Train Equipment
SIC 3743
NAICS 336510
Railroad equipment manufacturers build the world's passenger and freight transit equipment, including subway trains and street cars, locomotives, railcars, and parts and equipment used to run railroad systems.
In the early 2000s, freight car manufacturing across the globe declined, falling from 75,685 cars in 1998 to 34,247 cars in 2001. Railcar demand from 2001 to 2003 was dismal, the lowest in twenty years. The outlook was improving in the mid-2000s, however, especially as the industry consolidated further. According to the Railway Supply Institute, North America had ordered 20,315 new cars through the third quarter of 2004. This was an increase from 19,770 orders the previous quarter. Tank cars, box cars, non-articulated platform flat cars, and aluminum gondola cars were in the highest demand. At the same time, locomotive production continued its tradition of steady growth, fueled by developments that increased efficiency. Besides new trains and infrastructure, many countries sought safer methods of controlling and monitoring railroads. Therefore, information and technology firms began to develop and market computerized signal and communication systems for the railroad industry.
Railroad companies also invested money in new railroad equipment to lure commercial and freight clients to areas where train use had decreased over the years, such as in the United States. New technologies available to railroads included more durable yet lighter-weight freight trains capable of traveling 80 miles per hour, as well as electronic tracking systems to ensure safety on the railroad. In addition, the industry was focusing on the development of more environmentally friendly cars and locomotives in the mid-2000s.
Emerging economies such as those of China, South Korea, and Indonesia began expanding and improving railway systems and contracting railroad equipment manufacturers to produce advanced machinery to carry their transportation systems into the next century. The United States also started to upgrade its passenger and freight railroad equipment, and South American countries such as Brazil took measures to improve railroad transportation as well. By the mid-2000s, China's booming market also caused increased demand in this sector.
Several industry insiders and analysts, including 65-year industry veteran Norman W. Seip and Thomas D. Simpson of the Railway Supply Institute, felt more good times were in store for railroads and related industries. However, as Simpson pointed out, "the new railroad freight car building industry has been a cyclical one with spectacular highs and industry-sapping lows". Although some suppliers remained anxious about the future, builders were enjoying exploring their opportunities.
The demand for switchers was tremendous. As a result, there were many designs and opportunities for small companies normally linked to rebuilding. A new generation of switchers were distinguished by microprocessor engine controls enabling them to replace more efficient four-axle units in many Class I yards.
Economic Planning Associates (EPA) issued a freight car forecast calling for delivery of 69,000 railcars and intermodal platforms in 2007. The forecast was "based on opening year backlogs and further growth in orders". Furthermore, EPA expectations for 2008 included continued demand for a number of car types, a revival of demand for coal cars, boxcars and intermodal equipment plus an increase in tank car production capacity with support deliveries of 70,500 units.
Although the organization of the railroad industry varied by country, the role of the railroad equipment manufacturer remained largely the same in each context: it sold equipment such as locomotives, signal systems, and railcars to the railroad operators, whether owned and operated by a government or a monopoly and whether for freight or passengers. Railroad leasing companies and other manufacturers and producers who relied on railroads might also purchase train equipment.
In the mid-1990s, railroad operators began working more closely with equipment manufacturers in order to ensure high standards of reliability and performance were met as increasingly complex technology came on-line, according to International Railway Journal. Since many train lines crossed national boundaries, notably in Europe, railroad operators realized they had to procure equipment compatible with different national railroad systems. In Germany, for example, Deutsche Bahn (DB) worked closely with Siemens and other manufacturers to develop the InterCity Express 2.2 and the InterCity Express Tilting trains to meet the railroad's standards for smoother, more comfortable, and more efficient travel.
Based in Alexandria, Virginia, the Railway Progress Institute (RPI) represented the global railroad industry and served more than 100 members. Originally called the Railway Business Association, the RPI served both freight and passenger railroads, and the association's key objectives included the following: promoting a free enterprise system of railroads throughout the world, advancing high-speed train penetration and light rail systems in urban cities, and representing its members' interests.
Inventors developed early railroad equipment in the first part of the nineteenth century. The English engineer Richard Trevithick built the first steam engine in 1802, which did not run on tracks and reached a maximum speed of 6 miles per hour. The following year, Trevithick developed a locomotive designed for tracks, which weighed more than six tons and could reach speeds of only about 2 miles per hour, taking four hours to get to the end of the 8 miles of track Trevithick laid for the train.
In 1814 another engineer, George Stephenson, built a five-ton steam engine that could pull eight cars loaded with 30 tons of cargo. Stephenson designed this train for a mine in England and went on to build a number of other trains, including his 1825 "Locomotion," which became the first passenger train. The Locomotion traveled a 16-mile track from Stockton to Darlington, England.
In the middle part of the century, the rest of Europe and the United States began installing railroads and purchasing steam engines from the British company founded by Stephenson. Countries such as the Netherlands, Germany, France, and the United States imported trains from Britain during the early years of the railroad equipment industry. The United States alone purchased about 100 steam engines from Britain between 1829 and 1841.
In Asia, the United States, and the United Kingdom, railroad equipment manufacturers supplied these countries with their first locomotives at the turn of the century. However, by the 1920s Japan began to produce its own trains, and by 1935 Japan had manufactured 687 locomotives. Later in the century, Japan became a major proponent of the railroad, creating the world's first high-speed railway in 1964 which stretched about 257 miles across the country and reached speeds of 100 miles per hour.
Throughout the 1970s, 1980s, and 1990s, the prosperity and prospects of the railroad equipment manufacturing industry depended on the overall economics of the countries in question. In the stable and even flourishing economies of Europe, the United States, and China, railroad manufacturers experienced heightened demand and solid growth in the 1990s as they received new contracts to produce equipment for the modernization of old railroad systems. Several large railroad companies in the United States, including Amtrak and Union Pacific Corp., as well as city and state transit authorities, ordered high-speed trains and electronic tracking systems. Europe continued to expand its high-speed railway production, including new orders for locomotives from British Rail. In addition, China forged ahead in the creation of the Eurasia Continental railroad system.
However, in the turbulent economies of South Korea and Thailand, which experienced devaluations of currencies and mushrooming debt in the mid-1990s, demand slumped and existing contracts were reevaluated. South Korea's new president, Kim Dae-jung, called for the review of the country's 412-kilometer Supertrain project because of its escalating construction costs. Furthermore, Thailand halted production of its Skytrain project, which would have eased Bangkok's notorious traffic problems, when it terminated its contract with the developer, Hopewell Co. When construction stopped in August of 1997, Hopewell had built only 20 percent of the railroad.
In the global market, Germany, Canada, France, the United States, Japan, and China led the world in railroad equipment manufacturing in the mid-1990s. To remain competitive, companies in the industry had to accommodate railroad operators and restricted budgets and funding. Railroad operators in Europe pressured manufacturers to provide low-cost—low cost to purchase, operate, and maintain—railroad equipment, forcing manufacturers to seek lower prices from their sub-suppliers. Railway Age reported that in some cases railcar costs dropped by 30 percent...
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