NEW PROVIDENCE, N.J. (July 20, 3:20 p.m. ET) — Composite railroad tie maker Axion International has announced further penetration into the global railroad tie and sleeper market via a joint venture with Sicut Holding Ltd. of the United Kingdom.
The companies signed a non-binding letter of intent, Axion announced July 19. The venture will operate as Axion Rail LLC. Axion will own 65 percent and Sicut will own 35 percent.
Both companies license technology from Rutgers University. Axion was focused on North America, South America, Australia, the Caribbean, South Korea, Russia and a portion of the Chinese market based on a “contracts-won” basis, according to Axion.
Sicut licenses patents from Rutgers for Europe, India, South Africa, Southeast Asia and also a portion of the Chinese market also on a “contracts-won” basis.
In a July 13 telephone interview, Axion President and CEO Steve Silverman said the companies will gain greater efficiency by joining forces. While Axion was serving the Moroccan market, for example, Sicut was serving India.
“It would make sense to have one manufacturing hub to serve both of those markets,” Silverman said. The global railroad tie or sleeper market is estimated at $8 billion, according to consultancy firm SCI Verkehr GmbH. The European market is worth $3 billion.
“This joint venture will be an enormous acceleration of Axion's business model with long term benefits to our corporate growth strategy and loyal shareholders,” said Silverman.
“We have been working with our partners at Sicut since Axion's founding,” Silverman said. “However, instead of dividing our efforts among the world's different geographic regions, the time has come to take advantage of our synergies and combine forces to sell our innovative products on a truly global basis.”
Officials said that the joint venture will target railroad sleeper opportunities using its combined relationships around the world, including those in the large European markets, such as the United Kingdom, which replaces approximately 1 million sleepers annually; France, at 1.2 million sleepers annually; and Germany, at roughly 1 million sleepers annually.
“There is tremendous opportunity in France, the U.K. and Germany to name a few of our prime European markets, as well as exciting opportunities in India, Southeast Asia and Africa,” said Anil Aggarwal, president of Sicut Holding. “Our future looks bright as the rail tie industry begins to increasingly employ eco-friendly RSC technology.”
Axion Rail LLC will operate in a contract manufacturing model, Silverman said.