Friday, February 19, 2010

US Railcar Company, LLC: ACF comes full circle

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The decision of US Railcar LLC and American Railcar Industries to join forces to compete for business in a growing U.S. passenger railcar market has several historic elements, not the least of which is a return to passenger railcar manufacturing for one of America's oldest railway supply companies.

Back in the heyday of American passenger railways, American Car & Foundry was one of the largest manufacturers of freight and passenger rail equipment. ACF Industries, as the company was later known, and its predecessor companies have roots in the U.S. railcar manufacturing industry that date back to 1873. ACF left the passenger railcar business around the same time as many of its domestic contemporaries—Budd, St. Louis Car, Pullman Standard—but remained in business because it was also a successful manufacturer of freight cars. American Railcar Industries (ARI) acquired ACF’s assets in 1994, and today is a major North American manufacturer of covered hopper and tank cars and certain freight car components, as well as a provider of repair/rebuilding and fleet management services. ARI’s principal investor is Carl Icahn, who through Icahn Enterprises LP has a 54% stake in the company (which is publicly traded on the NASDAQ as ARII).

us-railcar-llc-logo.jpgAmerica’s passenger rail renaissance, aided in no small measure by the Obama Administration’s commitment to developing passenger rail corridors including high speed and creating domestic manufacturing jobs, has brought ARI back to the passenger railcar business. St. Charles, Mo.-based ARI has entered into a joint venture with Columbus, Ohio-based US Railcar, LLC to design, manufacture, and sell North American-compliant DMUs (diesel multiple units.). The joint venture is named US Railcar Company, LLC. It is led by President and CEO Michael P. Pracht, a rail industry veteran with extensive experience with several major global railway supply companies. Production will be based in Arkansas, where ARI manufactures freight cars. The joint venture plans to produce railcars for commuter and regional passenger rail service. 

usrail-midwest-poster.jpgAccording to US Railcar, LLC Managing Member Barry H. Fromm, who will serve as a Director of the joint venture, “One of US Railcar Company’s goals is to reestablish FRA-compliant DMU production in the U.S.” As Chairman and CEO of Value Recovery Group, Inc. (VRG), Fromm led a group of initial investors in the purchase of assets from the former Colorado Railcar Manufacturing LLC, which ceased operations in late 2008.

There’s also a mildly ironic twist to the joint venture: In the late 1940s, ACF, in an attempt to export North American passenger rail technology overseas, designed and built the first Talgo train for Spain (see text of a July 12, 1954, Time magazine article, below).

“These are extraordinary times with growth opportunities for passenger rail in the U.S.," said Pracht. “The US Railcar Company DMU is designed to enable new, cost-effective and environmentally friendly passenger rail service across a range of corridors and routes, all with a proven, existing equipment platform already in service.” The DMU was prototyped through a demonstration project in 2002 and, according to Pracht, “is currently the only DMU that is fully compliant with Federal Railroad Administration passenge requipment safety regulations as stated in 49 CFR Part 238. This means the US Railcar Company DMU can be quickly pressed into service using existing freight railroad rights-of-way.”

Ten DMUs are currently in service in Florida, Alaska, and Oregon. Available in both regional and intercity configurations, the DMU “is well suited for incremental corridor development at speeds from 79 to 90 mph,” says Pracht. “Platform enhancements currently anticipated include a diesel-electric upgrade and increasing speeds to 125 mph, making this American-made DMU an attractive solution for both mature and emerging passenger rail agencies aroundt he country.” As well, the company has been working with industrial designer Cesar Vergara, principal of Vergarastudio, on improving and modernizing the DMU’s existing design.

For ARI, re-entering the passenger railcar market is way to strengthen its operations in a severely depressed freight car market. “ARI is excited to participate in this opportunity to join US Railcar and bring ARI’s long and proud freight rolling stock manufacturing heritage to the passenger equipment sector,” said ARI President and CEO James Cowan. “Our commitment toexpand and diversify our manufacturing program results from our desire to grow,and build on the expected federal commitment to passenger rail as part of a balanced national transportation system. Through this partnership, we look forward to being an integral part of that new growth with modern passenger rail equipment built in the U.S.”

The joint venture is structured to enable ARI to provide USRailcar Company, LLC with its railcar production experience, and for VRG to provide government contracting experience. ARI and VRG representatives will have equal representation on the joint venture’s board. VRG is an economic development consulting, government advisory services, and asset recovery and management firm that represents state and local governments, commercial banks, private investors, and several federal agencies.

 

—William C. Vantuono, Editor, Railway Age

 

RAILROADS: Will All Go to Talgo?

(From the July 12, 1954 edition of Time)

 

For several hours in Manhattan last week, the presidents of the four biggest eastern railroads met with the train builders of ACF Industries to discuss a radical train. The roads: New York Central; New York, New Haven & Hartford; Baltimore & Ohio and the Pennsylvania. The train the railroaders had in mind was similar to ACF’s swift “Talgo” express, whichhas been running for four years on Spanish railroads.

Built of aluminum and other lightweight metals, Talgo’s cars are only 7 ft. 6 in. from floor to ceiling, 4 ft. lower than current coaches.I nside, travelers sit in reclining airplane-type seats, look out big picture windows, and put their luggage in forward compartments. The low train can whip into curves smoothly at 90 m.p.h., v. the 50-60 m.p.h. of today's flyers. It weighs only one-third as much as current trains, requires only 40% as much fuel for the same speed, can be built at an estimated $1,300 a seat, v. $2,300 for present cars. The Midwest's Rock Island Railroad has already ordered one of thenew trains from ACF for Christmas 1955 delivery.

On the 157-mile run between New Haven and Boston last week, the New Haven’s new president, Patrick B. McGinnis, who wooed stockholders with the promise of better passenger service, put on a demonstration of ACF’s speedy train. With special ICC permission, the engineer disregarded the 60-m.p.h. speed limit on curves, and went into the turns at 87 m.p.h. On the long straightaways, he pushed ACF’s Talgo up to 102.8 m.p.h. and pulled into Boston in 150 minutes. Though it was a stop-and-start experimental run, the time was still ten minutes better than the best previous record.

After his ride, fast-flying President McGinnis said: “If enough Eastern roads get together, we can jointly order on a wholesale basis.In that case, I’d place an order within months.”