Driving under a sky filled with gray clouds, Donald Croteau pulled into the parking lot at Vertex Railcar Corp. shortly after lunchtime July 24, his white SUV joining a few dozen other cars in front of the plant.
 
Earlier that day, a Wilmington StarNews story said Croteau was no longer in charge of the rail car manufacturing company that he brought to town with a big splash in 2014 and the promise of 1,342 jobs.
 
Although he spoke frequently to numerous local media outlets and groups in Wilmington in the months following that promise nearly four years ago, on this July day, he wasn’t talking publicly.
 
With other company officials also remaining quiet on the matter, it remains to be seen who is directing the business and where it will go from here.
 
Croteau declined to comment on the record for this story, including not answering questions about his current role at Vertex Railcar or why he still signs his emails as CEO/board director of Vertex Railcar Corp., despite the July report that seemed to suggest he was no longer in the top executive role.
 
The silence is a far cry from how Croteau, along with then-Gov. Pat McCrory and state and local officials, brought the news of Vertex to Wilmington on Nov. 13, 2014.

They held a press conference (shown at left, image courtesy of WECT) that day at the former Terex Crane facility at 202 Raleigh St. where the company, then known as Vertex Rail Technologies, was setting up shop. The company was going to be at the forefront of supplying a massive demand for new tank cars that would be necessitated by new government safety regulations, officials said at the time.
 
In months after the news conference, the fanfare would seem unusual and possibly premature. After a start that included a jumpy rail car market, lawsuits and layoffs, Vertex Railcar Corp. is now a joint venture between Vertex Rail Technologies and Chinese investors and reportedly has about 100 employees working to fill rail car orders at the Raleigh Street plant.
 
“There are businesses, I’m sure every day in this community and elsewhere, that have grand plans … but they don’t stand before the public at large and make grand proclamations either,” New Hanover County Manager Chris Coudriet said, describing the sentiment of many of those who were part of the company’s original announcement in 2014. “So it’s certainly disappointing for the community because that’s potentially 1,300 men and women that saw a chance to earn a job in a new industry, in our community.
 
“It did not bear out the way we had all hoped it would.”
 

THE BIG ANNOUNCEMENT

The initial promises would be repeated by Croteau in numerous instances after the November news conference, with Croteau continuing to use the same job number, pledging to devote some of the 1,342 positions to people trying to overcome employment barriers and describing quick timelines for hiring and the production of rail cars, something no new manufacturer had done in the United States in decades.
 
Asked in 2015 whether Wilmington Business Development had vetted Vertex Rail Technologies, WBD CEO Scott Satterfield said in an email at the time, “Vertex, as you know, is a start-up company. The company was brought to WBD and our allies by an industrial broker representing the building and property that Vertex currently occupies. As a startup company, Vertex declined to apply for financial incentives. Nonetheless we gained insight into the company and its plans through interviews with its executives and reliance on due diligence of allies.
 
“This was augmented by economic intelligence we gathered independently regarding the current market potential for freightrailcar manufacturing. We were similarly satisfied in and relied on the background information of the property owners who engaged in their own due diligence. Seen in the context of its overall industry and the strategic transportation needs of the U.S. domestic energy industry, along with our reliance on the due diligence of our allies as noted earlier, we were satisfied that the viability of Vertex’s business plan more than offset any uncertainties of assisting a start-up entity.”
 
From the start, the community seized on Croteau’s plans, which were targeting an area that had gone at least half a century with no major manufacturing job announcements of similar scope. Added to that was a sense that Wilmington might be gaining a little something back of its previous railroad culture after traumatically losing the Atlantic Coast Line Railroad’s headquarters in 1960.
 
McCrory, who was North Carolina’s governor from 2013 to 2017, told reporters and others gathered at the Raleigh Street facility at the announcement event that Massachusetts company Vertex Rail Technologies would occupy the thenvacant industrial property, investing more than $60 million at the site and employing more than 1,300 people.
 
The salaries would average about $40,000 annually, officials said.
 
The response was immediate.
 
