Volume 2, Issue 9
September 7, 2001

Inside this issue:
Progress through teamwork for K&O
Letner proud of SK&O customer service
Employee News
Anniversaries
Watco warehouse involved in storage and trucking

Progress through teamwork for K&O By John Brown Chief Operating Officer Watco Transportation Services

Typically the most challenging period of any Railroad Start-Up is the first sixty days. New people are being trained, new procedures are being learned, new expectations are being strived for, and new territories are being defined. Group all of this with the increase in car loadings due to the wheat harvest, and you have a recipe for some serious challenges.

This update to everyone in the Watco family is to celebrate the success we have had with our largest acquisition, the Kansas & Oklahoma Railroad, and to underscore our need to constantly improve.

Working together, every employee, every manager, from every department- we can be the best that we can. I have been personally motivated to work even harder than ever as I see the commitment from our entire company to make the K&O a success.

Thanks in part to the dedication of the retained employees, and the commitment of Watco employees across all services, many of whom spent weeks away from their families to ensure the smoothest transition possible, we have been able to call this 60-day period a success. From early on we have been able to emulate the performances of the previous management, while ourselves learning the details of the day-to-day operations of the railroads, but emulating the previous results is not enough.

Armed with the valuable knowledge we have been able to collect, we are now in a better position to start implementing some of the tools and practices that have made Watco Railroads some of the most successful in the industry, and with the past two months under our belts, we must now adopt a sense of urgency, and begin making these necessary changes now.

Marketing and Business Development have worked to bring new business opportunities to the K&O, as well as explore ways to maximize our profitability by finding ways we can combine the strengths and territories of the neighboring SKOL Railroad. Cross state local moves are being investigated, as well as opportunities that exist at the Port of Catoosa (in Tulsa, Oklahoma) that will benefit both Railroads, and Watco as a whole.

We must now phase in scheduled service across the entire system, with emphasis being placed on those lines with the longest transit times. This should enable us to reduce overall costs and improve customer service.

A redefinition of operational territories will allow us to provide a greater level of accountability and responsibility, a step that has been proven historically to improve the efficiency, safety, and profitability of a Railroad. This coupled with improved training and safety will also help toward making the K&O a great Railroad.

We are exploring new ways within the locomotive department to improve the daily availability and performance of the locomotive fleet. These improvements should enable the mechanical department to work closer with the operations department, so any downtime can be minimized, and customer service can be maintained to the levels we are expecting.

Changes have already been made to the clerical operations, which have improved the coverage provided by the dispatch/customer service team. Other changes will be phased in, further improving the efficiency and accuracy of the Railroad as a whole.

The past 60 days have also provided us with the inspection time necessary to make strategic decisions regarding long-term capital improvements to the Railroad. The track department has developed a list of areas earmarked for capital improvement, and due to the urgency of these projects, we have already started these activities.

With the birth of the K&O, new expectations in service and commitment were forged. We have been successful in building customer expectations, now we have to build their confidence with our service.

With the first 60 days behind us, we are able to now look ahead and plan to meet or exceed these goals. This time the light at the end of the tunnel is a locomotive. A K&O locomotive that is transporting the future of Watco Companies by carrying the most valuable commodities we have; Customer Service, performance commitment, and the dedication of every employee across the whole system.

Randy Letner is a second-generation railroader. His father worked for the Missouri-Kansas-Texas Railroad, known as the Katy Railroad, as a Section Foreman for 14 years.

Now the Area Manager for Watco Transportation Services, Letner uses his years of experience working around railroads. Whether railroad construction for William A. Smith in Kansas City, or cribbing ties and managing a train crew for Watco Companies, railroading is in his blood.

He even remembers playing around railroads as a kid.

"I used to play on the old MOP track that's now the SEK. I never thought one day I would work on it. There was this one engineer who used to throw my sister and I a pack of Juicy Fruit gum."

Could a simple pleasure such as a pack of gum thrown by a stranger be the connection between a man and his destiny? Maybe not, but something sure connected Letner to Watco.

"I've had a lot of jobs, but nothing suited my fancy until this job," he said.

Beginning on the track back in 1988, Letner toiled on the track crew for around 7 years.

"I worked on the track crew, from Nevada to Chetopa. I guess it was about 1995 when I got injured."

That injury changed his career. One vertebrae in his back was injured working on a line of track.

"We were cribbing up track from a washed-out area. The track was completely gone so that you could walk under it. Throwing around too many ties hurt my back. I was out (from work) for a while and when I came back I blew out another vertebrae. That's when I started working on service."

