Railroad Rolling Stock Industry

What's in each profile

Research Base: Quick Scan
This overview is based on research conducted in 1999 and contains the latest data and trends on the sector based primarily on qualitative information derived from secondary sources and interviews with major players in the industry. The information is meant to enrich the understanding of human resource issues presently facing the sector. It was designed to make it easier to find, focus on, or compare particular areas of interest and to allow users to get a general feel for the sector and its human resource concerns.

The economic indicators are in-house statistical analyses conducted in June 2000.

The Railroad Rolling Stock Industry (SIC 326) consists entirely of the four-digit Railroad Rolling Stock Industry (SIC 3261). The industry is defined as establishments primarily engaged in manufacturing and rebuilding locomotives and railroad cars, including frames and parts such as wheels and brakes, but excluding springs. These cars may be for passengers or freight including special purpose cars and mine cars. Establishments primarily engaged in manufacturing chassis springs including springs for railway cars, are classified in Motor Vehicle Steering and Suspension Parts Industry (SIC 3254).

Some, but not all, of the products related to this secondary industry include:

• Brakes and parts, railway rolling stock;
• Flat cars, railway; freight cars; gondola cars, railway; hopper cars;
• Locomotive engines and parts, diesel and semi-diesel;
• Locomotives;
• Ore cars; railway, cars;
• Railway cars, self-propelled;
• Rapid transit cars, railway;
• Refrigerator cars, railway;
• Street cars;
• Tank cars, railway;
• Trolley buses; and
• Wheels, for railway rolling stock.

1980 SIC Conversion to NAICS Canada (* indicates partial link):
1980 SIC E3261 Railroad Rolling Stock Industry:

NAICS Canada
331511* Iron Foundries
332113* Forging
332510* Hardware Manufacturing
333130* Mining and Oil and Gas Field Machinery Manufacturing
333619* Other Engine and Power Transmission Equipment Manufacturing
336510* Railroad Rolling Stock Manufacturing

NAICS 33651 Railroad Rolling Stock Manufacturing:
Establishments primarily engaged in manufacturing and rebuilding locomotives and railroad cars, of any type or gauge, including frames and parts are included in this industry. Also included are establishments primarily engaged in the manufacture of rapid transit cars and special-purpose self-propelled railroad equipment, such as rail layers, ballast distributors, rail-tamping equipment and other railway track maintenance equipment. All the other NAICS mentioned above will be excluded from the overview since the link is minimal.

The updated economic indicators refer to the NAICS Industry Group 3365. Data were classified according to SIC codes (Major Group 33) for historical trends.

Total shipments for this industry increased from $1.6 billion in 1990 to $3.4 billion in 1996, for a compounded average annual growth rate (CAAGR) of almost 14 per cent.

In the same period, total shipments per employee increased from $216,685 to $286,890, for a CAAGR of close to six per cent.

In 1999, there were 79 establishments, the largest of which were found in Ontario, Quebec and Nova Scotia. Small firms are found across Canada in all provinces except Prince Edward Island. By far, the most significant firms in the industry are Bombardier Inc., National Steel Car Limited, General Motors of Canada Limited, Trenton Works Inc., AMF Technutransport Inc. and Procor Ltd.

In 1991, half the larger establishments were foreign owned.

From 1988 to 1996 total capital stock within the industry contracted from $1.2 billion to $0.9 billion. The total stock for construction remained the same but investment in machinery and equipment declined. However, research and development spending increased from $594.1 million in 1988 to $701.0 million in 1993.

The industry is highly export-oriented, with over 70 per cent of urban transport and locomotive shipments destined for foreign countries, principally the United States. The world's leading exporters in 1995 were Canada, the United States and France, comprising 23 per cent, 20 per cent and 14 per cent, respectively.

According to Industry Canada, worldwide demand for transit systems, and hence equipment, is predicted to increase steadily over the next few years. On the freight rail side, opportunities for the sale of equipment will continue to grow internationally as railway companies replace older equipment and purchase new equipment for bimodal and rail system application.

