September 10, 1997

To: ARRC Employees

From: Gov. Bill Sheffield President & CEO

Subject: New Locomotives

The Railroad Board of Directors authorized the purchase of eight new state-of-the-arts locomotives from the Electro-Motive Division of General Motors Corporation at their meeting in Fairbanks today. The purchase is going to have far-reaching effects on the Alaska Railroad, its customers and employees. I want to keep you informed of the process every step of the way.

The new locomotives will improve service to our customers and reduce operating costs.  Each of the new locomotives cost about $1.9 million. Delivery is scheduled for early 1999.

Continuing to patch up our old locomotives is not consistent with the Railroad's philosophy. We're in this for the long run -- we are committed to providing quality transportation services to Alaska for at least another 75 years -- and this investment clearly demonstrates that commitment.

I have appointed a task force of Railroad employees to coordinate the many changes that will be made over the next few years. Included in that group is Byron Henshaw, Rich Carter, Wes Rogers, Evan McKinney, Tom Cannon, Marge Doughty, John Kincaid, Pat Shake, and Jerry Anderson. This group will ensure that the experience and ideas of all Railroad employees are hear.

We have been studying options for updating our locomotive fleet for the past several months. The results of this study, which included on-site testing of new locomotives this summer, shows that the Railroad can reduce its fleet from 50 locomotives to about 30 locomotives. Our newest locomotive was built in 1985 and the oldest built in 1951. We spend about $7 million annually to operate and maintain this fleet of locomotives, which uses fifty-year-old technology.

The new 4,000 horsepower locomotives utilize state-of-the-arts technology, which improves reliability and tractive effort. Each of the new SD70MACs will pull more than twice the tonnage that can be pulled by one of the locomotives currently in use on the Alaska Railroad. Similar units have been in service in the Lower-48 for the past five years.

The power of these units is amazing. Where now it takes six locomotives to pull a train, with the new locomotives it will take only three. New technology increases fuel efficiency of the engine and lowers its emissions. Both of those facts mean it is good for the environment.

This purchase represents the first phase of the transition to a new locomotive fleet. The transition, which will be completed over the next five years, calls for the purchase of an additional eight SD70MACs. As new units are received, the existing units will be sold.

I hope you are as excited as I am about what the future holds for the Railroad. The purchase of these locomotives represents a solid step toward a solid future.