POINT OF VIEW What would Flagler say about changes at his railroad?


As I wrote in “All Aboard! A History of Florida’s Railroads,” the eternal rest of Henry M. Flagler would have been vastly disturbed by myriad events after 1913. He was passionate about pushing boundaries, but how would he take recent news that the Florida East Coast Railway that he built has agreed to become part of Grupo México?

Irate or bemused?

Flagler could question a long line of parties likely to have opinions:

  • President Abraham Lincoln, who signed the Pacific Railroad Act of 1862, directing Union Pacific and Central Pacific to construct a transcontinental railroad;
  • Thomas Clark Durant, of Union Pacific, who was present in 1869 when “the golden spike” was hammered at Promontory Point, Utah;
  • George Pullman, who lobbied Durant to finance his design for comfortable, luxurious passenger cars (“dolled-up rolling hotels”);
  • Henry B. Plant, whose expanded rail empire brought the world into Florida’s lap;
  • George Westinghouse, on his 1869 patent on air brakes for trains;
  • Eli Janney, on his 1875 patent for an automated “knuckle-design” coupler;
  • Andrew Chase, an engineer who designed a refrigerated rail car in 1878 — enabling livestock dealer Gustavus Franklin Swift to re-set the meat industry.

With the Panama Canal on the rise, Flagler and all of the usual suspects were aware of the promise in shipping and international trade on the horizon. So is all of that restless anticipation in déjà vu mode now? It would be handy to learn what Flagler discovered after consulting with the above-mentioned.

Today, the Florida East Coast Railway (FECR) remains a big player in freight traffic, and its route closely parallels the one which Flagler built in the 1890s. It operates from headquarters in Jacksonville, which may or may not change when Grupo México closes on the $2.1 billion purchase.

The buyer is the company’s transportation division, which includes Ferrocarril Mexicano (Ferromex), operator of a 6,000-mile line across Mexico and in Texas — with multi-modal connections at ports on the Gulf of Mexico and the Pacific Ocean. So having a line in Florida seems an obvious move.

But the ironic wrinkle in this timeline — one which might move the needle toward bemusement for Flagler — is that good ol’ Union Pacific, headquartered in Omaha, Neb., has owned 26 percent of Ferromex since 1999.

As for the $2.1 billion deal, it involves only the freight assets of the FEC railway and nothing related to Florida East Coast Industries (FECI), its activities and subsidiaries. Fortress Investment Group LLC bought FECI in 2007 (Fortress had about $70 billion under management in fall 2016).

Earlier this year, Japanese conglomerate SoftBank Group, best known for technology and telecommunications, agreed to buy the Fortress group for $3.3 billion. When the acquisition closes, Fortress will no longer be a publicly traded entity. The deal does not affect its business model or projects in place, including the All Aboard Florida/Brightline express passenger rail project ready for a summer launch.

Fortress will retain investment autonomy, and keep its advisers. But it will be interesting to see whether SoftBank Group influences other infrastructure ventures, in Florida or elsewhere.

STEPHANIE MURPHY-LUPO, WEST PALM BEACH



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