Billionaire Icahn backs passenger rail company
COLUMBUS, Ohio -- Billionaire investor Carl Icahn is backing a startup company that would build trains to run on President Barack Obama's high-speed rail network, challenging international manufacturers that dominate the market, the company said Thursday.
Icahn's American Railcar Industries Inc. has formed a joint venture with US Railcar LLC, a Columbus-based company that aims to re-establish passenger train manufacturing in the United States.
Production would be based in Arkansas, where American Railcar has two freight car factories. Icahn Enterprises LP has a 54 percent stake of American Railcar, based in St. Charles, Mo.
The Obama administration in January awarded $8 billion in stimulus cash awarded to 13 high-speed rail corridors across the country.
"These are extraordinary times and growth opportunities for passenger rail in the U.S.," said Michael Pracht, president and CEO of the joint venture, named US Railcar Company LLC.
Delving into passenger equipment allows American Railcar to expand and diversify operations, said president and CEO James Cowan.
US Railcar was created in 2009 by a group of private investors who bought the assets of a defunct Colorado railcar company.
The company's diesel-fuel trains, which comply with safety standards set by the Federal Rail Administration, can travel 79-90 mph and can be upgraded for 125-mph service.
Ohio, which is getting $400 million in stimulus money for a 79-mph startup service connecting Cleveland to Cincinnati, has already expressed a preference for the company's trains, but no order has been placed.
States can negotiate with any manufacturer, but because rail projects require so many trains and so much expertise, the Obama administration has conceded foreign companies are likely to be part of it.
Among the most prominent are Montreal-based Bombardier Inc., which helped build Amtrak's Acela Express between Boston and Washington, D.C., the only high-speed service in the U.S., and the Spanish company Talgo SA, which has a $47 million deal with Wisconsin to produce two 14-car trains to run on the state's Milwaukee-Chicago corridor.
While US Railcar would begin production in Arkansas, it continues to explore building a factory in suburban Columbus, said Barry Fromm, CEO of Columbus-based Value Recovery Group, whose investors are behind the new rail company. Talks with the Ohio Department of Development are ongoing, he said.
US Railcar applied for, but didn't receive, $8.7 million in federal stimulus money to help build an Ohio plant.