Union Switch & Signal Chief Executive Officer Ken Burk is making a big bet that the Pittsburgh railroad products company can boost the average speed of the nation's largest freight railroad by 2 to 4 mph.

	Steve Mellon, Post-Gazette Ken Burk is CEO of Union Switch & Signal, which has won a contract to automate the nation's largest railroad, Union Pacific. Behind Burk is a system that optimizes a railroad's train traffic. Click photo for larger image.

If that doesn't sound so fast, consider that a 1 mph increase in average train speed can save large railroads such as Union Pacific Corp. an estimated $200 million a year. By moving product just a little quicker over long distances with the same number of trains and crews, the effective number of workers and locomotives per mile falls, generating huge efficiencies.

Union Switch recently signed a contract to design and maintain a rail dispatching system for Union Pacific that aims to help do just that. The technology, initially developed some 10 years ago with a Carnegie Mellon University research team and refined since then, is designed to give railroads "real time" information on train movements and help automatically route traffic around problem areas such as impassable tracks.

It's a complicated problem that involves multiple agents -- or autonomous pieces of software -- that incorporate decision-making programs, memory and the ability for trains, crews and rail traffic controllers to communicate with each other. "It's basically a more difficult and complex problem than air traffic control" because planes "can fly around a problem," Burk said. "On rail, you are fixed onto the track."

A prototype system that electronically recreated 700 miles of Union Pacific track on computers at Union Switch test labs in the Pittsburgh Technology Center in Hazelwood showed velocity could be improved by about 20 percent, or from 2 to 4 mph depending on the circumstances. "That can have a huge impact for a multibillion- dollar industry," Burk said.

"Do you need the same number of crews if we've changed your level of performance? Do you need the same number of locomotives or the same number of maintenance people on standby? No, you don't," he said. "It changes the way you do business."

Union Pacific is not the first railroad to buy into Union Switch's technology.

	Steve Mellon, Post-Gazette Software development leader Uwe Deutermann, kneeling, and his colleagues at Union Switch and Signal discuss a system that allows railroads to optimize efficiency. Behind him are, from left, Viorel Morariu, chief architect; Jim Rozum, product line manager; and software team leader Waleska Alvarado. Click photo for larger image.

Network Rail, Britain's infrastructure management company formerly known as Railtrack, had contracted with Union Switch to build a network management center to optimize traffic planning and reduce train delay. But that six-year project was suspended last year due to financial and budgetary constraints. The loss of that contract led to 40 layoffs in Pittsburgh last year.

But Burk said he took a gamble and kept the project's development team largely intact after the Network Rail contract ended, hoping another railroad would eventually see the system's value. The roll of the dice paid off when Union Switch signed what Burk claims is the largest software deal of its kind in the industry -- he wouldn't be specific about cost at the railroad's request -- with a multiyear contract that will recover the 40 lost jobs for engineers at the company's technology center headquarters.

Burk believes the deal also represents a chance for "The Switch" to cement its reputation as a leading developer of automation products for an industry looking to get more out of its trains, track and crews. "We think this deal signifies a market leadership position for Union Switch & Signal," he said. "It's a big deal."

It helps that Union Switch landed the biggest fish in the railroad pond. Union Pacific, which links 23 states in the western two-thirds of the country, generated record operating revenue in the second quarter of $3.3 billion and conceded in its financial statement that it "has more business demand than we are able to fulfill."

That demand -- seen in all of Union Pacific's key business areas from industrial and agricultural products to intermodal traffic, chemicals and energy -- is pressuring the railroad to find ways to handle increased volumes more efficiently. One way to do that is to speed up trains that averaged 21.2 mph in the second quarter, a tad slower than last year's average of 21.3 mph.

"We basically funded this on our own and began pursuing the Union Pacific business," Burk said in an interview this week. "That was really a bet, a bet that this is really going to work, that this is going to be great product."

Burk joined Union Switch about five years ago when the company was struggling financially, partly because competitor Siemens took over as the lead manager of a $127 million contract from the New York City Transit authority. Since then, Burk said the privately held company has made a turnaround and is focusing on growth through new smart computer-aided technologies of the type sold to Union Pacific and designed by its Hazelwood engineers.

The company completed a driverless train system for the metro in Copenhagen, Denmark, in 2003. It has since developed an automated light metro system for Brescia, Italy, and is the apparent low bidder on a similar project in Greece.

Other new products include devices that can detect broken rails and warn train crews of them before they get to a danger spot and tell ahead of time whether track switches are in the correct position.

"Now we're in a mode of growth and developing opportunities," Burk said. "As a company, we have focused more on new product development. There has been a lot of emphasis based on advanced technology."

His long-range dream is to see railroads integrate more available technology into their operations to better serve shipping customers. Utilizing bar codes with their ability to track specific packages would be one example.

"We see ourselves focusing on our customers' customers," he said. "We're tracking train performance now. We see getting into package performance, people performance."

The company is one of Pittsburgh's oldest industrial concerns.

Founded by industrialist inventor George Westinghouse in 1881, Union Switch is a wholly owned subsidiary of Ansaldo Signal N.V., a Netherlands holding company that is itself owned by Finmeccanica S.p.A. of Italy, a huge conglomerate.

It employs about 900 people, roughly 550 of whom are in the technology center's headquarters and research facility. Manufacturing operations are based in Batesburg, S.C.

Finmeccania's board of directors agreed in July to list Ansaldo Signal as an independent company on the Milan stock exchange, saying it would permit the parent to focus on other businesses in the aerospace, defense and security sectors. The initial public offering is expected late this year or next year.