One of the largest railcar producers in the world is subleasing a portion of Navistar Corp.’s Barton plant with plans to build up to 7,000 cars annually.
FreightCar America officials said Tuesday they hope to begin production in July and have 200 workers on site by the end of the year. They expect to employ 400 people at the plant by the end of 2014, said Terry Heidkamp, senior vice president of operations for FreightCar.
“This is a win for all involved, FreightCar America, Navistar and the community,” Heidkamp said. “It also is a win for FreightCar to be able to produce these cars in a competitive way.”
As part of the arrangement that allows FreightCar to use two of the plant’s four assembly lines, the two companies are forming a partnership. Navistar will assist in maintenance and production of the railcars.
Heidkamp said FreightCar produces about 70 percent of the coal cars manufactured in America, but the company wants a variety of railcars.
“We need a new footprint, a different footprint that will help us better compete in the market,” he said.
Navistar leased the nearly mile-long plant from National Alabama in September 2011. The company announced last year it would build a new truck at the facility, but plans have been put on hold, as Navistar facilities in Springfield, Ohio, and Mexico are at sufficient capacity to meet existing demand, company officials said.
Navistar also is awaiting permission from the Environmental Protection Agency to bring a new truck engine into production, but officials said that is not connected to the reason things have been put on hold in Barton.
Bob Andress, vice president of manufacturing at FreightCar, said having Navistar in the same plant will save costs and make production more convenient. Andress said another major supplier also is nearby in Iuka, Miss., 12 miles from the Barton plant.
Lauren McFarland, corporate communications manager for Navistar, said wages will be competitive with the skills needed. She said the industrial development training website likely will list a range between $12 and $14 an hour, up to $20 an hour.
Officials with the Shoals Economic Development Authority and Shoals Industrial Development Committee unanimously voted Tuesday to allow Navistar to count jobs related to FreightCar’s operation toward a local incentive package. Local governments will pay Navistar $7.67 million in incentives if 900 people are working at the plant.
An additional $7.67 million is awarded if that number reaches 1,350. After that, $3.83 million is awarded if the number reaches 1,500 and $3.83 million more if it reaches 1,800 by 2016.
David Bronner, chief executive officer of the Retirement Systems of Alabama, said officials had hoped Navistar would have a “quick and heavy” start but various issues have stood in the way. That slow start could be a blessing in disguise.
“It may actually be better for the area to have two publicly listed companies,” Bronner said. “In time, this will be bigger than we had originally anticipated with just one company.”
Tuscumbia Mayor Bill Shoemaker, chairman of the industrial development committee, said Tuesday’s announcement means the plant has two quality companies working together.
“The products they’re building are just a perfect fit,” Shoemaker said. “This is teamwork between them, and each feels good and can’t wait to work together. Most of the plant still will be available for Navistar to produce their product. It really is the perfect match.”
FreightCar has headquarters in Chicago and operates manufacturing facilities in Danville, Ill., and Roanoke, Va.
FreightCar America has no debt and a good cash balance, Heidkamp said.
Danville’s 250 employees received notices earlier this month of a possible layoff in April, according to news reports. Andress said that is not a sign of plans to shut down the plant. Instead, it is the result of a depressed coal market. He said Roanoke has a good backlog of orders, while Danville’s is not as full.
FreightCar officials said they will begin the hiring process Wednesday morning, with hopes of having employees trained and working on site in May.
Anyone interested in applying for an hourly job can do so through the Alabama Industrial Development Training website. Information on applying for salaried jobs can be obtained through the company.
Navistar officials said 180 people are working at the plant now. Company officials said they project having more than 300 at Barton by the end of 2014.
That, coupled with FreightCar’s anticipated employment levels, would mean more than 700 people would be working at the plant.
Heidkamp said the company will produce a variety of railcars at Barton. FreightCar has specialized in coal cars, but Heidkamp said the Navistar plant offers flexibility that fits into his company’s plan to produce railcars for numerous purposes.
“We can carry flatcars, intermodal cars ... and other types,” Heidkamp said.
The plant in the Barton Riverfront Industrial Park was built in 2007 by Canadian-based National Steel Car. The concept of building a plant that can manufacture a diversity of railcars was stressed during production of the facility.
The company struggled financially because of a downturn in the railcar industry, and the Retirement Systems of Alabama stepped in to take over operations at what became known as National Alabama.
Heidkamp said FreightCar America will invest about $23 million into configuring the two productions lines for its purpose. That is significantly less expensive and time consuming than building a new plant or going into a plant that is not set up for railcar usage, he said.
“Because of the way the facility was designed and what it was built to do, it’s perfect for us,” Heidkamp said. “We were also impressed with the local area, employment base and the state and local governments.”
He said the company ultimately plans to produce 6,000 to 7,000 railcars a year. “Our strategy for a while has been to grow our product line.”
Ray Koopman, district of manufacturing and business development for Navistar, envisions the companies looking for ways to continue developing their partnership at the plant.
“We’ll be looking at projects we can work on together,” Koopman said. “If all this ends up being is a customer-supplier relationship, we have failed. We’ll aggressively go after additional fabrication opportunities that utilize our equipment.”
Andress said the partnership and facilities bring a lot of potential. “With us both in transportation, the usages of assets could be optimized.”
Discussions about the partnership started last year, according to both companies.
Bernie Delinski can be reached at 256-740-5739 or bernie.delinski@TimesDaily.com.
FreightCar America facts:
Formed in Chicago in 1901 as the Cambria Steel Co. to build freight and mine cars.
Purchased its Danville, Ill., plant in 1995, and Roanoke, Va., facility in 2005. The company has nearly 1,000 employees.
Completed its initial public offering on NASDAQ in 2005. The stock closed Tuesday at $24.59 a share.
Responsible for 70 percent of the coal cars produced in the United States. The company also has introduced 16 new designs and product line extensions during the past five years.