Ridden Into Town On A Rail

Despite government aid, a Weld County company goes to bankruptcy court.

When Ron Maynard announced his plans to build a new railroad repair facility just outside the tiny Weld County town of Hudson in 1988, the government couldn't be helpful enough.

Maynard's company, Rocky Mountain Railcar Inc., received tax credits and hundreds of thousands of dollars in fixed-interest loans from state and federal agencies. Maynard won a grant for training new workers he would be hiring. In 1989 Governor Roy Romer helicoptered to Hudson for the company's grand-opening ceremonies. And when Maynard admitted last year that he couldn't make payments on the government-backed loans, state officials wrote a new quarter-million-dollar loan.

Despite all the attention, two months ago Rocky Mountain Railcar filed for protection from its creditors under federal bankruptcy law. The financial failings are not the only thing that is troubling, however. Despite the company's initial promise of good jobs in an economically depressed area, Maynard's critics say there are plenty of indications that the results have been less than ideal.

Many of the new jobs turned out to be low-paying, and the federal courthouse is peppered with lawsuits brought by former workers injured on the job who could not convince the company to pay their medical costs. Rocky Mountain Railcar has been investigated and fined several times for safety violations at the new facility. And state labor officials have piled up so many complaints about wage violations that they have taken the unusual step of ordering local placement centers to not send any more job applicants to the company.

Maynard, the sole owner of the company, dismisses the notion that he isn't running a decent business. He is vigorously fighting recent fines levied against Rocky Mountain Railcar by the Occupational Safety and Health Administration.

"I tried to do everything I can legally," he says. "I don't know all the rules and regulations, but I try to do what I think is right. I've got the bureaucracy of the state of Colorado thinking I'm a bad guy."
Colorado's economic-development workers have been criticized for their failure to attract big businesses. Yet the case of Rocky Mountain Railcar illustrates the flip side of job-creation efforts. Despite government's interest in the Hudson company, some people have concluded that perhaps the money could have been better spent.

Five years ago Weld County officials were thrilled when Maynard announced his intentions to move Rocky Mountain Railcar from its location inside Rocky Flats to a site northeast of Hudson. "When Ron Maynard first came to town, he was given the red carpet," recalls Jodi Hartmann, vice-president of the Greeley/Weld Economic Development Partnership. "He got everything he ever wanted from local government, because we all wanted to believe in him. I mean, nobody talks about bringing jobs to Hudson."

The company began getting financial breaks almost immediately. The property on which Maynard planned to locate was outside Weld County's designated enterprise zone, so he asked the state to extend the zone's boundary. Officials quickly agreed, saving Maynard an estimated thousands of dollars through tax credits.

Other agencies kicked in relocation funds. The Colorado Housing and Finance Authority, a state agency that sells bonds to raise development money, pitched in a loan of nearly $1.7 million, and the federal Small Business Administration added $750,000 more.

The company also qualified for a $50,000 grant from Colorado FIRST, a job-training program in the state's Office of Business Development, to train Maynard's new welders at a Greeley community college.

Even much of Rocky Mountain Railcar's business was coming from the government. Maynard's expansion plans grew out of a subcontract to design railcars for the MX Peacekeeper missile system. Although the contract called for only two prototypes, the Air Force eventually envisioned a dozen trains secretly carrying the missiles to different launching sites.

All this activity prompted a lot of talk about jobs around Weld County. In a September 1988 letter to Romer, the director of the Economic Development Action Partnership noted that Rocky Mountain Railcar was "an excellent employer for Weld County, with plans to hire 100-150 employees." When the new $5 million facility opened in May 1989, the company announced it intended to employ 280 people within the next two years.

It wasn't long before business started to unravel for Maynard, however. In 1991 Congress killed the Peacekeeper program. Soon after, the company lost its largest contract--to repair railcars for Houston Power and Light, a Texas utility. Maynard's crew went from working on 115 cars a week to 3.

Maynard also discovered that he was not paying market value for his skilled workers, primarily welders. When construction at nearby Denver International Airport began, his welders, who he says earned from $7 to $10 an hour, bolted for DIA, which was paying up to $18 an hour. In one month, Maynard says, he lost nearly sixty welders.

Meanwhile, on-the-job injury claims began showing up in federal court. Because Maynard was in the railroad business, he was permitted to insure his company under the Federal Employees Liability Act. While the state workers' compensation system pays a set amount when a worker gets hurt on the job, FELA demands that a worker prove the company negligent.

Maynard soon gained a reputation among lawyers as someone who would not pay out a claim easily. Gary Wood, an attorney who has sued Rocky Mountain Railcar several times, recalls that Maynard once sent one of his supervisors with a hidden microphone and recorder to tape a conversation with a man injured on the job in an attempt to gather evidence against him. Maynard says he can't recall if the incident ever happened. But he adds that if one if his supervisors did record a conversation, it wasn't at his orders.

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