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Town comes up big with a rail-car giant

HORNELL, N.Y. -- This has been a railroad town since 1851, when President Millard Fillmore and Daniel Webster, his secretary of state, came through here on a smoke-belching steam locomotive for the inaugural run of the Erie Railroad from New York City to Dunkirk, the Buffalo News reported.

Webster sat on a rocking chair in the open rail car.

As the railroads thrived, so did Hornell. This is where the Erie built all its repair shops on the New York-to-Chicago line. They were giant, cavernous buildings where skilled workmen could fix up to 20 steam locomotives at a time. More than 5,000 workers made good wages at the shops.

And when the railroads suffered, so did Hornell. As the rails lost passengers to the automobile and airplane, its freight business to over-the-road truckers, Hornell's rail shops dropped to about three dozen workers.

But like the little engine that could, Hornell stayed true to its roots, suffering through Conrail's abandonment of the city in the mid 1970s, fly-by-night hucksters, temporary flings and Wall Street machinations that shut down a thriving transit car business just five years ago.

That persistence paid off. Hornell is now the North American home for a giant French transportation company that brought the world's largest subway contract - as much as $2.3 billion to build New York City's rail cars - to the Hornell rail shops.

Alstom Transportation will build as many as 1,700 New York transit cars in Hornell, a Canisteo Valley city in western Steuben County, 60 miles south of Rochester and 90 miles southeast of Buffalo.

How did an old industrial city, a former rail town, land an industrial giant like Alstom?

Because the city never gave up on rail, because the skilled work force never left, because the rail shops stayed under local control. As a result, tiny Hornell, population 9,000, today is America's biggest rail success story.

New York's Metropolitan Transit Authority is not alone in sending work here. Rail cars bearing the logos of the nation's biggest transit systems are parked in the Hornell yards. Washington will spend as much as $315 million on 182 new cars; Atlanta just awarded a $266 million contract to rebuild 238 transit cars; and the Chicago Transit Authority, which received the last of 600 rebuilt cars from the Hornell shops six months ahead of schedule, is about to award a contract for 700 new rail cars.

"It looks like Alstom is the odds-on favorite to get the job," said Hornell Mayor Shawn Hogan. "Hornell has been the workplace of choice for Chicago."

It's all been extremely gratifying to Hogan, a big, gregarious man who was first elected in 1985 and has been mayor longer than anyone else in New York State.

A native who returned to Hornell after school at St. Bonaventure University, he watched as the city's once-proud Erie Train Depot slowly started falling apart, taking down the surrounding neighborhood with it.

Now it's being restored under a $2.4 million project and will become Alstom's North American headquarters. A restaurant has just announced it will open across the street.

Hogan said there is now virtually no unemployment in Hornell - the city has no separate unemployment rate, but Hogan said anyone looking for work can find a job - and he has the pleasant task of seeking developers to build houses for the additional workers. Alstom's subcontractors are setting up shop, and the boom is attracting other, unrelated industry. Alstom came to Hornell in 1997 with 50 workers, some from headquarters in France, showing Hogan plans to hire as many as 1,000 workers within five years.

"I've dealt with a lot of companies," Hogan said. "This is the first company that said "this is what we're going to do' and they did it."

This year, right on schedule, Alstom hit the 1,000-employee mark.

Gregory C. Moscato, who came from Buffalo to become Alstom's vice president for human resources, has a personnel director's dream job. He has hired 332 new workers this year alone, many of them for production jobs that pay between $10 and $20 an hour.

"We are hiring right now. We're looking for engineers," Moscato said.

Alstom has brought manufacturing to a state that has lost thousands of manufacturing jobs. It's thriving in a transit market that some say is neglected by anti-rail policies set in Washington. And it willingly chose New York State despite its reputation for high taxes.

"I would say with the success story we have, no, we don't have to complain," Alain Percet, Alstom's vice president for rolling stock in the United States, said in a heavy French accent, a new sound heard around town.

The company, city officials and the union president who represents Alstom's blue-collar workers all point to a major reason for Alstom's success: A skilled work force that gives a day's work for a day's pay.

"I really think it's because this is a rural area," said Robert Mosko, president of Local 2741 of the International Association of Machinists. "Most of us worked on dairy farms; we grew up on them. One of the hardest jobs out there is farming. That type of work ethic is here."

"In Europe, there is a tremendous amount of downtime, long vacations," Hogan said. "When they came over here and saw the American work ethic, they were blown away."

The only setback Alstom had is getting enough supplies. One of the company's major steel suppliers, Buckeye Steel in Ohio, shut down in October, forcing Alstom to temporarily furlough 30 workers and lay off another 80 until a new supplier is found.

