Stadler Rail begins first phase of US expansion and establishes Australian company

Posted on 6 Jan 2016 by Aiden Burgess, Aiden Burgess

Stadler Rail Group is set to begin its expansion into the North American market as its US subsidiary Stadler US will open a temporary manufacturing and assembly facility in Utah as part of the first phase of its 15-year plan to expand its North American manufacturing.

The Swiss-based railway vehicle manufacturer is currently selecting a US manufacturing location, with Utah in the running for the permanent location.

Stadler US will be manufacturing DMU (diesel multiple unit) vehicles at its Utah facility for the Fort Worth Transportation Authority’s TEXRail project – a 27 mile commuter rail project which is expected to begin construction early this year.

Owner and CEO of Stadler Rail Group, Peter Spuhler, was confident the Utah facility would be an important step towards successful expansion in the US market.

“We are delighted that Utah is able to provide such a great location for the final assembly of our trains for the TEXRail order,” he said.

“Conditions here are ideal, and we are confident that this represents important progress in our US business,

“The two-phase plan enables us to manufacturer trains for the TEXRail order under optimum conditions and, based on orders received, to extend and further expand our activities in the US.”

Stadler Rail has indicated that if it chooses Utah to be a permanent location for its North American manufacturing, the company’s US expansion would create up to 1000 jobs over the next 15 years, with projected new state wages of $576m, projected new state tax revenues of $40.3m, with the potential for the project to also generate up to $30m in capital investment over the 15 year expansion phase period.

These projected figures and potential boost to the state’s work force know doubt helped the Utah Governor’s Office of Economic Development (GOED) Board of Directors to approve a post-performance incentive of up to $10.1m, which includes both an Economic Development Tax Increment Finance tax credit rebate and an Industrial Assistance Fund (IAF) grant of $500,000.

The first half of the IAF grant is for necessary rail-related upgrades, with the other half of the funding available for facility upgrades upon permanent selection of the Utah location as the company’s main US manufacturing site.

If Stadler Rail does select Utah as its permanent US location, the Swiss company may earn up to 25% of the new state taxes it will pay over the 15 year agreement with the state of Utah as part of its post-performance incentive.

The agreement was the continuation of a mantra that the Utah GOED has about actually bringing companies to the state for their manufacturing purposes, an outlook emphasised by the executive director of GOED, Val Hale.

“We find time and again that the very best way to sell anyone – business or individual – on Utah is to simply bring them here,” he said.

“Stadler Rail is a leading company in global manufacturing, and I believe they’ll quickly see that Utah has everything they need to effectively serve their North American market,

“I applaud the GOED Board of Directors for their proactive decisions on this project and look forward to building a strong relationship with this impressive company.”

The first phase of its 15-year plan for US expansion follows Stadler Rail’s expansion into the Australian market with the establishment of new company Stadler Australia in November.

Stadler Australian expansion

Expansion into Australia and the Asia-Pacific region is also part of Stadler Rail’s strategic repositioning, and comes at a perfect time for the company with the Australian government wanting to start investing a considerable amount of funds in transport infrastructure as it looks to boost the development of rail transport in the country.

Stadler Australia will constitute an office in Sydney, which will serve as a base for the company to enter the Australian market.

Stadler Rail intends to found a joint venture in Australia to handle the final assembly, with the Swiss or European portion of the rolling stock to be transported by ship, using the same method to transport rolling stock for its current TEXRail project in Texas.

Stadler Rail’s head of marketing and sales and member of the Group Executive Board, Peter Jenelten, said the Australian Government’s plans to invest in transport infrastructure meant it was the perfect time for the company to begin its expansion into Australia.

“Australia and the Asia-Pacific region present Stadler Rail with exceptional new business opportunities,” he said.

“The new Australian Prime Minister Malcom Turnbull’s announcement that the government wants to invest federal funds in the transport infrastructure for the first time ever is an important development.

“These funds will be used to launch new rail transport projects across the entire continent, add to this a number of projects that were already underway prior to this announcement.

“That is why, for Stadler Rail, this is the perfect time to enter the Australian market.”