Bill Scott ’70 and his brother, Dick ’75, went into business with $3,500 and a pickup truck in 1975. In April 2005, they sold about 65 percent of their business, Trans-Global Solutions Inc. to Kinder Morgan Energy Partners, L.P. for approximately $245 million.
The seven bulk terminal operations the Scotts sold to Kinder Morgan were projected to handle about 10 million tons of petroleum coke in 2005. The sale of the operations in Jefferson County at the Port of Beaumont, ExxonMobil and Premcor, and in the Houston area at the Port of Houston and the TGS Deepwater Terminal on the Houston Ship Channel, have, in a way, brought the hard-charging pair full circle.
Both brothers are former football players for Thomas Jefferson High School. “It was fun growing up in Port Arthur,” Dick said. “It was amazing how the local plant folks would turn out to be the fathers of the kids we played football with. We had lots of good support from the community when we were getting started in business.”
One of the fledgling company’s first jobs was for Joe Brousard II at the Beaumont Rice Mill where Dick and Bill supervised the work force directly. It wasn’t until their second year in business that they were able to hire supervisors.
“When I graduated from Harvard on the Neches (Lamar) in 1975, I was putting my accounting degree to good use writing payroll checks out of our pickup truck,” Dick, who is president of the company, said. Their accounting professor at Lamar, Richmond Bennett, helped the two set up their first books.
Bill, who is chairman and chief executive officer of the company, followed a different course at Lamar, his eyes set on law school. “In the 1960s (a degree in) government was a good vehicle (to get into law school), and there were a lot of people who studied political science and then went into law,” he said.
During his college years, Bill worked for a railroad construction and engineering business associated with the Kansas City Southern Railroad, and Dick worked there summers while in high school. “We started out laying and spiking crossties in the railroad construction business, we maintained that business, and we still operate it
today,” Bill said.
“There are people other than the aficionados with model railroad sets who fall in love with the romance of the rails,” Bill said. “Railroading and construction got into both our blood, and our thoughts of going back to law school and graduate school were replaced by plans for bigger and bigger projects.”
Today, the brothers have ample opportunity to fulfill that passion since Trans-Global runs the Austin Area Terminal Railroad (AATR), a short-line headquartered in Round Rock. The 154-mile line runs from Austin to Georgetown and from Llano to Giddings where it connects with Union Pacific Railroad. The shortline transports many products, primarily aggregates including crushed limestone and granite. This business accounts for 25 to 30 percent of the Scotts’ remaining business. In addition, Trans-Global operates Austin Steam Trains, which run excursion trips on the line between Austin and Burnet. In 2004, Austin voters approved regular passenger service on the line to begin in 2007.
“I guess the pinnacle of being in the railroad business is to run your own railroad,” Dick said.
Railroading was a key element of their business from the outset. “We started out maintaining the tracks for local industries,” Bill said. Today, Trans-Global operates 78 locomotives in switching operations for refineries for more than 30 refineries and chemical plants as well as the AATR. While there is a certain romance to the rails, the reality is, “There is nothing easy about railroading. It’s either hot, cold, or wet, and everything is heavy,” Dick said.
“You either like it or you hate it ’cause it’s all hard work,” Bill added.
When Kinder Morgan bought Trans-Global’s bulk handling business, it was the largest west of the Mississippi River and larger than any single business on the Mississippi in terms of total tonnage handled.
“Probably the best compliment we could have been paid by Kinder Morgan was that they kept virtually everyone on payroll and gave them good employment,” Bill said. “It worked out well for all our employees.” About 50 percent of the employees ofTrans-Global made the move to Kinder Morgan.
“Even after we sold the bulk side of the business, we still have more than 400 employees. It’s still a pretty good-sized business,” Dick said.
And it has been a good business, but not without its seasons.
“Our business has had ups and downs,” Dick said. “We had many trials and tribulations, as almost everybody does in a business without outside investment.”
At first, just borrowing money was a hard sell. After being turned down for a loan by a bank they had patronized for years, First Security Bank in Beaumont came through with their first $50,000 loan. Dick had worked there part time while a student at Lamar. “Ruth Lebourgeois said, ‘Shoot, I’ll help you,’ and the rest is history. We did business with them for a long, long time,” Dick said.
In that downturn, diversification proved invaluable. “We had parts of our business that went away, but we reorganized and branched out into different things.”
The rail business has “always been a dependable cash flow” and helped pull them through that difficult time. But it was on the waterfront where Trans-Global went from bust to boom.
“We have made more money on waterfront real estate and operations than we have on land-based activities,” Bill said. “The waterfront is higher risk but has greater reward. The joint ventures we did with Mitsubishi and Cemex certainly taught us a lot and increased our credibility.”
Through the ’90s, Trans-Global’s rail and bulk-handling business grew larger in Houston than in Jefferson County. In early 2000, a large project for Premcor Refining in Port Arthur helped balance out the business. In Jefferson County alone, the company was handling a million tons a year at the Port of Beaumont, a million tons of petcoke at ExxonMobil in Beaumont, and 1.8 million tons of petcoke for Premcor in Port Arthur.
In Houston, the company was handling 4 to 5 million tons of petcoke a year. Trans-Global operated the Houston Bulk Terminal for the Port of Houston from 1989 to 2004, handling petcoke for Conoco Phillips and Lyondell Citgo.
In 2003, the company built a bulk terminal facility, TGS Deepwater. This facility handled petcoke for Shell Oil on land Trans-Global owned on the Houston Ship Channel between the Deerepark refinery and the bridge on Beltway 8. Today, Kinder Morgan handles 2.4 million tons per year at the Deepwater facility, Dick said.
Trans-Global had become a vertically integrated transportation provider, furnishing in many cases a full range of services between the refinery producers and the overseas consumers. Trans-Global operated a fleet of trucks, rail cars, barges and a ship to move these products from the refineries and producers to and from the port facilities.
“We had a fantastic work force,” Bill said. “Engineering, plant operations, manufacturing and construction of the conveyor systems – there was no part of the bulk-handling business we operated that we didn’t control.”
Bo-Mac Contractors Ltd., a company owned by Lamar alumnus Jerry Reese ’66, built the docks for the Scotts at ExxonMobil in Beaumont and Shell Oil at Deer Park. “Jerry and his team were always great to work with,” Bill said. “We could depend on them to provide the dock structures on time and on budget.”
Through the years, the brothers have invested heavily in waterfront real estate and now own more than 1,000 acres with over a mile of waterfront in Jefferson County alone. For recreation, Bill operates the Star S game ranch on the James River near Mason, and Dick heads to properties near the Hill Country-meccas of Wimberley and Dripping Springs.
Both brothers’ wives are Lamar alumnae. Dick’s wife, Rose (Modica) Scott, graduated with a history degree in 1972, and Bill’s wife, Gay (Duckworth) Scott, graduated with a B.B.A. in accounting in 1980.
The Scotts have been a part of Southeast Texas since 1957, when they moved from Fort Worth just in time to experience Hurricane Audrey. “I think my mom and dad and everyone in the family was wondering what in the world we’d gotten into,” Dick said.
The business was always a family affair, with their mother, Nita Scott, involved with the administration of the business from the start and their father, DeWitt, also becoming involved when “in the late ’70s Mom and Dad purchased the first locomotives we leased to industry and formed their own company, Econo-Rail Corp. to provide plant switching services to the local petrochemical industry,” Dick said. Now in her 80s, Nita “still takes a lot of pleasure from being involved in the business.”
“It is our family’s intention to stay involved in the community and to help others create success stories as well as give back to the community, which has been so good to us over the years,” Bill said.