Letner’s main duty as Area Manager is pleasing the customers. Just a few of those he serves are the Kansas City Southern Railroad, the KAMO Elevator, ConAgra, Pitt Plastics and Watco’s Cornell facility. It takes a little more than a pack of chewing gum to please them though.

"I manage four men, Gary Brown, Tim Herman, John Horton and Mick Kensley. The customers contact me with what they need and then I tell the guys," Letner said.

"We do everything physically possible to meet their needs. We'll work weekends if need be to keep them (the customer) going."

Effective customer service is a policy Letner and all Watco employees have learned. The growth this company has seen is proof that customers are pleased.

"This company has increased so fast in such a short time-especially for a shortline railroad. Back when I started we thought 12 cars was a big train. Now we're pulling 80 to 100 cars."

Like most Watco employees, Letner agrees that the company is headed in the correct direction to find success.

"It’s great to be part of a company that has such a major foot-hold in the Kansas railroad industry. Watco is keeping the railroad heritage alive and on the move. Hats off to Dick Webb for sticking to his dreams and working hard to make them become a reality."

Letner added that knowledge is something he gains daily.

"You never stop learning. Everyday is different; you cope with it and deal. You can overcome any obstacle, but to get things done you've got to have good people…and we do. I've got a great crew. They do things without being told, and they do it efficiently to cut costs and man-hours. That's something we didn't know a thing about until John Brown (COO Watco Transportation) came in and laid it all out. We have a goal now and we keep after that goal. When we achieve one, we make another," Letner said.

If money makes the world go 'round, then customer satisfaction makes the trains owned by Watco go 'round.

"I talk to the customers on a daily basis and the service they get from us is the best they've ever seen. No one has serviced them like Watco does," said Letner.

Bill Coleman, President of Vinylplex, Inc. agrees that Letner’s crew goes above and beyond any service he has ever received.

"Typical rail services operate when and where they want, without regard to the needs of the customer. But the Pittsburg train crew has given up weekends and holidays to ensure that our industry is served," Coleman said.

Coleman has dealt with railroads for over 25 years and never thought he would be content with his rail service, let alone pleased.

"Without the rail industry, many hundreds of jobs would not be in existence. My business would not be able to run properly."

Letner has been married to his wife Mary for 26 years. They have an 8-year-old son named Jacob.

The family of Kim Bohrer, Administrative Assistant for the SKO and SLWC, welcome an exchange student to their home for the 2001-2002 school year. Eighteen year old Jairo Madiedo, is from Bogota’ Columbia and will be a senior at Cherryvale High School. To sponsor an exchange student, The Bohrer’s applied and had to pass background checks before being accepted into the program.

Marsha Brooks-Lopez joins the Twin Falls office in July as receptionist. Marsha has experience in management, real estate and accounting. She also used to own a Specialty Restoration and Abatement Company dealing in insurance.

Todd Buie, switchman and engineer for the South Kansas and Oklahoma Railroad in Cherryvale, KS, has been promoted to Location Manager. Todd will be in charge of operations at that location.

Sharron (Wilson) Turnage spent most of the month of July at military camp in Ft. Lewis, Washington. Over a 32-day period Cadet Turnage went through training for leadership to become an officer. Multiple tasks from rifle marksmanship to water survival were practiced. Upon graduation Sharron became a 2nd Lieutenant in the United States Army. Also, Sharron married 2nd Lieutenant Shawn Turnage August 18th in Pittsburg. They are stationed at Ft. Hood, Texas. Their mailing address is Rt. 1 Box 1134, Kempner, Texas, 76539.

Theodore Dobrie, and his wife Karen, have a new baby boy. Camden Tyler was born July 30th, weighing 7 pounds 9 ounces. Ted and Karen also have a 2-year-old daughter, Kaytlyn. Ted is the Regional Supervisor for Watco Companies Mobile Repairs in Jacksonville

Jarrell Nettles joins the Jacksonville Mechanical locations as a Railcar Repairman. Jarrel has over 16 years experience working on trucks and railcars. He and his wife Linda have 2 boys and 2 girls.

Carl Berguist joins the Palouse River and Coulee City Railroad as Conductor. Carl and his wife Pat have a daughter named Carlene.

Congratulations to Jerrad Mitchell, son of Rita Mitchell, payroll/personnel manager in Pittsburg, Kansas. Jerrad is a member of Pittsburg’s Babe Ruth Baseball team for 15 year olds. Jerrad and the team not only won the District Title, but continued to compete and capture the State Title. The team advanced to the Midwest Regional Tournament, taking 2nd over teams representing 8 other states.

