Dive Brief:
- Union Pacific Railroad has renewed its partnership with supplier Rocky Mountain Steel Mills by reaching a new, seven-year contract agreement to produce domestic steel rails. The deal ended a legal dispute between the two companies.
- The transportation giant has agreed to continue purchasing steel rails from a longtime facility in Pueblo, Colorado, which was recently rebranded in July to Rocky Mountain Steel under the ownership and management of Atlas Holdings.
- Financial details regarding the contract were not disclosed. Union Pacific said it has withdrawn a previously filed lawsuit in Nebraska against Rocky Mountain Steel. The supplier plans to begin operating a new, long-rail mill in Pueblo this year as part of a $1 billion investment in U.S. steel production.
Dive Insight:
Rocky Mountain Steel, formerly owned and operated by Evraz North America, is a critical regional rail supplier with a history spanning nearly 140 years with Union Pacific. The Omaha, Nebraska-based railroad, also known as Uncle Pete by rail enthusiasts and employees, collaborated with the Pueblo mill during World War I to increase steel production and has been a longtime buyer supporting its expansion of Western railroads since the early 1890s.
“We appreciate the longstanding relationship with Rocky Mountain Steel, its dedicated workforce and their collective commitment to domestic steel manufacturing,” Union Pacific CEO Jim Vena said in a statement. “The new long-rail mill is a significant step forward in American manufacturing.”
The new mill at Rocky Mountain Steel will be able to produce 328-foot steel rails, according to Union Pacific. The long rail will require 80% fewer welds than standard 80-foot rails, improving track safety and reliability for major railroads, the company said. The mill is powered by a 1,800-acre solar farm, making it “the world’s largest solar-powered steel mill.”
The renewed partnership came months after Union Pacific sued Rocky Mountain Steel for allegedly breaking a supplier agreement by refusing to ship more rail unless the railroad paid 61% more than specified in their contract, industry news outlet Trains.com reported. Around the same time, BNSF Railway filed a similar lawsuit in a Texas court after the supplier left orders unfulfilled for months over a 50% price hike dispute.
Union Pacific declined to comment on the value of the seven-year contract or what led to the renewed partnership.
The United Steelworkers union, whose members work at the Pueblo facility, supported the deal. Rocky Mountain Steel is a major economic driver for the city, directly employing more than 1,200 people and indirectly supporting more than 10,000 jobs, according to its website.
“USW members have proudly produced steel rail for Union Pacific for generations, and as we look to the future, we’re pleased that our nation’s transportation infrastructure will continue to be U.S.- and union-made,” USW International President Roxanne Brown said in a statement.
As it moves forward with Rocky Mountain Steel, Union Pacific is continuing to pursue a proposed $85 billion merger with Norfolk Southern, which would connect over 50,000 route miles across 43 states from the East Coast to the West Coast. The Surface Transportation Board rejected its merger application in December, deeming the proposal “incomplete.”
Industry groups such as the American Chemistry Council and the American Farm Bureau Federation have expressed concerns about the proposed merger, saying it could drive up costs, erode services and undermine the country’s supply chain.
“We are filing our merger application with the Surface Transportation Board at the end of the month, complying with their request for additional information,” Robynn Tysver, a media relations manager at Union Pacific, said in an email to Manufacturing Dive last week.
