Here is a second article that also ran in Sunday's Mirror.


Establishing business plan key to keep K-4 running long term

By William Kibler

Latent magic might have helped Michigan's Steam Railroading Institute find a Hollywood theme to support the operation of its Berkshire locomotive.
But the Railroaders Memorial Museum needs practical business sense to succeed long term with its K-4, which may return this fall from an 8¢-year restoration in Scranton.
It won't be easy, experts say.
The magic in Michigan surfaced after the institute's Berkshire became the model for the locomotive in the movie "Polar Express," where Santa Claus transports children to the North Pole by steam locomotive.
Altoona must not rely on the magic of a Hollywood movie. Like the institute, the museum should hire a consultant and do a business plan, said Dennis Braid, executive director of the institute near Flint, Mich.
"The single most important factor is realistic management," said John Craft, operator of the Steam Central Web site.
Without a business plan, the museum risks failure, like many steam excursion services, experts say. Those fail because steam locomotives are so expensive to operate.
"You're running a piece of equipment [that railroads] got rid of 50 years ago because it was not economical," said Linn Moedinger, president and chief mechanical officer of the Strasburg Railroad in Lancaster County, which has run steam excursions since 1960. "It's not any more economical today."
It's a Civil War technology, said Andrew Muller, proprietor of the Reading and Northern Railroad in Berks County.
"They use all the elements of the Earth to destroy themselves -- heat, oxygen, sulfur," Muller said.
Running a half-dozen excursions a year with the K-4 and keeping the locomotive in running condition between trips could swell the museum's budget by $75,000 a year, Braid said.
It could swell more than that, said Steve Lee, manager of the Union Pacific Railroad's steam program in Cheyenne, Wyo.
"More than they think," he said.
In addition to regular maintenance and operations, money also is needed annually for major breakdowns and the required major boiler inspection and overhaul every 15 years, Craft said. Fixed costs are high, compared with variable costs, which means the risk is high.
The Michigan institute runs the Berkshire twice a year "outside the fence" and figures it costs $10,000 each time -- a calculation that takes fixed costs, such as insurance, into account.
Operation and maintenance on an engine like the K-4 could range from $10,000 for an individual year to $500,000, said Moedinger. A failed cylinder could cost $250,000.
Insurance costs vary radically, depending on many factors.
"It might cost them a million dollars, it might be $50,000," Moedinger said, adding that Strasburg's insurance cost is in six figures.
Operator Bennett Levin paid $18,000 for $10 million worth of liability to run five cars in Clearfield in 1992.
The K-4 and other attractions will increase visitors up to 400 percent, helping to defray the additional costs, Altoona museum Executive Director Scott Cessna has predicted.
The museum will need to tailor the price of K-4 tickets according to those costs, said Scott Lindsay, locomotive rebuilder and operator.
Strasburg is profitable, if barely, Moedinger said. It supplements excursion revenue with special events and contract shop work.
Muller's steam service failed in 1998.
"In the 1980s, [I] ran all over the place, lost hundreds of thousands of dollars and had a ball," he said.
Muller's two locomotives remain parked, needing $400,000 to become operational again, although they're in "excellent shape," he said.
Probably half the steam lines operating in 1960 are gone, Moedinger said.
But more start up all the time, Lindsay said.
People like to talk about riding old trains, but 99 percent won't drive a significant distance to do it, Muller said. Yet 99 percent will ride those trains if they vacation in a place where they're available.
Strasburg succeeds because it's in the middle of a major tourist area, he said. Same with a line at Disney World.
The museum's problem will be drawing tourists because it's not in a tourist area, Muller said.
Altoona can overcome that with creative and continual marketing, Levin said. It must network with other tourist sites, reach beyond railfans and advertise in conjunction with other area attractions.
"Piggyback advertising dollars," Levin said. "More bang for your buck."
It must ration the K-4's availability for excursions, or it will lose its novelty, he said.
The museum also needs to hook the K-4 to a matched set of period cars to provide riders with an authentic experience, Levin said.

Usually, the biggest problem is finding a railroad willing to put up with steam excursions, Lee said.
"The railroad usually looks at these things as a huge pain in the patoot," especially big ones like Norfolk Southern Corp., he said.
Some restored engines around the country remain idle for lack of a line to run on, Lee said.
Yet a successful K-4 excursion service is doable, Lindsay said.
Altoona museum will have advantages
The K-4 being well-known among railfans should help.
Everywhere he goes as a local chapter representative to the National Railway Historical Society, people ask, "What's up with the K-4?" said Dick Charlesworth, a member of the Horseshoe Curve Chapter of the National Railway Historical Society.
People admire the longevity of the K-4 line, first built in the teens of the 20th century, but it operated up to the time of dieselization by the Pennsylvania Railroad, he said.
They respect the K-4's holding its own in unauthorized races with newer-technology steam locomotives of the New York Central, on parallel tracks near Chicago, Charlesworth said. And Altoona's specimen is one of only two left in the world.
The museum recently used $5,000 of its own money to start an endowment to help defray the extra operation and maintenance costs for the K-4.
"It's going to be a great thing," Lee said. "But everybody needs to take a deep breath. It's not going to be God's gift to Altoona -- [although] it will be for a little while."

perhaps Altoona should contact the 261 group. They have operated very sucessfully over the years.

This topic and the other K-4 threads are being locked. I am starting a new thread called "K4 consolidated thread." Discussion of the K4 is welcome to proceed in the new thread, but all readers and posters are warned that in the new thread the Internchange guidelines will be vigorously and aggressively enforced.

Erik Ledbetter
Associate Editor, RyPN
RyPN Board Member