News

Company Name: Nippon Sharyo U.S.A., Inc.
Name of Representative: Akira “Kevin” Koyasu
President and CEO
Contact: Frank Mochizuki 847-228-5580
mochizuki@nipponsharyo.com

Nippon Sharyo will expand its US railcar business

October 20, 2010

Arlington Heights, Illinois (Wednesday, October 20, 2010) – On October 20th, Nippon Sharyo U.S.A., Inc. announced its decision to expand operations in the US, including the establishment of its own passenger railcar production facility in the City of Rochelle, Illinois.

The new strategy is focusing on two elements, one to increase competiveness in the expanding passenger railcar market in the United States, and the other to respond to the increased desires for “localization” of railcar assembly.

The new production facility is also expected to reduce total production costs by reducing transportation costs and by mitigating the risks of exchange rate fluctuations. Having a new production facility in the US also offers greater flexibility for production planning and delivery schedules while increasing the “local content” for Illinois and providing job opportunities in the Region.

The new facility will also enhance Nippon Sharyo’s consistent “on-time, on-budget” contract performance accomplishment on every United States contract over the past 30 years.

1. Establishing New Production Facility in the USA

Most passenger railcar procurement contracts in the United States are supported by Federal Transit Administration funding, which requires compliance to “Buy America” rules. Even when the financing is not provided by the Federal Transit Administration, the State or other local municipalities have their own “Buy America” or other local content requirements.

Nippon Sharyo has delivered an aggregate of 886 passenger railcars to the US market since early 80’s, and has complied with “Buy America” and local content requirements without exception by utilizing US suppliers and conducting final assembly in the US.

Nippon Sharyo decided to enhance its presence in the United States by building its own new production facility in Rochelle, Illinois. This is in response to the Obama Administration's initiative in support of passenger rail investments to create more jobs in the United States.

After investigating more than 50 candidate sites in the Midwest, Rochelle, Illinois was selected as an ideal location for new facility for several reasons. The City and the State offered an attractive incentive and support plans, which included more than ten million dollars of direct investment to improve the infrastructure for the new facility. Rochelle’s proximity to two mainline railroads in the “Chicago Hub” railroad network, and the friendly community environment were also factors in choosing this location.

Nippon Sharyo’s aggregate investment is expected to be around $35 million. This investment will create approximately 250 new jobs by end of 2013. The facility will be designed to accommodate an annual production of 120 new passenger cars of all types. The initial market will be for suburban commuter type vehicles and inter-city passenger cars, which will fully comply with various safety regulations of Federal Railroad Administration for operation on the general railway system.

At the ground breaking ceremony on October 20th in Rochelle, Illinois Governor Pat Quinn and many other officials from the State and the Region celebrated the start of this new era in the history of passenger railcar manufacturing in Illinois.

2. Re-organization of Nippon Sharyo USA

Nippon Sharyo’s U.S. subsidiary “Nippon Sharyo U.S.A. “will be reorganized, and two new entities will be established under current operation. One is Nippon Sharyo Manufacturing, LLC as the group’s manufacturing arm, which will own the new production facility and will be responsible for overall production related activities including project administration, procurement, manufacturing, quality control and warranty service. And second entity is Nippon Sharyo Engineering & Marketing, LLC, which will be responsible for strategic planning, marketing activities, engineering, and general customer relations including support for bid preparation. Highly skilled engineers and marketing professionals will be added for this entity.

Outline of new facility.