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Q&A: Vertex CEO Shares Details About Company

By Cece Nunn, posted Dec 5, 2014
To Don Croteau, being known around Wilmington as “the train guy” is “kind of funny.”

That’s what some people have called him, he said, as they’ve seen the CEO of Vertex Rail Technologies around town in the days since his company’s plans for a manufacturing plant in Wilmington were officially announced Nov. 13.

Croteau, who is also the managing director of Vertex FD in Middleboro, Massachusetts, and his partners plan to bring more than 1,300 jobs to the Port City and invest about $60 million to get the former Terex Crane manufacturing facility, at 202 Raleigh St., up and running for the production of technically advanced rail cars that will meet new safety specifications.

While Vertex Rail shares part of its name with Vertex FD, a company Croteau leads that specializes in the fabrication and design of components for the likes of NASA and GE Hitachi Nuclear, they are separate entities.

“I am lucky enough to do work all over the world designing some really unique things for some really unique industries,” Croteau said of Vertex FD. “We’ve made wind tower components; we’ve made pieces for the space shuttle, pieces for the Mercury space probe, all different types of high-end research vessels and tanks.”

The set of skills required for Vertex FD’s products, which includes the ability to adhere to stringent functional and safety standards, Croteau said, is one of the reasons it made sense for Croteau and his partners to start a new firm to produce rail cars.

“There are about 80,000 or 90,000 of these cars that will have to either be retrofitted or removed from the rail within the next three years. All of our competitors have a backlog that’s approximately two years long,” Croteau said.

“We’re coming online with a capacity here in Wilmington late next spring, beginning of summer – worst-case scenario – and we are it. We are the only company with a certified design as close to manufacturing as we are by a year or two at last.”

In a recent interview, Croteau shared more details about Vertex Rail and its plans for the Port City.
 
GWBJ: Where are the investment dollars for Vertex Rail’s Wilmington operation coming from?
“We’re privately held. I have three partners. It is our money that has brought the company to where it is so far,” Croteau said. “There are plenty of private equity people and other folks who’d like to invest in the business. We haven’t opened it up to them as of yet … We haven’t found the need to do that yet, but currently it’s privately held by four owners, and we will either put the money in ourselves or invest it through a bank.”

Croteau is the majority shareholder, he said, and his other Vertex Rail partners are: Katherine Perduta, a practicing attorney and vice president of legal affairs; Scott Bauer, vice president of operations in charge of all the manufacturing aspects; and Daniel Bigda, a rail industry expert.

“He brings the historical knowledge of the rail industry and the technical aspects,” Croteau said.
 
GWBJ: Why did you choose Wilmington? How did you first find out that Wilmington might be a good location?
Croteau had been to Wilmington before through Vertex FD’s work with GE Hitachi Nuclear Energy.

“The first thing that put it back on our radar screen was the site,” he said, referring to 202 Raleigh St. and the facilities once used by Terex Crane.

To be able to produce rail cars in a facility, the building “has to be long; it has to be wide; it has to be tall; and it has to be near rail or on rail, and there are, frankly, not that many of those kinds of buildings available in the U.S,” Croteau said.

But he had found other sites, in Pennsylvania, Texas, Georgia, South Carolina, Colorado and California, “and all of those states were very interested in us, but because of my knowledge of Wilmington and my understanding of the skilled labor pool here, primarily through my work with GE, I felt it could be a good fit. And then when we really started digging into this about 10 or 11 months ago, we realized it could be the best fit,” Croteau said, pointing to the area’s diverse work force, strong potential candidates, and “an economic climate which needs us here.”
 
GWBJ: When did you first come into contact with Wilmington Business Development?
Croateau said he believes he was first introduced to Wilmington Business Development through Douglas Faris, vice president of Realty Group South in the Charlotte office of a global company called Binswanger. Faris was the listing agent for the Terex Crane site, and Croteau contacted him after seeing the site advertised online.

“He, very quickly when I said I’d like to come down and see it, said ‘Well, I’ve got someone that maybe you want to meet,’” Croteau said. At that time, Croteau expected that Vertex Rail could be creating 472 jobs.

“It’s actually tripled,” he said, “and that’s because we were able to maximize the site, add more people, which for us adds revenue and opportunity, on the selfish side, but it also gives everyone a bigger chance.”

He credits the help and relationship with WBD with fueling the company’s interest in manufacturing in Wilmington. Croteau said that although Vertex plans to bring 1,342 jobs, a $53 million payroll, an estimated $650 million revenue stream and have $1.1 billion in annual economic impact for Brunswick, Columbus, New Hanover and Pender counties (according to an analysis by Woody Hall, senior economist at the University of North Carolina Wilmington’s Cameron School of Business), the employees of WBD “treated us really well before they even knew that information.”

“There hasn’t been a person here, from the cab drivers to the rent-a-car places to the big wigs, who haven’t made it feel like it was the right thing to do,” Croteau said.
 
GWBJ: How did the first job fair [held Nov. 14 at Cape Fear Community College] go?
“Stunningly well,” Croteau said. “We collected over 1,000 resumes.”

He and his partners found out later that on the same day, which was the day after the Vertex Rail announcement, cars were backed up on Raleigh Street to Carolina Beach Road with people trying to drop off their resumes at the site, though Vertex had not moved in yet.

“We are following up with a community day/job fair/open house at the site Dec. 6 [beginning at 10 a.m.],” Croteau said.

“We just know there’s a lot of interest and a lot of curiosity so I said, ‘Let’s just open the building up for five hours. We’re going to have six to eight local food trucks there. We’re just going to talk about things and take applications for five hours, and if you want to apply, we tell people come on down. If you want to just talk to us about what’s going on, it will be open and we can do that too.”
 
GWBJ: What further approvals does Vertex Rail need to proceed with manufacturing rail cars?
The company’s tank car design, its underpinning and then the tank itself, were approved in August and September, Croteau said, by the American Association of Railroads and a subsidiary of AAR, Transportation Technology Center Inc.
Croteau said Vertex Rail is one of only about six companies in the history of the U.S. to receive approval for a car design.

The next steps include getting the facility and a car sample approved “and you can only do that when the facility begins to run,” he said.

With hiring expected to begin in January, Croteau said Vertex Rail hopes to be building sample cars in March and gain approval for those cars in March or April.

“We expect the first hopper car to come out of the facility in May ... the first tanker cars to come out in June, and at that point, we’ll be rolling at 18 a day, five days a week.”
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