Relative Importance of the Industry in the Economy
Accounting for 0.3 per cent of total goods GDP, the Railroad Rolling Stock Industry comprised 0.1 per cent of all Canadian industries in 1999. (Source: Statistics Canada, CANSIM)

GDP Growth Since 1986
As portrayed in Figure 1, the industry growth rate of the Railroad Rolling Stock Industry is more variable than that of the Canadian GDP. Whereas the national production growth rate has been increasing steadily, the sector underwent major booms and recessions especially in 1994 when it surged by almost 60 per cent. Nevertheless, over a span of 12 years, both grew by approximately 30 per cent. (Source: Statistics Canada, CANSIM)

Number of Firms by Size
Predominantly composed of small-sized firms (Figure 2), the distribution of the firms by size in this industry is similar to that of the whole economy. In 1997, 11 per cent of all establishments in this sector had 5 to 19 employees whereas the comparable figure for the Canadian economy was 22 per cent. Nonetheless, the sector has comparatively more large firms (9.7 per cent for the industry versus 0.2 per cent for all industries have at least 500 employees). (Source: Statistics Canada, 1997 Business Register)

The industry is competitive in terms of technology, and is, in some cases, a world leader. For example, Bombardier’s UTDC Systems Division’s ALRT system uses state-of-the-art linear induction motors and an innovative, fully automated command and control system. GM’s Diesel Division is also a world leader in the manufacture of advanced diesel AC electric engines and microprocessor controls.

Following significant downsizing and restructuring in the North American rail system, railways are now modernizing their fleets and embracing newer technologies such as higher horsepower locomotives and intermodal equipment. Railways are looking to new technologies and more powerful locomotives to increase productivity and reduce operating costs.

Canada has become a major player in the international rail and guided urban transit market. In the guided urban transit subsector, Canadian firms are technically competitive and, in some respects, world leaders. Canadian plants are generally devoted to vehicle assembly. Through joint ventures, licensing, acquisitions and in-house R&D, many Canadian companies have succeeded in acquiring and developing innovative products and technologies.

Canadian firms appear to be lagging behind major U.S., European and Japanese producers in the commitment of resources to product development. Canadian producers are disadvantaged by the small size of the Canadian market; where firms are not able to access foreign markets, large investments in R&D cannot be justified. (Source: Strategis)

Economic/Market
The railroad and railway stock industry is highly cyclical causing both shipments and employment to vary greatly from year to year. The Canadian industry is competitive in terms of product and price. Canada also enjoys a good reputation for quality and reliability, which is essential to secure future sales.

While Canada dominates such subsectors as guided vehicle systems and the manufacture of locomotives, there is strong foreign competition. Equipment sold to international markets often involves the establishment of consortia. It is common for the Canadian industry to be a member of or to lead these efforts.

Acquisitions, especially on the part of Bombardier, have allowed the industry to broaden its design capability and to participate in the U.S. and European markets.

There is a trend away from the manufacture of traditional car types, such as boxcars, toward the production of specialised cars for intermodal service. As well, manufacturers are reducing the weight of the cars through the use of lighter, more durable composite materials.

The ability to provide export financing with competitive terms and conditions is a major factor in securing sales to foreign markets.

A stable Canada-U.S. exchange rate is important to Canadian competitiveness in this industry.

Regulatory
Non-tariff barriers, especially government procurement policies, are significant for Canadian exports to developing countries. These barriers, together with strong indigenous industrial capacity, have virtually closed the European and Japanese markets to Canadian producers. This has led to various acquisitions and licensing agreements on the part of producers.

As well, in the United States, government procurement policies, which apply to federally funded purchases (such as purchases by transit authorities and municipalities) have been a major barrier to Canadian producers. These provisions for buying American products have led several Canadian companies to open assembly facilities in the United States.

In Canada, some provincial governments continue to have their own procurement requirements , which are similar to those of the United States.

