Trinity Industries to build railcar maintenance facility in Iowa

A Trinity Industries (NYSE: TRN) subsidiary has bought 230 acres in Iowa to construct a multi-million-dollar railcar maintenance facility.

TrinityRail Maintenance Services will build the facility in Shell Rock, Iowa, with operations expected to start by the end of 2020. Services at the facility will range from repairs and maintenance, to coatings, cleaning, inspections and testing. The facility will be near the Iowa Northern shortline railroad, which provides transloading services and supports the local grain and renewable energy industries.

The facility’s location in Butler County will give Trinity access to the Class I railroad network and the upper Midwest, Trinity said.

“This full-service facility will expand our internal network and operational flexibility in a key geographic location,” said Eric Marchetto, senior vice president and group president of TrinityRail, a railcar lessor.

The facility will enable Trinity to internally service and maintain approximately half of its 123,000 owned and managed railcars, Marchetto said. Trinity has reserved $60 million in capital funds to build the facility, with $30 million expected to be spent in 2019. Financing for the project wasn’t included in Trinity’s guidance for its capital expenditures in 2019.

Trinity said in April that it expects to spend between $90 million and $110 million in 2019 on manufacturing and corporate capital expenditures and between $1.2 billion and $1.4 billion on building its leased fleet.

Trinity executives said in February that it estimates its owned and managed lease fleet to grow from approximately $9 billion at the beginning of 2019 to more than $10 billion by year’s end.

Trinity’s announcement comes as railcar lessors are jockeying among themselves to be the key provider of leased railcars for shippers in need of railcars in a post-precision scheduled railroading environment. In this environment, shippers could seek to secure their own railcars even more as the railroads aim to cut costs and shed what they deem to be redundant assets.

Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.