voestalpine Nortrak: full steam ahead 4 minutes spent reading
Railways

voestalpine Nortrak: full steam ahead

Viktoria Steininger
Holds editorial responsibility for blog topics, is researching and writing articles. Her stories give insights into the world of the voestalpine Group.

In North America's railway industry voestalpine Nortrak Inc.—the voestalpine VAE subsidiary responsible for the NAFTA region—is the market leader in the construction and production of customized turnout systems and their components, also known as “special trackwork”.

The largest trains in the USA may not transport passengers, but they play an ever more important role in freight transport. The vital transport of raw materials such as coal, lumber, ore, grain, vehicles, and oil, as well as consumer goods industry containers, throughout the North American continent is particularly lucrative. In North America the privately-owned and exchange-listed organizations Union Pacific, Burlington Northern Santa Fe, Norfolk Southern, CSX, Canadian National, Canadian Pacific, and Kansas City Southern all build and maintain their own rail infrastructure networks for freight transport, thereby forming the most important Class I (= largest freight railroad) segment.

They have their own, very specific technical standards and regulations for product approvals, and frequently negotiate procurement agreements which run over several years.

Structural transformation

Downturn in the freight transport sector

At the beginning of 2015 all Class I railroad operators experienced a large-scale reduction in freight volumes, resulting from significant declines in coal transport. Why? Because of the structural change away from coal to natural gas in power generation, as well as the de facto stoppage of metallurgical coal production due to extremely low prices. As a consequence, their investment volumes fell quickly and significantly in order to compensate for falling earnings. Due to these structural impacts it may take quite a while until the Class I market has recovered, compared to previous market fluctuations.

Growing volumes of passenger traffic

Continuing positive demand in the passenger transport segment is primarily the result of population growth in many North American cities. The end customers in this segment are frequently light rail transit operators which, as they are publically financed, are subject to “buy American” regulations. For this reason, Nortrak is required to produce all components in the USA; due to its unique degree of vertical integration, this strengthens the company’s position.

While true high-speed railway projects have not yet been realized in North America, the most likely projects of this type will be in Texas (Dallas—Houston) and California (San Diego—Francisco and Los Angeles—Las Vegas). The challenges here lie in financing and environmental approvals.

“Shortline”

The third segment, Class II, III, and Industrial, primarily covers rail freight and includes smaller “shortline” railways which are connected to Class I carriers and ports with local railway infrastructure. Expansion of the Panama Canal is expected to bring more growth, especially thanks to the chemical and plastics factories located along the Gulf coast. According to a voestalpine Nortrak assessment, it will be possible to differentiate in this technologically relatively undemanding customer segment based on cost leadership, short delivery times, and innovative customer service.

In spring the company plans to establish an “E-Commerce Webshop” for industry turnouts in modular design—Ludwig Freytag, Dave Millard, Brian Abbott

In spring the company plans to establish an “E-Commerce Webshop” for industry turnouts in modular design—Ludwig Freytag, Dave Millard, Brian Abbott

Growth & “E-Commerce Webshop”

While others are suffering from the structural downturn over the long term, Nortrak will be able to further extend its market position in the Class I segment. The company has recently won its first comprehensive procurement agreement with a Class I railway. Strategic initiatives are also being implemented in the passenger and industrial segments, and include technology-based access to customers. One highlight is an “E-Commerce Webshop” for industry turnouts in modular design which the company plans to launch in spring 2017. The system will enable customers to configure their own industrial turnouts, to determine the price, and order direct online from voestalpine Nortrak.

In future voestalpine Nortrak will exploit new opportunities in all segments of the North American special trackwork market.

In future voestalpine Nortrak will exploit new opportunities in all segments of the North American special trackwork market.

Strategy: system solutions

Moreover, a partnership contract has been signed with the company GIC which will manufacture and sell concrete sleepers. The company strategy is to offer complete system solutions for the North American railway industry which will also include the signaling technology know-how of its European associated companies.

What clearly creates advantages for voestalpine Nortrak is its commitment to ensuring workplace safety, delivery reliability, as well as meeting financial and quality goals throughout all phases of the business cycle. Thus, voestalpine Nortrak is confident of being able to exploit future opportunities in all segments of the North American special trackwork market.

Website voestalpine Nortrak: www.voestalpine.com/nortrak

Viktoria Steininger