The U.S. Environmental Protection Agency is developing new emission standards for locomotives and other off-road mobile emission sources. These standards, which are expected to be in place by the year 2000, are meant to achieve a maximum reduction of diesel locomotive emissions.

Social/Demographic
Changing demographics, increased road congestion, energy and environmental concerns and laws are providing a strong impetus for innovative technologies in rail and automated transit systems.

Population trends in developing countries and the opening of markets in Eastern Europe and the Commonwealth of Independent States (i.e. Russia etc.) will create new market opportunities for the industry.

According to the 1996 Census, employment in this industry was 9,105, and is mainly full time. Depending on demand, production work may vary considerably, from one to three shifts per day. Non-traditional forms of work such as part-time and contract work are largely absent from this industry but are on the rise.

The top occupations in this industry are:

• Welders and soldering machine operators;
• Machine fitters;
• Painters and coaters, manufacturing;
• Machinists and machining and tooling inspectors;
• Mechanical assemblers and inspectors;
• Railway carmen/women;
• Supervisors, other mechanical and metal products manufacturing;
• Motor vehicle assemblers,
• Inspectors and testers;
• Metalworking machine operators; and
• Heavy-duty equipment mechanics.

This industry employs large numbers of skilled and specialised workers, who require some form of trade certification. Detailed below are the five major occupations for this industry and the skills often required to gain employment.

Welders and soldering machine operators usually complete an apprenticeship program or a combination of several years of work experience and some college or industry courses in the trade. Trade certification is compulsory in Nova Scotia and Alberta. It is available but not compulsory in a number of other provinces, such as New Brunswick, Manitoba and British Columbia. This is a Red Seal trade. Welders operate manual and semi-automatic welding equipment to weld ferrous and non-ferrous metals following blueprints and welding process specifications. Welders in the rolling stock industry are considered highly specialised. Full-time earnings are slightly above average levels.

Machine fitters fit, assemble and build heavy industrial machinery and transportation equipment. Machine fitters must serve an apprenticeship or have on-the-job training. There are relatively few young workers in these occupations, probably because of the number of years of training and apprenticeship required. Full-time earnings are close to average for all occupations.

Painter and coaters use machines, brushes and spray equipment to apply paint and other non-metallic coatings. These occupations normally require some high school education. Training is often obtained on the job. The age distribution of workers in these occupations is similar to that of the overall work force. Full-time earnings are about four fifths of average levels.

Machinists and machining and tooling inspectors usually complete an apprenticeship program or a combination of several years of work experience in the trade in addition to some related high school, college or industry courses. Trade certification is available in all provinces and is compulsory in Quebec. This is a Red Seal trade.

Mechanical assemblers produce a wide variety of mechanical products including diesel engines. Inspectors check products to ensure conformity to standards and specifications. Most workers receive some on-the-job training. Inspectors usually require experience as assemblers.

Almost all the workers in these occupations are male. There are few young workers, which reflects the time required to complete an apprenticeship and the relatively high educational requirements. Though there will be continual demand for all these trades and workers, employment in all these occupations will remain highly sensitive to economic conditions.

In 1998, Canadian average salaries and wages for this industry totalled $49,110, tangibly greater than the average for the entire manufacturing sector of $39,435. (Source: Strategis)

Relative Importance of Employment in Canada
In 1999, smaller than its share of Canadian GDP, the Railroad Rolling Stock Industry represented 0.05 per cent (7,500 employees) of the total employment in Canada. (Source: Statistics Canada, LFS)

Employment Growth Since 1988
Employment in the Railroad Rolling Stock Industry, being very inconsistent, increased by 26 per cent in the last ten years (Figure 3). The total Canadian employment was more stable. It increased by 13 per cent. (Source: Statistics Canada, LFS)

Provincial Distribution of Employment
As represented in the map above, Central Canada has the largest share of Canadian jobs in this industry. Eighty-eight per cent of the work force is found in Quebec and Ontario. (Source: Statistics Canada, LFS)

Relative Importance of Employment in Each Province
The relative weight of employment in each Canadian province for this sector is very small. It is at most 0.2 per cent. (Source: Statistics Canada, LFS)

Unionisation
In 1999, 62 per cent of the work force was unionised, which is almost the double of the overall average (32 per cent). (Source: Statistics Canada, LFS)

The union representing the largest share of workers is the Canadian Auto Workers (CAW).