Paying for shops pays off Hornell had the rail shops to offer Alstom because of a risky decision - some called it foolhardy - made 30 years ago by the director of Hornell's industrial development agency. It was 1976, and Conrail, the new freight rail company formed from six bankrupt railroads, had announced it was closing the Hornell shops.

"We went to Philadelphia the next day and talked to them about buying the shops," said James W. Griffin, who is still the industrial development director. The deal was struck. Hornell would pay Conrail $400,000 and keep the shops in local control.

Griffin had only one problem: His agency had no money. He had a year to raise the $400,000 and the millions more needed to make the shops ready for a new tenant.

"At one of the public hearings, we were severely chastised by some community leaders for not trusting Conrail," Griffin said. "History has shown that Conrail could not care less about Hornell."

Griffin hustled together a patchwork of government grants to raise $4.4 million, bought the rail shops, refurbished them and put in new roads so workers could get to them. After a few false starts - a failed transit rehab venture by an obscure veterans group, a two-year stay by General Electric - Griffin landed the construction giant Morrison-Knudsen, which had a small rail division.

MK, as it's known here, brought the shops back to life in 1983 and kept the skilled work force rebuilding rail cars for transit systems around the country. At one point, it had 80 percent of the nation's contracts.

But a new chief executive officer at Morrison-Knudsen, William Agee, fresh off his controversial tenure at Bendix, a commercial vehicle manufacturer, nearly drove the company into the ground. A bonding company had to take over the existing Hornell contracts in 1995.

Rather than ship the work elsewhere, the bonding company formed Amerail, rehired the Hornell workers and finished the work, most of it for Chicago.

That left Griffin with empty plants, and he began pitching again. The workers, he said, were always his ace in the hole.

"You can find a lot of empty buildings," he said. "You can't find a labor force. Hornell has always been a railroad town, so we had a core of people. They could take a locomotive apart in their sleep."

Griffin discovered that Alstom, one of the world's largest transit companies, had no North American factories, and started pitching them hard. Alstom, it turns out, was looking to expand into the United States.

Workers applaud Alstom Alstom wasted no time courting its workers.

Told that Morrison-Knudsen officials were stunned when the first employees they interviewed all had the same request for one benefit, Alstom quickly agreed to it: Alstom workers get the first day of deer season off as a paid holiday.

"It's far improved," union president Mosko said of Alstom's operations. "We have a lot of the same managers we had as well as many new ones. The philosophies are different; the technology is improved."

Alstom is trying to introduce the team concept to production, but it hasn't happened.

"Different people have different versions," Mosko said. "We're headed there, but we're not where we should be."

Alstom, unlike other transit car companies that make this part or that, makes virtually the whole car in Hornell.

"One thing we have pride in as a community," Hogan said, "these cars are designed, engineered and built here."

The New York City contract called for 25 percent of the work - the truck bodies or undercarriages - to be done by Kawasaki, thus keeping its Yonkers plant open.

The only thing Alstom hasn't been able to find in the United States is the outside car body. They're made in Brazil and sent by freighter to Baltimore.

From there, a Hornell trucking company, Silk Road Transport, hauls them to Hornell.

"We have, to date, moved about 5,800 rail cars throughout the United States," said Silk Road's chief executive officer, Jane Picknelly Karlsten. "We specialize in that."

Karlsten moved her company to Hornell 20 years ago from Springfield, Mass., and while she hauls for other rail manufacturers as well, she said Alstom's arrival in Hornell was a big relief.

"Alstom appears to be a quality company," she said. "It helps make us feel good about the future."

Alstom refitted the old Erie shop for rebuilding subway cars, which is five stories high and three football fields long with some of the world's largest indoor cranes. The company also built a slightly smaller shop for new cars, and uses a third building erected by the industrial development agency for Morrison Knudsen for the undercarriages of rail cars and other parts.

Once the finished cars go through the shop, Silk Road delivers them, a process that requires permits through every state and every municipality off the interstates, and two escort vehicles.

Alstom also has contracts to build locomotives for New Jersey Transit, is redoing rail cars for New Jersey and Baltimore, and has built the electronic equipment for the high-speed Amtrak line Acela among Boston, New York and Washington. Other Alstom suppliers and subcontractors are also moving to Hornell, including a Spanish company, Talgo.

Percet, the company vice president, said Alstom has enough work right now to keep full production going for three to five years. Hogan said that extends to the next decade if New York and Washington pick up all the options and the Chicago bid is won.

Percet said he doesn't see any problem if Washington is not the biggest proponent of mass transit or rail.

"You have a railroad," he said, "you have to take care of your cars."

Monday, December 9, 2002

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