Despite ongoing geopolitical tensions, Mexico is still the primary trading partner for the United States. Owing to the wide-scale presence of skilled and affordable workforce, Mexico is ideal for enterprises looking to optimize operations and attain a favorable cost structure. In fact, various companies in Mexico are signing collaborations with such companies to drive growth in the country.

FreightCar America, an American freight car manufacturer, reportedly announced a new joint venture with Fabricaciones y Servicios de México (Fasemex), a Mexican company focused at developing industrial metal mechanics required for industrial parts.

Fasemex is operational in America and Mexico, the JV between both these two firms would focus on producing railcars in Castaños, Mexico.

When in operational state, FreightCar America will have significantly repositioned its production footprint, which would include the state-of-the-art Muscle Shoals factory as well as the new Castaños factory. This new factory is still under construction and is projected to start manufacturing the railcars by mid-2020.

President and Chief Executive Officer of FreightCar America, Jim Meyer stated that getting FreightCar repositioned and on the correct cost structure is at the core of the company’s ‘Back to Basics’ strategy. FreightCar is making great development in its material as well as fixed cost reduction efforts. Now, with this partnership in Castaños, the company will be even more competitive in particular railcar types which were not feasible economically earlier.

Meyer added that while the company completes the new facility construction, it remains highly committed towards Shoals as the company’s primary production platform and will also continue with initial plans of making incremental investments and consolidate its Roanoke operation in Shoals.

Fasemex and FreightCar will be sharing profits as well as losses of the joint venture on a 50/50 basis. FreightCar is committing USD 25 million to this joint venture in coming years by a combination of cash and assets.

Earlier in July, FreightCar America announced that it is officially closing its manufacturing plant at Roanoke in November. Additionally, the Castaños entity would be controlled and consolidated by FreightCar America. 

The layoffs at Roanoke are predicted to start this week and continue on till November 11. All the employees at Roanoke production plant will be terminated by the mid-November.

Source credit: https://www.globenewswire.com/news-release/2019/09/19/1918280/0/en/FreightCar-America-Inc-Announces-Joint-Venture-with-Fasemex-to-Manufacture-Railcars-in-Casta%C3%B1os-Mexico.html?culture=en-us