Average Income
The average weekly salary ($718), excluding the salary of self-employed workers, is well above the national average ($596) and represents a major incentive for recruitment purposes. (Source: Statistics Canada, LFS)

Income Distribution
Wages within the industry are noticeably higher than the country's average. Thirty per cent of the employees in the sector versus 15 per cent at the national level earn $30,000-39,999 annually (Figure 4). Twenty per cent of the workers in the industry earn a yearly salary in the $40,000-49,999 category, twice the proportion for all industries. (Source: Statistics Canada, Census 1996)

Average Actual Work Hours
Workers in the railroad rolling stock sector worked 41 hours weekly, which is 4 hours longer than the norm. (Source: Statistics Canada, LFS)

Overtime Hours
Of all the workers who worked overtime, the average weekly overtime hours worked in this sector is equivalent to the national average (9.2 hours). (Source: Statistics Canada, LFS)

Part-time Jobs
In 1999, the percentage of part-time workers in the industry was 1.3 per cent versus 18 per cent for all industries. (Source: Statistics Canada, LFS)

Involuntary Part-time Jobs
No data available due to small (<1,500) sample size.

Unemployment Rate
Very much lower than the national unemployment rate (7.6 per cent), this sector's rate of unemployment is 0.1 per cent. (Source: Statistics Canada, LFS)

Period of Unemployment
No data available due to small (<1,500) sample size.

Tenure
Job tenure in the sector averaged 86 months, 10 months shorter than the country's average of 96 months. (Source: Statistics Canada, LFS)

Employment Permanence
The percentage of temporary jobs in this industry is 2.7 per cent versus 12 per cent for all industries. This sector is relatively secure considering the low percentage of temporary jobs, low unemployment rate and the long tenure. (Source: Statistics Canada, LFS)

Type of Work
In 1999, the railroad rolling stock sector had a low percentage (1.3 per cent) of self-employed workers compared to the whole economy (17 per cent). (Source: Statistics Canada, LFS)

Occupational Profile
One third of the workers in this industry are machining, metalworking and related machine operators. The other professions, each one of which has too small sample size to report, are included in the 'other' category (Figure 5). (Source: Statistics Canada, LFS)

Labour Turnover
The labour turnover is quite consistent (30 per cent) for all industries (Figure 6). It is more or less the same for this sector; however, there was a major increase in 1996 (9 per cent). (Source: HRDC)

Reason for Leaving
There are many layoffs in this sector. Eighty per cent of the people who left the industry did so because of a shortage of jobs, while only 46 per cent left from all industries. In the sector, 4 per cent quit voluntarily versus 20 per cent for all of Canada. Sixteen per cent left the industry for other reasons such as death, bankruptcy, sickness, etc., as opposed to 35 per cent for the whole nation. (Source: HRDC)

Gender
The workforce in the Railroad Rolling Stock Industry is predominantly male (91 per cent). Men make up 97 per cent of the employees in trades, transport and equipment operators and related occupations, 95 per cent of the workers in occupations unique to processing, manufacturing and utilities, 93 per cent of the labour force in natural and applied sciences and related occupations and 60 per cent of the work force in business, finance and administrative occupations. Eighty-six per cent of the workers in the 'Other' category is male. (Source: Statistics Canada, Census 1996)

Age
Workers in this sector tend to be older than the general average (Figure 8). Thirty-six per cent of the employees in this industry were between the ages of 35 and 44, while the Canadian average was 29 per cent in 1996. Twenty-six- per cent of the workers in this sector versus 21 per cent for all industries were found in the 45 to 54 age category. (Source: Statistics Canada, Census 1996)

