Wabtec, a key player in rail industry, has a lot going for it
Raymond Betler typically doesn't find new college graduates clamoring to work in the rail industry.
They don't consider it sexy enough, said Betler, the CEO of Wabtec Corp., a Wilmerding-based provider of rail industry products and services.
“People want to work for Apple and Google, and at those places that have exercise rooms and glass windows and swimming pools,” he said.
But his industry offers job security and innovation, he said.
“It's constantly changing. It has compelling dynamics. ... It will grow in technology; it will need to grow in productivity. And at the same time, it is a very stable industry.”
Publicly traded Wabtec is experiencing record sales, earnings and margins — in part because of demand for its air braking equipment for freight cars and locomotives. And the company continues to invest in product development and global expansion, Betler said.
“It is a very well-managed company with a very ... basic strategy that they execute on,” said Art Hatfield, analyst and managing director of transportation research in the Memphis office of Raymond James Financial Inc. “I think, also, oftentimes in business, people overcomplicate things. Wabtec doesn't do that.”
Diversification allowed the company to continue to post solid earnings results, Hatfield said. Though it has competitors in various products, it doesn't have one competitor that competes in all of the products Wabtec offers, he said.
In addition to braking equipment, Wabtec produces electronics, compressors, brake shoes and pads, door systems and current collectors. It makes cooling systems for locomotives and the power generation market.
Some of its biggest customers are General Electric, Caterpillar Inc., Union Pacific Corp., BNSF Railway Co. and New York City Transit, spokesman Tim Wesley said.
Every locomotive, freight car, subway car or bus in North America probably contains some Wabtec products, he said.
Seven years ago, Wabtec had 4,500 employees and $1 billion in sales, Betler said. It now has more than 13,000 employees, about 500 of whom are in Western Pennsylvania, and $3.5 billion in sales.
Betler cites four strategic growth initiatives: global and market expansion; new product development; aftermarket products and services; and acquisitions.
Market expansion can mean going to untapped areas such as Russia, where Wabtec is developing products to upgrade technology used with the country's freight cars. Wabtec has an opportunity to customize brake pads for Russia's fleet that uses cast iron brake shoes, he said.
Wabtec's operations in more than 20 countries sell products to more than 100 countries.
It has about 60 percent of the market share on all transit agencies' braking systems in North America and is expanding that reach worldwide. For example, after partnering with Passenger Rail Agency of South Africa a few years ago, Wabtec now supplies 3,600 braking systems for vehicles used in its rail system.
More than 30 acquisitions over eight years have supplemented the company's growth. About $1 billion in business has been acquired in the past decade.
Among its significant acquisitions was last year's $220 million purchase of Fandstan Electric Group Ltd., a London-based company that makes power collection products, such as those used to power trolley systems. It helped Wabtec to expand into Europe and add a product to its portfolio.
The $300 million acquisition of Park Ridge, Ill.-based Standard Car Truck, a rail equipment supplier, in 2008 allowed Wabtec to increase its overall portfolio in the freight area.
Now, its short-term goal is to continue improving, and its long-term goal is to double revenue in five years, Betler said.
Challenges vary by location: In North America, it's the dramatic price drop in oil and gas, which has led to a decline in the transportation of energy-related products. In Russia, it's geopolitical issues and in Greece, economic instability.
Also, overall shipping volumes in the rail industry have been down for several months, “so we may have kind of hit a cyclical peak in that,” Hatfield said.
Customers often ask if Wabtec has gone as far is it can with expansion, Betler said.
But, he said, “Our economy is totally dependent on the industry. We're just blessed to be part of it.”
Tory N. Parrish is a Trib Total Media staff writer. Reach her at 412-380-5662 or email@example.com.