Railroad Equipment Manufacturing
Description
Companies in this industry manufacture locomotives, freight and passenger rail cars, and brakes and other parts and equipment used in railroad operations. Major companies include Greenbrier, Progress Rail, Trinity Rail (Trinity Industries Subsidiary), and Wabtec (all based in the US), along with Alstom (France), Bombardier (Canada), CRRC Corporation (China), Hitachi (Japan), and Siemens (Germany).
Worldwide, the railroad equipment manufacturing industry is expected to generate about $106 billion by 2034, according to Market Research Future. Leading exporting countries for production of railroad equipment include China, the US, and Germany, according to The Observatory of Economic Complexity (OEC).
The US railroad equipment manufacturing industry includes about 230 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $13 billion.
COMPETITIVE LANDSCAPE
Demand for freight rolling stock is driven by fuel prices, as high gas prices shift freight transport from trucks to rail. Demand for passenger rail rolling stock is driven by public investment in regional rail transportation. The profitability of individual companies depends on securing long-term sales contracts with railroad companies and leasing agencies. Large companies have advantages in manufacturing economies of scale. Small companies can compete effectively through consulting services and custom-building locomotive and passenger railcars. The US industry is highly concentrated: the 50 largest companies account for more than 95% of industry revenue.
Imported railroad equipment comes from Germany, the US, and the UK, according to The Observatory of Economic Complexity (OEC).
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include new and rebuilt diesel-electric locomotives and parts and accessories for railroads, which both account for about 35% of the industry revenue. Other products include trains and train cars as well as airbrakes and railway equipment.
Freight rail companies tend to specialize in one or two types of cars, such as hoppers, tanks, auto carriers, or intermodal shippers. Demand for light rail, railcars used as streetcars in an urban environment, fluctuates year to year, but on average, a major light rail manufacturer produces several thousand units annually. Almost all rolling stock companies rebuild the products they manufacture.
Manufacturers typically operate a main production site and several smaller facilities dedicated to key processes such as wheel, brake, and axle subassembly; repairs; and components and parts. Completed subassemblies are shipped by rail or truck to the main manufacturing plant for final assembly.
At the manufacturing plant, workers weld, fabricate, and assemble parts in component-specific production bays. The train takes shape as the chassis and wheels are placed on rails and subassemblies, airbrakes, wheel trucks, circuitry, and computer network systems are added. The assembled rolling stock is moved by rail to an onsite test track. Once the train passes extensive electrical, load, and track tests, it's moved to a painting booth and delivered by rail to the customer.
Major raw materials include steel, normalized steel plate, and castings. Purchased steel and specialty components represent a significant portion of rolling stock manufacturing costs. Many manufacturers manage internal component divisions rather than relying solely on third-party providers. Most manufacturing contracts contain price variability provisions where raw material costs increases or decreases are passed directly on to customers.
Worldwide, the railroad equipment manufacturing industry is expected to generate about $106 billion by 2034, according to Market Research Future. Leading exporting countries for production of railroad equipment include China, the US, and Germany, according to The Observatory of Economic Complexity (OEC).
The US railroad equipment manufacturing industry includes about 230 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $13 billion.
COMPETITIVE LANDSCAPE
Demand for freight rolling stock is driven by fuel prices, as high gas prices shift freight transport from trucks to rail. Demand for passenger rail rolling stock is driven by public investment in regional rail transportation. The profitability of individual companies depends on securing long-term sales contracts with railroad companies and leasing agencies. Large companies have advantages in manufacturing economies of scale. Small companies can compete effectively through consulting services and custom-building locomotive and passenger railcars. The US industry is highly concentrated: the 50 largest companies account for more than 95% of industry revenue.
Imported railroad equipment comes from Germany, the US, and the UK, according to The Observatory of Economic Complexity (OEC).
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include new and rebuilt diesel-electric locomotives and parts and accessories for railroads, which both account for about 35% of the industry revenue. Other products include trains and train cars as well as airbrakes and railway equipment.
Freight rail companies tend to specialize in one or two types of cars, such as hoppers, tanks, auto carriers, or intermodal shippers. Demand for light rail, railcars used as streetcars in an urban environment, fluctuates year to year, but on average, a major light rail manufacturer produces several thousand units annually. Almost all rolling stock companies rebuild the products they manufacture.
Manufacturers typically operate a main production site and several smaller facilities dedicated to key processes such as wheel, brake, and axle subassembly; repairs; and components and parts. Completed subassemblies are shipped by rail or truck to the main manufacturing plant for final assembly.
At the manufacturing plant, workers weld, fabricate, and assemble parts in component-specific production bays. The train takes shape as the chassis and wheels are placed on rails and subassemblies, airbrakes, wheel trucks, circuitry, and computer network systems are added. The assembled rolling stock is moved by rail to an onsite test track. Once the train passes extensive electrical, load, and track tests, it's moved to a painting booth and delivered by rail to the customer.
Major raw materials include steel, normalized steel plate, and castings. Purchased steel and specialty components represent a significant portion of rolling stock manufacturing costs. Many manufacturers manage internal component divisions rather than relying solely on third-party providers. Most manufacturing contracts contain price variability provisions where raw material costs increases or decreases are passed directly on to customers.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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