By Tatyana Shumsky Of DOW JONES NEWSWIRES PHOENIX -(Dow Jones)- Union Pacific Railroad Co. is focused on growing its metals and automotive freight businesses as the railroad faces falling freight volumes from the energy sector, a company official said Friday. The freight volume of the railroad company's industrial-product business--which includes steel, copper and other metal products--is up 9% from a year ago, said Eric Butler, executive vice president of the unit of Union Pacific Corp. (UNP). The division's growth in freight volume was second only to automotive freight, which increased 14% from a year ago, Butler said at the American Copper Council meeting in Phoenix. "We are adding 150 rail cars to our copper fleet, because we are seeing significant growth in our copper business," Butler said. In 2011, Union Pacific Railroad rehabilitated 130 gondolas with new liners to carry copper. Union Pacific is also testing new liners in rail cars for transporting copper concentrate, an unrefined form of copper ore, due to be completed next year. The railroad has developed a special service, called Copper Connection, specifically to transport finished copper goods like copper rod, wire and tube, from fabricators to other manufacturers, Butler said. "Copper Connection offers a significant cost savings versus trucks, 20% on average," he said, adding that freight volumes for the service were up 25% in the first quarter compared to the same period last year. Moreover, freight volumes have grown 36% since Union Pacific introduced the copper service in 2010. The focus on growth comes as Union Pacific's energy-related freight volumes are down 11% from a year ago after an unusually warm winter and sharply lower natural gas prices weighed on demand for coal. "Where utilities can burn natural gas, they are burning natural gas," Butler said. Union Pacific has reinvested $15 billion in its railroad network over the last five years. This year's $3.6 billion capital-spending plan will be the biggest on the record, he said. "Our view is that the economy is strengthening, that things are getting better," he said, adding that while growth isn't robust, the pace of business is improving. -By Tatyana Shumsky, Dow Jones Newswires; Tatyana.shumsky@dowjones.com