Vertex held a job fair at Cape Fear Community College the next day, collecting 1,000 resumes, Croteau said in an interview in December 2014.
 
During that same interview, Croteau answered a question about where the company’s investment dollars were 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 was the majority shareholder, he said, and his other Vertex Rail partners were Katherine Perduta, a practicing attorney and then vice president of legal affairs; Scott Bauer, formerly vice president of operations in charge of all the manufacturing aspects; and Daniel Bigda, a rail industry veteran, who would later sue and be sued by Vertex.
 
“He brings the historical knowledge of the rail industry and the technical aspects,” Croteau said of Bigda.
 
In response to a June 2015 email seeking more information about the backgrounds of the partners Croteau mentioned, Vertex’s general counsel at the time, Foster Sayers III, wrote, “I should clarify that it’s not totally accurate to name them the original investors as not all of them actually contributed cash to the project. It’s more appropriate to call them the founding members or founding partners as some of them only contributed their time and effort as the basis for their membership interest in Vertex Rail Technologies.”
 
It was not until much later that the deep pockets seemed to arrive, with Croteau describing investment in Vertex by Chinese entities as key.
 

A JOINT VENTURE 

Also in June 2015, Vertex Rail Technologies changed its name to Vertex Railcar Corp. and entered into a joint venture with private equity investor Majestic Legend Holdings Ltd. and China Southern Railway Yangtze Co. Ltd., which would eventually merge with China Northern Railway in 2015 to become state-owned Chinese manufacturer China Railway Rolling Stock Corp., the largest manufacturer of rail cars in the world.
 
“The federal government’s updated tank car regulations have finally been released, and as a result, the build-out and material procurement for Vertex’s facility in Wilmington is rapidly moving forward,” a news release at the time said. “It will still provide the much-discussed 1,300 jobs within the community over the next ten to twelve months.”
 
The release also stated that Croteau would continue as CEO of Vertex Railcar Corp. and serve as a member of Vertex Railcar Corp.’s board of directors.
 
Of the joint venture, Croteau said in 2015, “We would have done what I said we would have done, but it would have been really hard. This clears all the obstacles.”
 
In December 2015, company officials from China and Wilmington held an event to celebrate Vertex sending out its first 30 cars.
 
At the time, the joint venture meant Vertex Rail Technologies owned 33 percent of Vertex Railcar Corp., China Southern Railway Yangtze owned 22 percent, and private equity firm Majestic Legend Holdings owned a 45-percent stake, according to Croteau and Sayers, who has since left the company.
 
According to a 2015 copy of the joint venture agreement, the ownership percentages would eventually change, with Vertex Rail Technologies keeping a 20 percent stake, China Southern Railway Yangtze owning 50 percent once shares were transferred from the other joint venture parties, and Majestic Legend Holdings retaining 30 percent.
 
Chinese officials with Vertex declined to comment for this story, including whether the ownership change set out in the 2015 agreement has taken place.
 
Majestic’s initial investment was $6 million, according to the agreement. Sayers said in 2015 that China Southern Railway was providing engineers and technical manufacturing know-how at that time.
 

TAKEN TO COURT

At an appearance at the Greater Wilmington Business Journal’s WilmingtonBiz Expo in March 2015, speaking before an audience of more than 600 business leaders and professionals, Croteau talked about what was happening at the facility on Raleigh Street five months after the announcement.
 
A quick start was critical, he said during the interview.
 
“We actually have orders for cars,” Croteau said, “and we have to start delivering them in August and July anyway.”
 
As he spoke, the groundwork was being laid for what would turn out to become legal headaches for Croteau and Vertex.
 
In the original announcement and throughout subsequent appearances, Croteau cited his experience running Vertex Fab & Design, the Middleboro, Massachusetts, company he acquired in May 2012, as an asset to starting Vertex Rail.
 
