Economic times might be tough for a lot of companies, but Karns-based Unitrac Railroad Materials Inc. has been riding the rails of a national railroad renaissance.
There is no talk of layoffs; in fact, Unitrac is hiring, and the company is approaching $100 million in revenues for 2008, compared to $50.6 million in 2007.
In June, it held an open house to mark the opening of an 18,000-square-foot addition that brought its total manufacturing and fabricating capacity at the Byington-Solway Road site to about 50,000 square feet.
"We are a growing business in a slumping economy," said Raymond J. Lambert, president and CEO of Unitrac.
The rising fuel costs and weak U.S dollar that have dampened the economy over the last year have also prompted more companies to ship more goods by rail, where transportation costs are lower. In turn, railroads have been investing more in upgrading tracks and other equipment, and that spells more business for a company like Unitrac, Lambert said.
"The heavy goods are coming off the roads from trucks and onto railroads, so they are kind of having a renaissance, and it's strictly because of fuel prices," he said.
According to the Association of American Railroads, three times as much freight per gallon of diesel can be hauled by rail as can be shipped by truck.
A train can move a ton of freight 436 miles on 1 gallon of fuel. An intermodel train - one that can load up with truck trailers for long-haul routes - can do the job of about 280 tractor-trailer rigs. Bulk and merchandise trains can typically haul the load of 500 tractor-trailer rigs.
Unitrac makes sections of track, track switch stands, transition rails, turnouts, diamond crossings and just about any other kind of track component. It was established in 1988 by Healey Railroad Corp. of Richmond, Va., primarily to supply materials to the Queen City Railroad Co. of Knoxville, the Armond Cassil Railroad Construction Co. of Warren, Mich., and to supply brokers. Besides Knoxville, other main locations are in Williamsport, Pa., and Chicago.
In December, Unitrac acquired Donovan's Explosive Hardening & Track Solutions of Danvers, Ill., in order to increase trackwork capacity.
DETS makes a key component of any track system. When a train switches tracks, its wheels actually jump over a specially shaped track piece in the switch stand and onto a different set of tracks. Because of this leap, the piece is called a "frog". To work properly, the frog has to retain its shape despite getting run over repeatedly by trains. DETS developed a process to harden the steel in a frog by blasting it with plastic explosives inside a special chamber. DETS also uses similar means to produce armor for the U.S. military.
"They've completely broken the box down on how to harden steel," Lambert said.
According to company literature, Unitrac is the nation's second-largest supplier of industrial and relay rail and North America's largest manufacturer of railway switches and components. Its Knoxville manufacturing operation is able to recondition used rail and make prefabricated railroad switching stands. Machinery, guided by computer, is used to shave rail pieces into the angles and forms needed. These operations have been added over the years to the core business, which is dismantling, reclaiming and reselling old railroad track.
"We are like the junkyard of the railroads," Lambert said.
Knoxville is the headquarters for the company, and forms the bottom point of a triangle in the eastern United States with the Chicago and Williamsport locations.
"Knoxville is becoming an epicenter of the Southeast for railroads," Lambert said. "It is just south of all the coalfields, and this is where probably the heaviest traffic - the tonnage - in the country takes place."
Growth possibilities for Unitrac look promising. A Feb. 13 Wall Street Journal article detailed how the major railroads have pumped $10 billion into upgrades of their rail corridors and are planning an additional $12 billion in improvements.
"Strategically, we have built our business right smack in the middle of the railroad business in the United States," Lambert said.
Business writer Ed Marcum may be reached at 865-342-6267.
Original article appears at KnoxvilleBiz.com of Knoxville News Sentinel Co.http://www.knoxnews.com/news/2008/aug/23/chugging-along/
