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Relaxing at home on his Vancouver Island farm, Jim Maier serves the hungry locals lined up at the organic café he and his wife own. "We think we bake the best organic bread on all of the island," he boasts. But the 55-year-old Maier, who has attempted retirement on three different occasions, doesn't spend much time tending his vegetable garden these days.
Instead, the professionally trained engineer, who spent eight years as general manager of GE Transportation Systems, and another four as commercial director at Bombardier, is attempting to revolutionize the railway industry. And as president and CEO of RailPower Technologies Corp. (TSX: P), a young Vancouver-based company that has developed the world's first hybrid-electric switcher locomotive, he seems poised to do it.
Switcher locomotives are critical to the railway industry. When a train rolls into a rail yard, switchers--commonly called "goats" by industry insiders--take over. The goats push and pull train cars from one track to the next, helping to break up rail cars and then connect them to others bound for the same destination. An integral part of rail yard logistics, some 10,000 switchers are in use across North America today. About half are operated by long- and short-haul railroads, while the remaining 5,000 are put to work by port authorities, oil refineries, chemical plants, grain terminals or the military.
Despite their importance, most switchers are between 40 and 50 years old and are desperately in need of an overhaul. The majority were once mainline locomotives, and travelled hundreds of thousands of miles before being demoted to switcher status. Powered by cranky old diesel engines that can be difficult to start, especially in cold weather, goats tend to spend much of their time idling. An average switcher churns through approximately 1,100 litres of fuel a day, and spews tons of greenhouse gases and particulate matter into the atmosphere. They are also extremely noisy.
Tough new regulations introduced by the U.S. Environmental Protection Agency, as well as by the Canadian Ministry of the Environment, combined with the rising price of diesel, have finally prompted railway executives to search for a solution. RailPower's Green Goat may be the answer.
Similar to the auto hybrids currently creating a buzz, the Green Goat runs on a combination of fuel, electricity and rechargeable batteries. First conceptualized five years ago by Frank Donnelly, RailPower's co-founder and chief technology officer, the plan was bold enough to enable the talkative engineer to convince friends to lend him $180,000 to start the project. (He later secured a further $1.5 million from the market.) Money in hand, Donnelly purchased an old switcher and then spent a year in a Southern Railway of B.C. shed in the Vancouver suburb of New Westminster, with only a dog for company, tinkering away to create RailPower's initial prototype.
What he created was completely new in railway circles. The 2,000-horsepower Green Goat has 42 custom-designed racks of lead acid batteries weighing upward of 27,000 kilograms, a generator to charge them, and a digital traction-control system that monitors what power goes where and when. The 70- to 285-horsepower diesel-engine generator only fires up to charge the batteries when required.
The Green Goat provides fuel savings of between 50% and 80%, and decreases greenhouse gas and diesel emissions by 80% to 90%. "It is a great idea," says Mark Stehly, assistant vice-president at Burlington Northern Santa Fe, one of the major Class 1 railroads (those with more than $250 million in revenue) looking into buying Green Goats. "It combines both cost efficiency and environmental benefits. That is a plus." RailPower also offers a mini version, the 1,000-horsepower Green Kid, for lighter switching operations.
Gaining acceptance for the products is no easy feat, however. The railway industry is notoriously bureaucratic, and often resistant to change. And gaining approval for investment in new capital equipment takes an extremely long time. Even Maier himself admits that, before he joined RailPower, he was skeptical about the new technology. "When [chairman] Norman Gish first said to me, 'I have this railway company and we make a locomotive that has batteries,' I said to him, 'You are wasting your time. Absolutely wasting your time. The railways don't like batteries."
But the Green Goat's technology is impressive--and any initial glitches are quickly being resolved. What's more, the system is engineered to fit onto a conventional switcher, leaving the original frame intact. As well, the controls are pretty much the same as those in conventional diesel-powered switchers, meaning operators require minimal additional training. Providing this bit of comfort to those who are wary of change, RailPower is making strides in its quest to convince rail executives to pony up $750,000 for the new machines. The Green Goats actually cost less than buying a new conventional switcher, which typically retails for between $1 million and $1.2 million; a used switcher, on the other hand, runs about $100,000. As well, the industry overhauls about 1,250 switchers a year at an average cost of about $330,000 per unit.
RailPower's increasingly strong position in the market over the past year can largely be attributed to Maier himself, who was hired in April 2003. Executive vice-president Simon Clarke explains it this way: "When I joined the company [in May 2002], people looked at us and said, 'Great technology. Great market. But that is a small company based in Vancouver. It doesn't have the depth of management or depth of railroad expertise to make it in what is a very big and slow-moving industry.' Jim Maier gave us credibility."
Maier's appointment did more than just bring credibility to the company. It also gave RailPower access to an incredible network of railway expertise. Maier's first mission upon joining what was then a tiny eight-person team was recruiting top talent. "I went through my Rolodex and just started calling guys up," he recalls. "I said 'Here is a ticket. Fly to Chicago [where a prototype was being tested], get on the locomotive, and after you have seen it, tell me whether you like it or not.' They all phoned back and said, 'When do I start?'"
An experienced group of 35 full-time employees and about 15 steady consultants is now on the RailPower payroll. The sales and marketing team consists almost entirely of ex-GE Transportation Systems types who, collectively, have been selling locomotives for well over a hundred years. There's no doubt they know how to negotiate a deal. The research and development team has also been beefed up with loads of engineers. "With some of the new engineering experience they gathered from GE, we have a little more confidence that the equipment will be well-engineered," says Burlington Northern's Stehly. In January, RailPower opened a U.S. subsidiary, based in Erie, Pa. But the company isn't hiring anymore. "We have exhausted my Rolodex," Maier says with a chuckle.
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