Wabtec Commuter Sales Help Offset Freight Decline

With its sales to the freight industry falling, in line with other rail equipment suppliers, Wabtec’s new $44 million order to build commuter locomotives for Virginia Railway Express is helping cushion the impact of the recession on freight demand.

The Wilmerding, Pa., company – once known as Westinghouse Air Brakes – sells a broad range of brake and electronic products to freight railroads as well as commuter lines, besides building new locomotives and refitting old ones.

A year ago, slightly more than half its $390 million in second-quarter revenue came from the freight sector, but that has changed dramatically.

For the three months ending June 30, 2009, Wabtec had $334 million in total sales for a 14 percent drop from the same quarter in 2008. Its transit group sales were $198 million for a 3.9 percent or $7 million gain, but sales to freight customers of $136 million were down 32 percent or nearly $64 million.

Yet even as North American railroads and some shippers have idled many locomotives and railcars until this year’s sharp recession fades and traffic picks up, and sharply cut their orders for new equipment, passenger rail lines are enjoying new support as the Obama administration and Congress plan to boost commuter transit operations and intercity passenger train service.

Wabtec said VRE, which runs in central and northern areas of Virginia, originally planned to buy just five of its MPXpress model locomotives. However, “VRE used resources from two federal earmarks from U.S. Sen. James Webb (D-Va.), federal formula funds and a recent award of stimulus money” from the Recovery Act to order seven more.

The commuter line also has an option to buy eight more, which could push the total order’s value to Wabtec over $73 million.

Wabtec’s MotivePower unit will build the locomotives in Boise, Idaho, with deliveries to begin next summer. The engines provide better fuel efficiency, burn more than 60 percent cleaner than the ones they replace and “are fully compliant with Buy America regulations,” Wabtec said.

Contact John D. Boyd at jboyd@joc.com.