But Vertex F & D was a small company compared to the vision Croteau described for Vertex Rail. Vertex F & D had about 30 employees, according to a 2013 article in a Massachusetts newspaper, and designed and manufactured vessels and tanks for industrial uses, including contracting with Wilmington-based GE Hitachi. But in May 2015, Croteau filed for bankruptcy on behalf of Vertex F & D.
 
A complaint filed by the trustee in the Massachusetts bankruptcy case in 2016 claimed Croteau “unlawfully” caused Vertex F & D to transfer rail car design drawings and manpower to the rail car manufacturing company before filing for Chapter 7 bankruptcy on behalf of Vertex F & D the year before. The assets claim would be settled by late 2017, with the defendants agreeing to pay $825,000.
 
In a separate case filed in North Carolina in New Hanover County Superior Court, documents showed that eight months before the Vertex F & D bankruptcy, Croteau sent an email to officials at a firm that was a potential rail car customer.
 
The firm was Solaris Oilfield Infrastructure, a Texas-based company whose clients are involved in the drilling and completion of oil and gas wells.
 
In the email, dated October 2014, Croteau said, “Lots of pressure on capacity … hung up a bit ago with my sales guy who has someone who wants 1500 cars … if they jump in you won’t get cars for about 15 months from next May!”
 
Solaris wanted hopper cars, eventually signing a letter of intent for 500 of them and giving Vertex Rail Technologies a more than $430,000 deposit. The following year, Solaris would sue Vertex to get the deposit back.
 
“On Dec. 4, 2014, a Solaris representative visited Vertex’s plant in Wilmington to conduct further diligence. Neither the completed car model nor the FEA [finite element analysis that had been due in November, according to the letter of intent] were made available for review. Indeed, the facility was virtually empty, with only a handful of employees and no evident progress toward the production of rail cars,” according to the affidavit of a Solaris employee.
 
On Nov. 10, 2015, a judge granted a decision in favor of Solaris and against Vertex, dismissing Vertex’s counterclaim and ordering Vertex Rail Technologies to pay Solaris $437,500 and other costs.
 
The court documents show the judgment was satisfied in February 2016.
 
Vertex Railcar Corp. is currently still involved in a different legal dispute that arose in August 2017, when Vertex sued contractor Civil Works Contracting (CWC), Wilmington Railcar LLC and John Allen for compensatory and punitive damages in excess of $25,000.
 
Allen was formerly Vertex’s director of facilities and is the current president of Wilmington Railcar, a rail car repair business.
 
The complaint filed by Vertex in New Hanover County Superior Court alleged numerous issues related to work orders and says Allen was the employee in charge of approving payment for CWC’s work.
 
Vertex’s complaint also calls Wilmington Railcar a competing company.
 
The defendants answered the complaint in September last year, denying the claims and filing a counterclaim, saying Vertex owes CWC a balance of nearly $85,000 and needs to return some equipment, and that Allen “never signed any Purchase Orders. They were signed by the following Vertex personnel: Donald Croteau, Scott Bauer, Dan Marx or Jack Xu,” the answer states.
 
The case has since been sent to mediation and remained an open dispute in August as of press time.
 

OPPORTUNITY LOST 

Adding to legal troubles the new company was facing, there were the to-be expected challenges of starting a new company. The 1,342 target appeared to move further away.
 
For Jamir Jumoke the failure of Vertex and Croteau to live up to that promise hit hard.
 
In early appearances as he spoke about his background, Croteau described an impoverished upbringing in Massachusetts. That was part of the reason why Croteau and Jumoke, who at the time was managing a new jobs initiative in Wilmington called Hometown Hires, formed a bond.
 
Jumoke and Croteau were introduced in early 2014 by Amanda Lee, who was then president of Cape Fear Community College.
 
Still in its infancy at the time, Hometown Hires had been created by New Hanover County District Attorney Ben David and Live Oak Bank CEO and Chairman Chip Mahan to help those with barriers to employment, such as criminal records, get into the workforce.
 
To Jumoke, Croteau seemed to understand him and the purpose Hometown Hires was trying to serve. He expressed empathy, something that not many people had for the job candidates Jumoke was working to help, Jumoke said.
 
