When European headquartered Faiveley Transport hitched its capabilities to U.S. based Ellcon-National in 2008, it engineered an acquisition that formed a turbocharged train locomotioning headfirst on international rails into the 21st century.
For Faiveley Transport, the purchase proved a perfect match for an organization seeking to expand its previously limited presence in the U.S. freight market. For Ellcon-National it represented an opportunity to expand its own market parameters, in terms of industry sectors served (both freight and transit) and national boundaries.
The mutually beneficial business transaction is making it all happen. A little less than two years from the acquisition, the international parent company transformed Ellcon-National’s Greenville, S.C. home into its North American headquarters.
Now, Faiveley Transport North American (FTNA) consists of two divisions: heavy haul rail freight (the focus of Ellcon-National) and the passenger transit division (the focus of Faiveley). “The passenger transit division brought the manufacturing expertise of Faiveley Transport to North America,” says Faiveley Transport North America Vice President of Business Development Vik Pearce.
Rail freight involves what the term obviously implies: the movement of product. Rail transit involves movement of people via conveyances such as subways and commuter trains.
Figuratively speaking, the train took off from the station 100 years ago. In 1910, Ellcon began as a garage-based business in New York City. The ragtime-era, rail-industry startup initially established itself by manufacturing transit car products. In 1959, it engineered a merger with National Brake, a manufacturer of rail hand brakes. Now renamed Ellcon-National, the company supplied products for both freight and transit markets. It rode this dual track for the next several decades, with freight slowly becoming a dominant focus.
In 1991 Ellcon-National moved from Totowa, N.J. to Greenville into its new 153,000-square-foot plant. Then-president Doug Kondra (son of former chairman and chief executive officer Emil Kondra), perceived that the southern state would provide an ideal location for a new home. Indeed, the Greenville region was experiencing robust economic development and industrial growth, and it offered a deep pool of skilled labor. However, Ellcon didn’t need to dip too deeply into that pool: Nearly 72 percent of its New Jersey workforce was willing to uproot and relocate. “Such loyalty among employees is remarkable, even unheard of,” says Pearce, commenting on a historical footnote that someone could and should easily expand into a full-blown chapter.
GROWTH FOSTERS ACQUISITION
As growth continued apace, and Ellcon-National expanded its product line, the company added 100,000 square feet to the facility. Still, that wasn’t enough. In 1998, Ellcon-National built a second 155,000-square-foot facility. By 2006 Ellcon had become a leader in the supply of many AAR brake products including hand brakes, truck-mounted brakes, empty load devices and slack adjusters. All the while, it continued manufacturing door panels and windows for passenger railcars.
In 2006, as it sought continued growth for its AAR heavy haul freight products in the face of global competition, Ellcon-National turned its face to the wind and began looking overseas for a complementary international partner. This led to a dialogue with the Paris-based Faiveley Transport, which enjoyed a 90-year history in rail systems. Led by Chairman and Chief Executive Officer Robert Joyeux, Faiveley Transport had become a world leader in on-board passenger rail systems (door controls, air-conditioning, pantographs, auxiliary power systems, transit car brakes, couplers, etc.) with operations in 22 countries.
By 2008, the informal alliance that began two years earlier became a formalized deal when Faiveley Transport officially acquired Ellcon-National. The acquisition provided Faiveley Transport with access to a large AAR freight brake market and a strong manufacturing base for its passenger transit products for North America.
Today, a modern 400,000-square-foot plant is home to Faiveley Transport North America. Led by Chief Executive Officer David Rose, the company has two divisions. The freight division provides products under the respected Ellcon-National brand, and the transit division provides Faiveley Transport’s well known products for passenger rail.
“Ellcon National’s investments in robotics, 3D modeling, CADCAM systems and CNC machining centers have provided high-tech resources that are now available to FTNA,” says Pearce. The freight division uses CNC work centers to machine-empty load devices (ELD) from aircraft-grade aluminum. Computers run special, individualized tests on each ELD. Further, computer-driven lasers cut out slack adjuster tubular housings, and robotic welders produce brake cylinders in a fraction of the time.
Such “hard” investments (combined with MRP and inventory management software) enable FTNA to keep track of orders and part movements, forecast market activity and incorporate customer needs into the central planning process, indicates Pearce. This translates into lower-cost, higher quality manufacture and more rapid development of new products, according to the company.
Moreover, Faiveley Transport is accelerating the strong focus on research and development, which has been a crucial component in Ellcon-National’s history. As Pearce points out, large and new test facilities provide extensive in-house AAR and project longevity testing. “As a result, we’re accelerating product development and have some exciting things waiting in the wings,” comments Pearce.
RAILROADING INTO THE FUTURE
Beyond all of that, the 50-acre Greenville site provides room for more expansion, which the company envisions. “We plan to generate growth on both the freight and transit sides as the U.S. market rebounds,” says Pearce.
In particular, the transit side is poised to experience substantial growth, as the U.S. government is becoming increasingly focused on developing more efficient ways to move people, in response to both economic and environmental concerns, Pearce points out.
“For instance, the state of California will be building an enormous transit system, representing an investment of many billions of dollars and designed to transport people from Los Angeles to San Francisco,” says Pearce. “People have begun to recognize that high-speed, long-distance rail transport can be much more convenient and economically smarter than air travel. We’re entering an exciting time in the American transit industry, and we’re placing ourselves right in the center.”
As the world economy stabilizes and US rail freight returns to normal levels, the FTNA freight division will benefit from the investments made by Faiveley Transport in new freight products, he adds. It will be ready to take advantage of Ellcon-National’s North American network of sales and service personnel and the global reach of Faiveley Transport.
Settle back for a smooth ride as the Faiveley Transport and Ellcon-National team shuttle the rail industry into the new century.