WATSONTOWN — A $1 million state capital budget grant has been awarded to Moran Industries to help the company expand its intermodal capabilities.

The grant comes from the state Department of Transportation through its Bureau of Rail Freight Ports and Waterways.

Jeff Stroehmann, vice president of operations at Moran, said the money will be used for rehabilitation and construction of a rail siding into an addition to the former Zenith plant off Eighth Street.

“This is a big deal for us,” he said. “It’s a bold step to help us with a concept we’ve pioneered in this area, the transfer of long-haul rail to short-haul trucking.”

Stroehmann said rail is the most efficient method of long-haul transportation, with its ability to move a ton of freight 426 miles on one gallon of diesel fuel.

“Transportation is the third largest cost to industry,” he said, “and from our Watsontown location, we are within eight hours of 40 percent of the nation’s population.”

Stroehmann noted Moran’s opposition to the proposed tolls on Interstate 80, since the company’s trucks use the highway to reach customers.

“We’re in a difficult business environment as it is,” he said. “If they put tolls on I-80, they may as well put up a big ‘closed’ sign at each end of Pennsylvania.”

The project includes construction of a switch from the Norfolk Southern main line track, which may be as much as half the cost of the project, rehabilitation of some existing track and building new track into the warehouse.

The project will be going out to bid soon, Stroehmann said, with construction slated to begin during the summer.

“We are very grateful to Rep. Merle Phillips and the Northumberland County commissioners for their help in receiving this grant,” he said. “They took a leap of faith to help us with this.”

Stroehmann said a variety of manufactured goods would be transferred from boxcars to van trucks for delivery. There will be space for 10 boxcars inside the warehouse when the project is completed.