Saturday, August 21, 2010

Special Report: Rail Car Debacle

Let's look at this story of the year, published today in the (Saturday) TimesDaily. The original Mike Goens/Tom Smith report is in red; the translation is in black:

National Alabama railcar plant is now an Alabama-based company, having severed its relationship with the Canadian industry that made a decision three years ago to expand its operations to Colbert County. - It took three years for National Steel Car to realize the plant would never make any money and/or get caught in what some politicians are calling a money laundering scheme involving offshore bank accounts.

Former National Alabama Chief Executive Officer Greg Aziz has resigned his position on the company's board, and the Retirement Systems of Alabama has obtained 100 percent equity in the plant it helped build at Barton Riverfront Industrial Park. - The RSA had to pony up some more teachers' retirement funds to purchase Greg Aziz's 10% interest.

“This increases our flexibility to build the business model that we think is best for the long-term benefits of National Alabama,” CEO John Stein said when contacted by the TimesDaily on Friday morning. “We are now in complete control of the future direction of our company.” - The TimesDaily took five days to contact National Alabama after Trevor Stokes' dramatic announcement that SEDA was looking for other industries to take over the plant.

The retirement systems has $625 million invested in the mile-long plant in western Colbert County.- The plant will never see a profit in our lifetimes, if ever. Don't hold your breath.

RSA lent National Industries Inc., which operates National Steel Car in Canada, $350 million in 2007 to build the plant as part of the state's incentive package to lure the company and the 1,500-1,800 jobs it was to create. There are 120 workers now. - Anyone can be snookered, but it takes a real and total failure not to know when to cut losses and run. Oh, and obviously Tom Smith didn't write this paragraph since it contains the grammatically correct word "lent."

With the struggling economy particularly tough on the railcar industry worldwide, Aziz asked RSA Executive Director David Bronner for an additional loan in late 2008 to help equip the plant. Bronner responded by increasing the existing loan by $275 million in February 2009, and RSA was given 20 percent equity in the company. - Aziz knew when he had a desperate patsy.

As part of the deal, however, Bronner insisted on repayment of the loan within 15 years and appointed a five-member board to oversee operations until the loan was repaid. - Yes, but now the RSA owns the whole shebang, so is the loan still valid or not? We're guessing not. Nice of the TD to once again drop the ball on the salient questions.

“This is another positive step in the right direction in getting the plant up to full capacity,” Colbert County Commissioner Troy Woodis said of the announcement. “Now, Dr. Bronner and Stein can carry this plant in the direction that it needs to go. - Yes, owning 100% instead of 90% makes a big difference in the RSA's management. That should add the 1680 employees within the next year. Can you say "press op" for Troy Woodis?

“Dr. Bronner has never done one thing that he is not thinking long term. He has long-term visions for what they want for the plant and now they can move toward those.” - Perhaps the TD should have asked Woodis how Greg Aziz's 10% ownership was holding the plant back.

The board changed the plant's management team a year ago. Stein was appointed CEO at National Alabama after Aziz resigned the position. Aziz, who remained on the company's board, said then “the time has come for the plant to have a CEO who is from Alabama and can devote the necessary time.” - Aziz had gotten all he wanted from the Shoals area and high-tailed it.

Stein said the goal has been to operate National Alabama as an “independent, stand-alone company.” Workers at the plant were told about the change Friday morning. - Before they read it in the newspaper?

“This is a continuation of our progress toward independence, and I think everyone is pleased this day has come,” Stein said. “This completes that process we began last August. We no longer have an affiliation at the board level or ownership level with National Steel Car or related entity. - Or have any of the business contacts or contracts the NSC has.

“There is still work to be done as we continue to focus on the best business plan for the company, not in the short term but from a long-term perspective.” - We say again, don't hold your breath for any profit in your lifetime.

Workers continue to build a small number of railcars in an attempt to perfect the production process in anticipation of the industry rebounding within the next year or so. - It keeps them busy since National Alabama doesn't have any real orders after three years of business.

“This move is going to be good for the area,” said Florence Mayor Bobby Irons. “Look at the financial strength the plant now has under the control of RSA. They are committed to making this a successful venture, and to me this just proves that point.” - Bobby Irons thinks the plant has more financial strength under RSA since any business is handled better than Greg Aziz was handling NSC.

Colbert County Commissioner Rex Burleson said with RSA in total control, they can be more aggressive in promoting the plant and working towards getting the entire plant up and operational. - Rex Burleson didn't want Troy Woodis to be the only commissioner to get a five second sound bite out of this.

“They are not going to let that much money be tied up in something and let it just sit there,” Burleson said. “This is nothing but positive for the Shoals and the state.” - Nope, Bonner and SEDA are already looking at other ways to get the RSA's funding back.

While they intend to continue building railcars at the plant, Stein and other managers on site also are exploring other possibilities to bring in business. That includes working with other companies to produce specific products at the Barton plant. - Of course, the mile long plant is really set up for sub-division. Flea market comes to mind if all else fails.

Stein said he has had conversations with several companies that he considers “good prospects.” - Conversations are social; meetings are business. Nice try, though.

“We're looking at opportunities to achieve our goal of creating jobs and building a successful company,” Stein said. “It takes time and we understand that, and we will be deliberate about making wise decisions. We're not going to do something so we can make a big splash and say we're doing something. - No one is going to accuse the plant of doing anything, much less making a big splash after the initial announcement.

“Decisions we make will be for the long-term profitability and success of National Alabama and our employees who make up a talented group that is committed to the vision of this company. - They're committed because they can't find jobs anywhere else in this economy. This is where an independent journalist would have asked the employees how they feel about the announcement, but we have only Mike Goens and Tom Smith who don't get paid unless they write something good.

“Having control of those decisions now increases our flexibility in the kinds of arrangements we can pursue with other companies. Before, and appropriately so, we had to take into account another company. Now, we have that control,” he said. - Now the company has to swim or sink without being able to blame a company in Canada.