Career Track Led Him to Owning Trains : Entrepreneur: Canadian engineer Tom Payne is making a go of what had been a losing state-owned line.

EDMONTON, Alberta —  Locomotive engineer Tom Payne loved railroading so much he bought his own line. He operates the Central Western Railway, all 106 1/2 miles of it, with 15 employees.

What is more, Payne makes a profit, something Canadian National Railways could not do with the Central Western.

“I make a little money at it,” he said with a grin, leaning back in his office chair and stroking a bushy brown beard. “I’m satisfied that I can do what I said I can do.”

His railroad hauls grain from Camrose to Drumheller in south-central Alberta.

It does the job so profitably that he is buying another railroad, the Coronation & Lacombe, a 132-mile branch line that starts at Compeer near the Saskatchewan border and connects with the Central Western at Stettler.

The C&L; purchase was approved by the National Transportation Agency in January, and Payne is now involved in “the bureaucratic paper shuffle.”

All this entrepreneurship comes at a time when the national railroads are abandoning thousands of miles of prairie branch lines as unprofitable, forcing farmers to truck their grain to central pickup points.

The first reduction involves 1,400 of the 6,000 miles of branch lines, and plans call for abandoning as much as 3,000 miles.

“I’d been a pick and shovel man all my life,” said Payne, who is 41. “I’m not a university type, so I went to work for the railroad.”

He spent 12 years with Canadian Pacific. As an engineer, he was assigned to runs in every part of the prairies at one time or another.

“I saw expensive men and expensive equipment not doing a hell of a lot,” he said. “I became convinced that if I could get my hands on a branch line, I could run it more efficiently than the original owners.”

But early on, he ran into what he called “the Canadian dilemma.” With a chuckle, he described it: “If this is such a hot idea, why hasn’t somebody else done it?”

It took six years, but he got his railroad.

“The cost for one used railway was $2.7 million,” he said. “That buys you 106 1/2 miles of track, fences, level crossings, land, bridges.”

Some of the bridges were rotting; some of the rail was faulty; repair work is still going on. Payne turned his first wheel in November, 1986, and the total investment has been $4.2 million.

“What you see is what you get when you buy a railway,” he said.

Payne’s financing came from the government, which deducts repayment from the freight rates it pays the railroad.

“Don’t borrow money from the federal government,” he advised solemnly. “It comes at 15%.”

He did not have much choice the first time around, but the $3 million for the Coronation & Lacombe will come from commercial lenders.

“We’ve run the business successfully,” Payne said with pride. “We make a little money. We’ve shown we know what we’re doing.”

CWR, a privately owned company, does not release information on profits.

When Payne started all this, he knew very little about business, but he did know about railroading, and he believed that he could make a go of a line run at at the local level, with local people on the staff and direct customer contact.

He assembled a board of directors that includes a former administrator of the federal Grain Transportation Agency and a former transportation minister.

The Canadian government did not make it easy, he said.

“They pay us 30% less than they paid CN to run the line,” he said. “It’s take it or leave it. It’s very simple: They’re the people with the money; if you want it, you agree.”

On average, the rate is $30 to move one ton of grain an average of 900 miles to a point of export--30% paid by the farmer, the rest by the government in grain transportation subsidy. Payne gets a prorated payment for his portion of the haul. One grain car carries 100 tons.

A branch line such as his needs to move 1,200 tons of grain a month to cover expenses. It, of course, has no control over wheat sales or when the Canadian Wheat Board might call for grain.

As few as four cars roll over Payne’s 106 1/2 miles of track in some months, as many as 100 in others.