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Published February 04, 2013, 08:48 AM

ND railroad construction firm on the right track

GRAND FORKS, N.D. -- About six years ago, R&R Contracting, a Grand Forks builder of railroad infrastructure, was looking for its next opportunity after the recent ethanol boom.

By: Christopher Bjorke, Prairie Business Magazine

GRAND FORKS, N.D. -- About six years ago, R&R Contracting, a Grand Forks builder of railroad infrastructure, was looking for its next opportunity after the recent ethanol boom.

“When that thing started dying out, we said, ‘What’s next?’” said Mark Reimer with R&R.

The next big thing turned out to be pretty big. And it was two things.

As North Dakota’s two primary economic engines of energy and agriculture picked up steam, R&R found itself in the middle of a rail shipping boom for oil and agricultural products.

And as the twin booms have lifted North Dakota’s economy, they have helped make R&R the seventh-biggest railroad construction and design company in the country, a status they just learned about last year, to their pleasure.

“It’s awesome, actually,” said Reimer, whose father, Peter, and brother, Bill, founded the company.

Ag and energy companies are investing heavily in infrastructure to handle bigger trains and a growing use of rail shipping. Reimer specializes in building and designing rail sidings and other facilities to handle the longer trains and heavier activity associated with the two industries.

“They’re saying only 10 percent of oil produced in North Dakota is going to be taken away” by pipelines if the controversial Keystone XL line wins approval, Reimer said.

Rail boom

Because most of North Dakota’s crude oil is refined out of state and new pipelines are still years off, transportation of the Oil Patch’s production of more than 700,000 daily barrels will depend on trains. At the same time, trains are bringing in the equipment and raw material for the hydraulic fracturing that makes the oil accessible.

That makes for a lot of rail cars and a need for some place to put them, such as a new 700-car facility near Sidney, Mont., just across the border from North Dakota’s oil fields, recently completed by R&R.

There are 18 unit-train and manifest-train facilities serving western North Dakota with 12 more in the planning or construction phases, according to the Williston (N.D.) Area Economic Development office. R&R is currently building two.

“The way I see it, it’s going to be at least another five years of build-out,” Reimer said. “We tried to keep this Bakken thing a secret as long as we could.”

The company’s projects are not confined to North Dakota’s oil play. It is also doing work at the other end of the line, where the crude is shipped for processing or export, in places such as Virginia, where R&R is building another rail facility.

While the oil industry continues to boom, so does agriculture, prompting elevators to build up their shipping capacities.

“When we started out, most grain elevators had the capacity for 16 cars,” Reimer said. “When we had most of them set up for 24, the railroad came along and said, ‘OK, we’re going to do 52.’”

Now it is normal for grain shuttle facilities to have a capacity for 110 cars, and elevator companies have an incentive to bulk up their capacity through discounted rates railroads provide for improvements.

Diversification

When the Reimers started R&R in 1988, railroads were still building the projects the company specializes in. But as that work shifted to contractors, the company grew with work in North Dakota, across the country and as far away as South America, through a joint venture with a company in Chile. R&R has also expanded to five offices across the center of the United States, to serve its primary market between the Rockies and the Appalachians.

The company moved into its headquarters, decked out with train pictures and classic railroad memorabilia, on Washington Street north of Grand Forks in 1994. It has added on to the building over the years while increasing its staff there from six to 26, Reimer said. It has 248 employees now working in 21 states and is hiring more.

“For the past two years, we haven’t even had a layoff in the winter,” he said.

About 50 percent of R&R’s work is for the energy industry, 30 percent for agriculture and 20 percent for other projects, such as some urban light rail systems bridge. Half to 60 percent of its work was in North Dakota last year.

“We’re just trying to move into doing more and more things,” Reimer said.

However, he sees them staying heavily involved in the Oil Patch, where they are planning to open new offices.

“The infrastructure out there in western North Dakota might slow down a bit, but I don’t see how it could,” he said.

Call Bjorke at (701) 780-1117; (800) 477-6572, ext. 1117; or send e-mail to cbjorke@gfherald.com

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