn., are proud to announce the birth of baby boy Rider Jax. He was born October 8 and weighed 7 lbs., 2 oz. and was 20 inches long.

Grandpa Larry VanHouten works for information technology through the Pitts-burg, Kan., office.

EventsThe Heart of the Heartlands sponsored an excursion

train ride to the Pumpkin Patch on October 17 and 18 using the Watco passenger cars. As always the trip sold out as soon as tickets became available. The train leaves the Carona, Kansas, depot and travels to the Pumpkin Patch just outside of Pittsburg, Kan. Upon arrival passengers are provided lunch and then have an opportunity to play in the corn bin, walk the maze and select pumpkins to take home to guard their front porches.

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WAT C O

WO R L D

November Anniversaries1 Year: Ken Addison, Clinton Alford, Taylor Anderson, Earnest Austin, Derek Brau, Bernardo Cuevas, Shamard Dright, Matthew Ebarb, Matthew Garcia, Michael Gilcrease, Melony Hires, Travis Hodge, Ricky Kaser, Gregory Lach, Joseph Magruder, Justin Near, Jeffrey Pierce, Earl Razor, Mark Ready, Mack Renner, Wyndell Rochell, Thomas Sherman, Steve Tanner, Earl VanLear, Kevin Weathy, Jerry Williams, Aaron Williamson.2 Years: Edgar Bazaldua, Randy Bryant, Kelly Callahan, Charles Chipman, Shawn Coates, Austin Combs, Timothy Crawford, Lydia Davilla, Armando DeLeon, Calvin Everson, William Farley, Jon Fortner, Jason Gillispie, John Grant, Michael Harlan, Kacey Hurley, Kevin Jeter, Lisa Johnson, Thomas Kennedy, Lisa Palomo, David Rotz, Timothy Stahlhut, Efigenio Tovar.3 Years: Jason Cagle, Kevin Dillard, Robert Groff, Robert Hampton, Josh Jewell, Afton Lundy, Melvin McAdoo, Jeffery Mims, Marvin Miner, Luis Rivera, Earl Sims, Kenneth Socie, Ron Spencer.4 Years: Phillip Billingsley, Dale Bright, Robert Bruner, Larry Cooper, Jeffrey Darnell, Betsy Foster, Robert Godfrey, Jarmaine Grant, Travis Hairston, Matthew Lefler, Larry Lenington, Bobbie Moore, John Peek, Robert Pritchett, David Ruggles, Robert Williamson.5 Years: Rick Baden, Josh Braden, Robert Henderson, Zachary Henwood, Ronald Largent, James Meyer, Chans Miller, Dan Peterson, Dale

Reeser, Vince Regnier, James Stapleton, Bill Ward, Thomas Wolford.6 Years: Gail Norman, Robert Powell, Eric Slimp, James Wolf.7 Years: Linda Klidies, Francis Mangiacarne, Tom Spradlin, John Streich, Roy Wallace.8 Years: Jimmy Johnson, Randall Martineau, Gerald Wiser.9 Years: David Binder, Eric Hamilton.10 Years: John Grassinger, Kelley Scarrow.11 Years: Fernando Avila, Robert De Luna.12 Years: Chris Brown, Edward Cullinan, Don Slaughter, Duncan Wilkie.13 Years: Paul Loper, Brian McCoy, Bonnie Pagel.14 Years: Tim Brinkerhoff, Chad Byles.15 Years: Michael Overbay, Tony Tatum.16 Years: Carlos Barnes, John Brown, Jack Lisle, John Ostrander, Terry Showalter.17 Years: Charlie Everson, Thomas Murray.18 Years: James Belsha, Bennie Hill.19 Years: Rickey Robertson.20 Years: Billy Brooks, Jose Cerna, Floyd Swonke.21 Years: Kenneth Jordan.22 Years: David Louk.24 Years: David Bidleman, Monte Dunham, Vic McClure, William Norris.26 Years: Rolan Herman, Kenneth Williams, Ronald Wissinger.28 Years: Gary Griffin, Roy Thomas.31 Years: James Ellis.34 Years: Herbert Liddell, Gregory Rasberry.

Rider Jax Riley

Jack William Fadler

Passengers from the Pumpkin Patch ride search for the perfect gourd.

by Mack RennerVice President Business Development

If you’re a football fan, you hear it all the time from coaches and players. “We’ve got to play four quarters.” Football games are often won or lost in the final minutes where a few poorly executed plays can undo an other-wise solid performance. As we approach the end of 2009, it’s important that we finish the year strong and main-tain our focus on carrying out the Watco Foundation Principles of improved customer satisfaction, improved profitability, and long-term focus. It will not only give us momentum heading into 2010 but it will also maximize the amount we all earn under the EVA Bonus Plan.

There is no doubt that 2009 has been a challenging year, with a sluggish economy and strong headwinds in the rail industry. But, as always, there is much to be proud of at Watco. We have strengthened relationships with our Customers by making their supply chains more efficient. We have reduced our expenses in anticipation of de-creased demand. We have found new and creative ways to generate revenue in all our business units. To continue with the football analogy, we’ve played three good quarters.