Croteau pledged to Jumoke, then later to Hometown Hires participants and during public appearances, that 10 percent of the jobs created at Vertex, or about 130, would eventually go to Hometown Hires program candidates.
 
“We got caught up in the optimism of the opportunity that presented itself. From a business standpoint, I’m always a little reserved in nature when something may seem too good to be true,” Jumoke said recently, reflecting on that time. “As an optimist, you don’t want to let your reservation remove you from an opportunity.”
 
Jumoke was offered a job at Vertex as the company’s community support coordinator, a position that would allow him to continue to work on connecting Hometown Hires candidates to Vertex jobs but also work to connect other charitable organizations with Vertex’s resources.
 
Of his time as an employee in the beginning, Jumoke said, “There was nothing that made me feel like they weren’t doing everything they could do to make the company successful.”
 
On the Hometown Hires front, Jumoke helped the organization create a customized program for potential Vertex employees. The program included training in workplace culture, employability skills and finance and budgeting, because most of the people who came to Hometown Hires for help getting a job had never made $40,000 a year, Jumoke said, the average salary promised when Vertex came to town.
 
About 90 Hometown Hires participants completed the customized program. Some Hometown Hires participants later went to work for Vertex, though it’s hard to say exactly how many. But Jumoke said the numbers fell short.
 
While he was working at Vertex in 2015, the Hometown Hires promise became a sticking point for Jumoke.
 
“It just felt like they should have been doing more at that point ... I eventually started pestering them about why the opportunities weren’t being fulfilled; that created some tension,” he said.
 
Jumoke left Vertex in December 2015. He said he refused to sign a nondisclosure agreement.
 
While the promise of 1,300 jobs going unfulfilled was a disappointment to a lot of people, Jumoke said, it was particularly felt by those in the Hometown Hires program who were trying to break out of a cycle of intergenerational poverty and had been promised positions.
 
“Those people can’t be forgotten,” Jumoke said. “They can’t be lost in the shadows of disappointment.”
 

SEEKING INCENTIVES 

In 2015, the city, county and state had kicked in more than $1 million total for some road work related to Vertex, including the extension of Raleigh Street to River Road. Last year, in separate instances, representatives of Vertex (not Croteau) also asked Wilmington Mayor Bill Saffo and Coudriet about the possibility of help from the city or county of some kind, possibly economic development incentives.
 
Vertex officials appeared to be hoping for some help to get through a slump in business, Saffo said.
 
“It was a lot of optimism that we all had for this company and for this organization. And we were proud to see manufacturing and [the rail industry] come back to the city of Wilmington,” Saffo said of the initial Vertex announcement. “Somebody comes in and starts talking to you about a manufacturing facility, and then you start seeing the money that is being spent, and then you start seeing people that are being hired … What he [Croteau] was telling us was becoming reality. But then shortly thereafter, we started to hear, ‘Well, we had to lay people off.’”
 
It was understandable to a certain extent, Saffo and other officials said, because of some upheaval in the freight car industry and oil market.
 
For example, the price of oil fell to $30 a barrel in 2016 after highs well over $100 a barrel in 2014.
 
Vertex Railcar Corp. holds certifications to build rail cars, and the facility is paying taxes on more than $35 million worth of equipment.
 
As for incentives, local leaders told the Vertex representatives that they would have to go through WBD, the agency that the city of Wilmington and New Hanover County contracts with for economic development activities, including vetting companies when it comes to economic development incentives.
 
Vertex had not approached WBD about the potential for incentives as of July this year, Satterfield said.
 
“The city and county have not invested in any incentives with Vertex. The road that was cut through that property out on River Road makes sense for that entire park and that entire corridor, and we’re pleased that the city and county chose to do that. It makes it safer, it provides better access to and fro, and it was a good idea to do that,” Satterfield said.
 
Asked about what he thinks of the fact that 1,300 jobs have not materialized at Vertex, he said, “We’re hoping the best for Vertex.”
 
-Christina Haley O’Neal contributed to this article.