The Coast Is (Almost) Clear

Posted on Aug 1, 2009 :: Development
Posted by , Insight on Business Staff Writer

Kohler's Whistling Straits

There’s been no rail service between Plymouth and Sheboygan Falls for more than 20 years, and companies along that rail corridor – major employers like Bemis Manufacturing and Richardson Industries – have managed without the service. But transportation costs continue to rise, and the cost and efficiency savings of shipping by rail could provide a significant competitive advantage, officials at both companies say. They’ll get that, thanks to a pair of rail improvement projects that should aid the Sheboygan County economy.

Plymouth Mayor Don Pohlman says enhanced rail service is expected to bring several million dollars in new industrial investment. Pohlman says an announcement is expected following the Aug. 6 Plymouth Plan Commission meeting that a new manufacturer is expected to locate in Plymouth and Sheboygan Falls and will add “several hundred new jobs” to the county economy over the next few years. A deal-breaker on the decision was availability of rail service.

“It’s going to be an exciting announcement,” says Pohlman. “The company will be 100 percent green and 100 percent manufacturing, and you can’t ask for much more than that in these times.”

Rail improvements affecting the county begin with an upgrade of the Wisconsin & Southern Railroad line from Milwaukee to Plymouth, which currently allows a top speed of approximately 5 to 10 miles per hour, according to Pohlman. When the upgrades are completed, rail traffic should be able to travel at 25 miles per hour or more, “and you need that kind of speed if companies are going to efficiently use rail freight effectively,” says Pohlman.

“This year we are installing 7,000 new ties in the line between Saukville and Plymouth as a maintenance activity until the state has the necessary funding for capital rehabilitation,” says WSOR Community Development Manager Ken Lucht. “Next year, we are planning to install 20,000 to 25,000 more ties as a phase one capital project. The following year, we hope the state has necessary funding to replace the old, deteriorated rail with continuous welded rail that is [up to date with] today’s and tomorrow’s rail industry standards. WSOR’s five-year plan calls for the entire corridor from Saukville to Plymouth to be updated to standards that will enable trains to operate efficiently and safely for years to come.”

The linchpin of the rail revamp will be reactivation of an 11-mile stretch of rail line connecting Plymouth and Sheboygan Falls. The state Department of Transportation acquired the line in May from Union Pacific, which last operated the line in the 1980s. The tracks have been overgrown and will need substantial reconstruction, says Lucht.

WSOR will operate the line once reconstruction is completed. Lucht says the $15 million project should be completed in 2010, and that at least four area companies have already said they’ll use the line for shipping. Bemis Manufacturing and Richardson head the list, joined by Kettle Lakes Cooperative and Glacier Transit and Storage.

“A portion of the corridor, say Plymouth to Hwy. 57, might be ready for service earlier in 2010,” says Lucht. “Until the entire corridor is fully operational, we plan to provide transload services as an alternative to those businesses currently without direct rail service.”

Money for the rail restoration is part of a $60 million freight rail infrastructure package in the state’s 2009-2011 biennial budget. WSOR will cover about 15 percent of the costs, with Sheboygan County picking up about 5 percent.

John Rogers, business development director for the Sheboygan County Chamber of Commerce, says the rail project is just one example of good news coming to a county beset by plant closures and layoffs. Sheboygan County’s unemployment rate has risen to more than 9 percent in the past year after standing at less than 4 percent a year ago. Some of the county’s largest employers have fallen victim to the national economic downturn. Earlier this year, J.L. French Automotive Castings laid off 337 workers. Just two years ago, J.L. French had received a $1.6 million loan from the state Department of Commerce to upgrade its Sheboygan plant and add 100 jobs. Also earlier this year, Gardner Denver announced it would close its Thomas Products manufacturing division in Sheboygan – a move that will cost 366 employees their jobs over the next year. Gardner Denver said it was consolidating operations in its Monroe, La., plant. Kohler Company, the county’s largest employer, has cut 650 jobs in the past year.

The good news begins in dribs and drabs. In April, Eclipse Manufacturing – in a reverse of the Gardner Denver move – announced that it would close its Pikeville, Tenn., plant and move those operations to Eclipse’s Sheboygan facility. That will add nearly 60 jobs in the Sheboygan economy. Eclipse’s move was aided by an incentive package that will include training assistance through Lakeshore Technical College. Paulette Enders, Sheboygan’s director of planning and development, says the incentive package also includes a $287,000 loan from the city. The company will not have to repay the loan if it retains its current workforce and creates 57 new jobs within five years.

The county will also get a slice of the stimulus package pie. The City of Plymouth will get a $760,000 grant from the state’s share of the American Recovery and Reinvestment Act. The City will use the grant to help fund a $4.2 million community center that will house a senior center, food pantry, day care center and Head Start program.

Lakeshore Technical College and the Plymouth School District are also looking toward the future of manufacturing with a proposal that would establish a manufacturing technology training center at Plymouth High School. Sargento Foods is also assisting in the project. Peter Thillman, director of workforce solutions at LTC, says the center, which may be funded in part by a $1 million federal grant, will benefit students and industry and also provide easier access to LTC’s training options.

Whatever economic ills might plague the region, Sheboygan County can at least rely on a strong tourism base, thanks in part to some of the most noteworthy golf courses in the Midwest. The PGA Championship will return in 2010 to Kohler’s Whistling Straits. The course hosted the PGA event in 2004, bringing with it an economic impact of more than $76 million, including more than $46 million in spending by out-of-state visitors, according to Northstar Economics. (For a personal view of Whistling Straits, see “Watch out, Tiger” on page 54.)

Whistling Straits also hosted the Senior Open in 2007 and Kohler’s other world-class course, Blackwolf Run, will host the U.S. Women’s Open in 2012. Those high-profile events attract attention and golfers to the region, but the county has a long history of attracting a wide range of visitors. Visitor spending to the county was down 2.24 percent in 2008, but was still a healthy $344 million – one of the highest in the state. Road America in Elkhart Lake attracts an estimated 700,000 visitors per year with an economic impact of $70 million.

Sheboygan is getting plenty of good press lately. In May, Coastal Living magazine named the city one of 18 “Dream Towns.” The magazine cited the city’s Lake Michigan shoreline, arts centers and walkable downtown as draws for visitors and residents.

The Coastal Living honor “will help bring visitors to our area plus it might make it easier for some of our key employers to bring the talented workers they seek, and their significant others, to Sheboygan County,” according to Rogers, who adds that Sheboygan compares favorably to other cities on the list in terms of cost of living, education, quality of life and home prices.

All in all, says Rogers, Sheboygan County probably has more reasons to be hopeful than the economy might indicate. “I think the mentality of the business community here is simply one of hope,” says Rogers. “I won’t go so far as to say people are optimistic or even cautiously optimistic, but I think we’re all hopeful that the worst is behind us and good things are ahead.”