Education Level
Many of the Railroad Rolling Stock employees have a trades certificate or diploma. Twenty-eight per cent of the workers in this industry have a trades certificate or diploma versus 12 per cent at the national level. Nevertheless, only 11 per cent of the workers in this sector have a university degree, versus 20 per cent at the national level. (Source: Statistics Canada, Census 1996)

Previous Jobs
Of all the workers who started a job in the Railroad Rolling Stock Industry in 1996, 64 per cent came from within the industry and 11 per cent came from occupations related to primary/manufacturing/construction. (Source: HRDC)

A number of commentators have highlighted the need for skills training to keep pace with changing technology.

Most training within the industry is done in-house. Skilled employees complete apprenticeship programs or a combination of experience and formal education in their specialty. Trade certification is available in all provinces and is compulsory for most trades in Quebec.

Presently, there is a shortage of specialised welders in this industry.

Procor Ltd of Oakville, Ont. recently developed a training and education partnership with the local community college to deliver apprenticeship and other specialty programs. Bombardier's Thunder Bay location is attempting to develop similar partnerships with both the community college and Lakehead University.

Incidence of Training
In 1997, 28 per cent of the employees in this sector received some kind of training, while the Canadian average was somewhat higher at 39 per cent. (Source: Statistics Canada, AETS)

Orientation of Training
In 1997, 21 per cent of the training in this field was job-related whereas it was 25 per cent at the national level. (Source: Statistics Canada, AETS)

Barriers to Training
Primary training barriers in this industry were work-related (Figure 11). Seventy-six per cent of the workforce in this sector as opposed to 67 per cent at the national level gave the reason that they were either too busy at work or lacked company support. Secondary training barriers were course-related (a course not offered or offered at an inconvenient time), 65 per cent for this sector versus 53 per cent for total Canada. (Source: Statistics Canada, AETS)

According to interviewees, companies within this mature industry tend to use traditional human resource systems and work practices.

Organisational Design
Manufacturing economies of scale are of marginal importance in this industry since quantities are normally small and usually involve unique specifications. There is, however, a continuing effort by the major manufacturers to use modern design and production technologies such as computer-assisted design and manufacturing (CAD/CAM), and robotics to reduce manufacturing costs.

Recruitment
The highly cyclical nature of the industry has been identified as a barrier to attracting new workers.

Training and Development
Interviewees highlighted the need to develop further partnerships with industry and education institutions to deliver training programs.

Other
According to Industry Canada officials, to remain competitive this industry must improve productivity continually through investments in research and development, human resources and market development.

Associations
Brotherhood of Locomotive Engineers (BLE)

Canadian Auto Workers (CAW)
http://www.caw.ca/ 

Canadian Council of Railroad Operating Unions

Intermodal Association of North America (IANA)
http://www.intermodal.org 

Railroad Association of Canada (RAC)
http://www.railcan.ca 

West Coast Railway Association (WCRA)
http://www.wcra.org 

Human Resource Development Canada, Job Futures.
Web site: http://www.jobfutures.ca/ 

Industry Canada, Strategis.

Human Resources Development Canada (HRDC) - Sectoral and Occupational Studies Division, Overview on the Railroad Rolling Stock Industry

Kruglinski, Anthony, "Why is the Power Market So Hot and the Car Market So Cool?" Railway Age, v. 198/6, p 12, 1997.

Statistics Canada, Adult Education and Training Survey (AETS), 1997.

Statistics Canada, Business Register, 1997.

Statistics Canada, CANSIM, 2000.

Statistics Canada, Census, 1996.

Statistics Canada, Labour Force Survey (LFS), 1999.

Vantuono, William C., "New York Leads a Revolution," Railway Age, v. 197/9, pp. 89-92, 1996.

Wasny, Garrett, "A Train Load of Opportunities," World Trade, v. 10/12, 1997, pp. 44-47.