Despite this commendable effort, through the first nine months of the year, we are slightly behind last year’s pace in terms of EVA. We are within reach of our AOP goals and a strong fourth quarter could make a real dif-ference. Now more than ever, it’s important that we all focus on the day-to-day activities that can improve EVA. Below are some examples of what you can do to make the last quarter of the year the best quarter of the year.• Ask for the business. When you are visiting with a Customer, ask them if there is anything Watco could be

doing for them that we are not already doing. It’s always surprising how many opportunities arise from this basic communication.

• Watch those expenses. Most readers of this article are likely cutting costs in their personal lives…a prudent decision in uncertain times. As a company we must also look for ways to reduce expenses. Every dollar counts.

• Safety is job one. A constant focus on safety will not only keep our colleagues and customers out of harm’s way but it will reduce costs and boost the EVA bonus pool. Every accident affects our reputation and takes money out of our pockets.

• Look for new opportunities. The transloading/intermodal division is now loading and unloading crude oil. The mechanical division is now scrapping railcars and working on passenger cars. These are just a few ex-amples of new revenue streams that were established this year. Keep you eyes open for new revenue sources, even for things that we don’t do today.

• Take care of your Customers. Even if it doesn’t result in new business right away, we must always put our Customers first and provide them the best service possible. Our Customers give us everything we have and if we take care of them everyday, they will continue to make Watco a success.

EVA Bonus Plan: fourth quarter can make a difference

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The newsletter for Watco Companies, Inc. and Watco Transportation Services, Inc.November 2009, Volume 10, Issue 11

Green engine rolling on Watco short lineby Tracie VanBecelaereManaging Editor

At first glance the newest engine on Watco’s Austin Western Railroad (AWRR) in Texas looks royal blue and gold but the truth is, it’s green as grass. The brand new Gen Set N-ViroMotive locomotive arrived in Austin, Texas, for testing on September 21, 2009. In their effort to constantly improve efficien-cies at Watco operated properties, Watco’s Locomotive Support team lead by senior vice president and chief mechanical officer of locomotives Larry Jensen, arranged for the testing of the hybrid locomotive.

The NREX 2020 is National Railway’s contribution to the new breed of fuel ef-ficient locomotives which have evolved as a result of high fuel prices and government mandated emission restrictions. Replacing the single engine prime mover with three GenSets producing equal horsepower coordinated by 21st century computer and electronic controls, allows the N-Vi-roMotive to not only exceed the capacity of the prime movers to move freight and passengers but with unmatched reductions in NOx and PMs emissions (85-90%), noise (85%), fuel consumption (40%-60%) and maintenance costs (35-50%).

Watco’s Larry Jensen and Keith Testerman, along with National Railway’s Gerald Cochran and Scott Ford, were on site to evaluate the locomotive and assist AWRR’s locomotive engineers in making the adaptation to the hybrid ma-chine. The unit actually looks and operates like a normal diesel electric locomo-tive, less the noise and smoke.

Certifications of the GenSet locomotive include:• Certified by the Environmental Protection Agency of the United States • First locomotive recognized as Ultra Low Emitting (ULEL) by the Cali-

fornia Air Resources Board • Meets all criteria of EPA regulations for 2012 Tier III • Meets all criteria of EPA regulations for 2015 Tier IV excepting NOx • Part 238 compliant for locomotive passenger services

The locomotive was first placed in consist with two GP-50 units on AWRR’s Summit switcher job. This is a grueling segment of track that has numerous two percent grades and heavily loaded rock trains. In order to level the playing field,

the three units were all topped with fuel, tonnage recorded, and event recorders were down-loaded. The first run was from Summit to Capital Aggregate’s rock quarry near Marble Falls and back to Summit. Austin Western chief mechanical officer Dan Martin joined Jensen and Testerman in riding the three locomotives to collect data and monitor the performance of each unit.

While the GenSet locomotive appeared to be “lazy” and allowed the other units to do all the work, it was actually performing as designed and only pro-

ducing power when needed. When the first test run was completed, fuel readings were collected along with event recorder downloads. Preliminary figures revealed that the GenSet consumed approximately 35 percent less fuel than the GP 50 over a 4 hour 18 minute time span while operating over 38.94 miles of track.

The GenSet was then moved to the Butler Yard loading station east of Austin where it was operated for several days as a single unit road switcher. This job afforded the testers the opportunity to compare the unit with a GP 40-2 locomotive that normally works this assignment.

Testerman said, “Some of the com-ments made by engineers while operating

the unit were, “I can’t tell what it is doing because I can’t hear it”, and “It only gives

you what it needs to”. Although the lack of sound, vibration, and smoke did make the unit feel different from conventional diesel electric locomotives, the engineers adapted quickly and were usually operating with confidence within the hour.”

The test was conducted over a 124 hour time span and preliminary numbers indicate the Gen Set to produce a fuel savings of approximately 42 percent when compared to the GP 40-2 that normally performs this job.

Another efficiency that was noted immediately was a savings in labor. The crew was able to save approximately twenty minutes when first boarding the locomotive because the GenSet doesn’t require the engineer to engage a bat-tery switch, any related control breakers, or to blow down the engine cylinders. The engineer simply places the isolation switch on line and insert and move the reverser handle to start the engine.

The Watco Locomotive Support Team is continuing to evaluate fuel usage data and performance of the unit to determine how the GenSet Hybrid com-pares to existing locomotives and other fuel and time conserving options in today’s evolving world of railroading.

The three engine locomotive on the Austin Western Railroad.Photo by Carol Hamilton, AWRR office clerk