Mexico: The railcar producer has completed a shift of production from the US to Mexico, that resulted in significant cost savings as production volumes rise. Now Freight Car America (FCA) continues to scale up new production.
In 2021, FCA completed the transfer of production facilities from a plant in the US state of Alabama, which has been operating since 2008, to a plant in Castaños, Mexico, launched in the summer of 2020 together with the local company Facemex. Then the manufacturer explained this decision by optimizing capacities due to a decrease in demand and the difficulty in managing significant production facilities, as well as the opportunity to reduce costs.
In its annual results report of 2021 FCA confirms that it not only managed to reduce costs by $20 mln USD per year, but also reduced employee salaries by more than 60%. Separately, it is emphasised that now FCA is the only manufacturer of freight cars with facilities exclusively in Mexico and supplying rolling stock to the United States and Canada. As FCA President and CEO Jim Meyer noted in an interview with Railway Age, the Mexican site has the capacity to produce 2 thsd railcars a year, or one thousand railcars per production line. It is the volume of production that the enterprise needs to achieve break-even, while in the United States the level of 6 thsd units was neccessary.
FreightCar America factory in Castaños. Source: Railway Age
The past year has been a very positive one for FCA. Revenue was $203.1 mln USD, what is 87.4% more than in 2020, and the backlog reached $240.2 mln USD at the end of 2021 (+64.5%). Over 1.3 thsd new railcars (+125.6%) and 377 overhauled railcars (+149%) were delivered to customers.
It is expected that this year FCA will produce and overhaul from 2.6 thsd to 2.9 thsd cars. The increase in production should be facilitated by the modernisation of the site in Castaños (in 2020, its capacity was estimated at 20% of the capacity of the Alabama plant). Thus, in 2022 it is planned to complete the construction of a production workshop with an area of 15 thsd sq. m and launch a workshop for the production of wheels and axles. It is assumed that by the beginning of 2023, the annual plant output will be 4-5 thsd cars – this is half that of the plant in Alabama, which, according to Jim Meyer, could theoretically produce 10 thsd cars a year.