Steve Sheffield came to Watco Switching in Pensacola, Florida in July. Steve is working in track maintenance and is currently finishing a degree in Microsoft System Engineering.

Also joining the Pensacola location is Edward Taylor. Ed was hired in August as a switchman. He and his wife Stephanie have 3 children, Joshua 13, Jeremy 11 and Austin 6. They are also expecting a son, who they have already named Colby.

Harry Burroughs joins the Springfield, Oregon location as carman. Harry brings over 7 years experience in various areas of railroad repair to Watco Switching. He and his wife Anita have 2 children, Randy 20 and Charlie 10.

Dale Babineaux joins the DeRidder, Louisiana, Switching location as a car cleaner. He has worked mainly offshore. Dale and his wife Jane have 4 children, Amber, Cody, Shianna and Dane.

Also coming to the DeRidder location as a car cleaner is Rodney Farris. Rodney also mainly worked offshore for 6 years. He and his wife Thelma have a one-year-old daughter Victoria.

Ronald Bagby joined the Kansas and Oklahoma Railroad in Wichita in the Marketing Department. Working as the Marketing Manager for the K&O beginning this past June, Ron has years of railroad experience, including 29 years with the ATSF Railway, 3 years with RailTex and the last 5 years with the former Central Kansas Railway.

Congratulations to the following people who celebrate anniversaries with Watco Companies, Inc., in the month of September.

1 year - Paul Leseman, Brian Knisley, Joseph Harbaugh, Joshua Kull, Ken White, Jerry Pierce, William Farley, James Wineland, Richard Colbert, Theron Pope, Greg Nolen, Jonathan Jacobson, Bobby Westlake, Larry Derosia.

2 years - Dee Mitchell, John Conti, Jr., Ai Huth, Joseph Dillon, Rebecca Scott, James Hanrahan.

3 years - John Padgett, James Bailey, Jr., John Berrett,

4 years - Gordon Peck, Donald Vandyne, Leslie Elmore, Jeff Griggs, Dena Patterson, Jennifer Barber, Joseph Scurry.

5 years - Bobby Littau, Norman Brown, Richard Reuppel, Bob Norman, Larry Smith, Rick Swinney.

6 years - Justin Blythe, O.B. Carlson, Bradley Hayes.

7 years - Patrick Charles

9 years - Terry Mayfield

11 years - Jimmy Cantrell

12 years - Donald Shafer

14 years - Timmie Benson, Cathy Shaffer.

The newest addition to Watco's fleet--a '94 Freightliner

Watco Warehousing Services continues with its goal of providing quality warehouse and distribution services for our customers. The 80,000 square foot warehouse in Pittsburg, KS is approximately 85% occupied with 21 different customers being served.

Atkinson Industries, Central Bag, Jameco Enterprises, Labconco, Midwest Coal Mining, Natural Life, National Pizza Company, Premdor Entry Systems, Rapco, and RSL make up the top 10 customers.

General Manager, Dave Carr, heads the Pittsburg Warehouse along with Mike Carr, Brian Collier, and Brian Guy providing the daily support.

Watco Warehousing Services provides warehouse storage space, the handling of products from truck to storage and storage to truck, along with over the road trucking of the products that have been stored. Products currently warehoused include those made of paper, glass, and plastic, electrical machinery items, manufacturing equipment, household entry doors, plastic bottled water, and surplus restaurant equipment.

WAM Trucking currently has operating authority in six states and experienced growth on the trucking side of the business over the past couple of years has increased business, calling for the need of additional truck. Recently a 1994 Freightliner tractor was added to supplement the over the road fleet.

The Pittsburg Warehouse is equipped with several overhead cranes ranging from 5 to 20 ton capacity and forklifts with capacity of 3,500 lbs. up to 8,000 pounds that are used daily in the loading and unloading of trucks from one of the five truck docks.

The front-page article in the July 13th edition of The Dispatch highlighted Watco Mechanical Services fabrication of the first transfer table built by Watco Companies, Inc and was built in the Pittsburg Warehouse for Gunderson located in Texas and was completed the end of April. The transfer table was ready for shipping by a heavy haul trucking company the first week of May. The warehouse team assisted the mechanical group with unloading and staging of materials when they arrived at the warehouse for fabrication job and with the final loading, just another example of how our various profit centers work together as a team for the benefit of Watco Companies, Inc. The warehouse services continue to show improvements and with everyone working together, will continue to grow and prosper.

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                               Watco Companies, Inc. * 315 W. 3rd Street * Pittsburg, KS 66762 * Phone: 620-231-2230 * Fax: 620-231-0812