Standard Steel

Taking off the brakesIn spite of the economic downturn, Standard Steel has invested $40 million in its railroad wheel manufacturing line. John Hilton tells Gay Sutton how the company is preparing not only for the economic upturn but for future growth in rail freight. ÔÇ£IÔÇÖm really bullish on the long-term prospects for rail traffic in this country,ÔÇØ says John Hilton, senior vice president, operations and sales at railroad wheel and axle maker Standard Steel. ÔÇ£Once we get past the downturn and the economy starts to expand, I believe more and more freight will be moved to rail.ÔÇØToday, railroads currently carry around 40 percent of North American freight traffic, a figure that has been steadily declining for many years now. ÔÇ£However, IÔÇÖve seen some interesting statistics recently,ÔÇØ Hilton explains. ÔÇ£The rail systems are three times more cost-effective than trucking for moving freight. A railroad can carry a ton of freight for an average of 438 miles on just one gallon of fuel. If just 10 percent of the freight that is carried by truck is moved to rail, we could save 1 billion gallons of diesel fuel a year and 12 million tons of greenhouse gas emissions.ÔÇØ This would not only reduce the national dependency on foreign oil imports; it would also cut the cost of freight transport for those transferring to rail.ÔÇ£You only have to look at the US infrastructure, too. Significant amounts of money are going into repairing bridges and roads, and trucks are doing most of that damage. So it makes a lot of sense to put more and more freight onto the rails and off the roads.ÔÇØ By doing this, Hilton says, the cost of maintaining the infrastructure would be transferred away from the federal government to the rail companies.This positive view of future rail freight growth is obviously shared by many in the rail industry. Considerable investment has gone into improving the rail infrastructure over the past 10 years. BNSF Railway, for example, has invested over $30 billion in expanding terminals, improving efficiency and double-tracking the rail line to handle increased rail traffic in the future.Other adjustments will certainly be needed, including increasing warehousing space and perhaps even changing the public mindset that encourages people to have everything instantly rather than planning and waiting. ÔÇ£But as the green program becomes more important to this country, people are going to see the favorable impact that rail will have. At some point the light is going to go on, and they are going to realize how much more efficient we can be at moving freight by rail.ÔÇØStandard Steel has a long history of supplying the railroad industry. Set up in 1796 as a manufacturer of pig iron, the company has seen some dramatic changes in product strategy. At different times in its commercial career it has manufactured armaments and ammunition, gear shafts and pre-pressed rolls, seamless rings for jet engines and missiles, and off-highway construction vehicles. ÔÇ£But our mother ship has always been railroad wheels and axles for the freight and passenger markets.ÔÇØ┬á Interestingly, the first railroad wheels the company produced were for the early locomotives of the mid-19th century. Because the wheels were not solid, the company supplied what was called the tireÔÇöthe tread and flange elements of the wheel. The companyÔÇÖs growth paralleled the burgeoning railroad industry as it spread its way along the densely populated eastern seaboard and reached its tentacles westward to support the increasing logistics needs of the Industrial Revolution.Today, Standard Steel operates from Burnham, Pennsylvania, producing 300,000 wheels and 85,000 axles a year for the railroad industry. And while the company has certainly felt the impact of the recessionÔÇöthe number of orders for new railcars is down and is forecast to dip even furtherÔÇöit has been cushioned to some extent by the fact that around 70 percent of the factoryÔÇÖs wheel output goes into the aftermarket to replace worn wheels.┬á The sector in which the company operates is highly competitive. There may be only two railroad wheel manufacturers and three axle makers in North America, but China, Japan and Eastern Europe are all infiltrating the market. However, Standard Steel has taken steps to remain ahead of the competition and at the same time position itself to take advantage of the resurgence in the rail freight industry when it comes. ÔÇ£WeÔÇÖve just completed a $40 million investment program that has not only increased our output but reduced our costs,ÔÇØ Hilton says.The overall effect of the investment has been to balance the entire wheel production line and to increase throughput by around 20 percent. The major portion of the investment has been spent on installing a completely new state-of-the-art heat treatment line to replace one that had been in operation for some 50 years and was located in a separate building somewhat distant from the forging line.┬áÔÇ£WeÔÇÖve installed the new heat treatment line in the same building as the wheel forging facility and directly in line with it. This has removed the extra steps involved in cooling the wheels and transporting them between forging and heat treatment. It has also resulted in a significant increase in the consistency and quality of the product,ÔÇØ Hilton explains.The remaining portion of the investment has also gone into increasing the capacity and efficiency of the forging line so that it matches the output capacity of the initial melting process. Upgrades have been made to the machining area so that it too matches the capacity of the rest of the plant, while the robotics on the forging line have been significantly improved, and new software has been installed on the rolling mill. ÔÇ£From end to end now, our wheel manufacturing facilities are pretty well balanced, and the process has become much faster and more efficient,ÔÇØ Hilton says.The world might still be in recession, but Standard Steel intends to continue investing in the site. ÔÇ£Having just completed this $40 million project on wheel production, future investment will be directed toward the maintenance of our equipment rather than in capital expansion,ÔÇØ he concludes.┬á Standard Steel is taking every possible step to ensure it is ready to take advantage of growth in the rail freight industry when it comes, and it is looking forward to the future with confidence. ÔÇô┬á Editorial research by Eric Sterite┬á