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Railroad parts salvager running on fast track: international, domestic buyers driving 400 percent annual growth.

When most Arkansans read about a train wreck in Chile they take another sip of coffee and flip to the sports section. Not Tom Ford. The 33-year-old owner of Wye Mountain Rail International hops the next plane to Chile with a laptop, digital camera and cell phone.

There's no railroad on Wye Mountain, of course - that would disrupt the view of the famous daffodils - and yet an amazing amount of international rail business takes place every day on the phone at Ford's office in Roland and at his 10-acre outdoor storage facility and 6,800-SF warehouse in Maumelle.

Ford, a former Spanish-language interpreter for the Air Force and former rail mechanic for Union Pacific Corp., makes his living mostly by buying used railroad parts in the United States, Mexico, South and Central America, Africa and Asia, repairing them and selling them to rail companies in countries at the farthest reaches of the planet.

"It's kind of a unique business," Ford says. "You never see anything the same.

"There's about 11 of us in the country that do this. We supply railroads overseas with locomotives, boxcars, any kind of rail-related parts that they need."

Central and South America are big markets or railroad entrepreneurs, Ford says, because the formerly state-owned railroads in those countries have been privatizing and growing.

We're not talking chump change here, either. Ford says the biggest deal he pulled off last year was an $8.9 million transaction to supply the Antofagasta y Bolivian Mining Co. with wheels for mining rail cars. Of course, Wye Mountain Railroad only takes a small percentage of that amount.

"Our goal is to be able to ship from Little Rock, Ark., to Johannesburg and beat the price of the guy who's 15 miles away in Johannesburg," Ford says. "So far, that's what we've been able to do." The company averages 20-30 sales per month.

Ford would not discuss the annual revenue of his company, other than to say they have increased 400 percent per year since he started the company three years ago.

The biggest deal Ford has in the works is a proposal to buy 3,200 wheel sets for boxcars used by the Antofagasta y Bolivian Railway. Ford says he has discovered a foundry in Russia near Moscow that will make the wheel sets.

Money From Tragedy

The gruesome aspect of the trade - and the most profitable aspect - is that Ford gets a lot of his parts from train wrecks.

"I subscribe to and read a lot of Mexican and Central and South American newspapers," Ford says. When he reads about a train wreck, "we'll go down and buy wrecked locomotives, recondition them and hopefully sell them."

Ford takes his gear down to the site of the wreck, takes digital pictures and e-mails them back to the office, where the staff helps him decide whether it would be worthwhile to bid on the salvage rights.

Then Ford will dispatch a team of three or four freelance railroad technicians, mechanics and electricians to the site, most of whom are Arkansas employees of Union Pacific Corp. It's hard to refuse, he says, when Ford pays $50-$100 an hour.

"We can dismantle a locomotive right at the wreckage site," Ford says. Due to high tariffs, Ford says, the company must usually leave the locomotive's frame behind and sell it locally as scrap. But the parts - including, Ford says, "engines as big as your living room" - are brought home to the Maumelle warehouse via truck, ship, rail or a combination of the three.

The markups on wrecked locomotives can be very lucrative.

"If I only paid $40,000 for a wrecked locomotive, and let's say I have another $5,000 or $10,000 in costs bringing it back, the first two or three major parts I sell off that might make my money back," Ford says. The profit margin is much lower, though, when Ford acts as a middleman in a business deal, earning 5-10 percent commissions.

Building a Network

The auto parts salvage industry has huge parts-locator computer networks, Ford notes, but in general, the train salvage business has no such advantage.

"We have the only international parts locator in the world," Ford says. "I've got the only computer base that I know of where guys call in on a regular basis and tell me what they've got and I send out a hot list every Friday."

The hot list, he says, goes out to at least 850 companies worldwide via e-mail, fax and regular mail. About 100 of those companies are big hitters in the railroad business, he says, and the rest are mining and oil rig companies that have some of their own rail equipment.

When it's time to ship out an order, the parts usually are trucked to ports in New Orleans or Houston and then off-loaded onto a steam ship. Complete train cars or locomotives, though, often are sent by rail all the way to their destinations. Many times, Ford solves storage and transportation problems by buying cars in other states or countries and allowing a local railroad operation to use the equipment for free until he finds a buyer.

The international nature of the business demands that someone has to be ready to respond to a business call at all hours of the day. "We get calls from Taiwan or Johannesburg at 3 or 4 in the morning," Ford says.

Before Ford began traveling the globe for train parts, he says," I lived up in Alaska and started out panning for gold, then moved up and bought a little mining operation. I was an electrical engineer on the side" and worked some for the Alaska Railroad, he says.

Ford moved back to his native Arkansas five years ago to become an electrician for Union Pacific. Two years later he started Wye Mountain Railroad International.

"I myself still do a lot of repairs," he says. "Our first couple of jobs were maintenance: short-line railroads in Arkansas having trouble fixing their locomotives."

Ford's mother, Claudette Ford, serves as the office manager in Roland, and his brother, Roger, is in charge of shipping and receiving for the company.

But the railroad business isn't Ford's only line of work; on the side he owns two Little Rock restaurants: Bobby's Country Cooking on 65th Street in southwest Little Rock and DD's Deli in University Mall.

"When I was just starting the railroad up for the first year or so I could tell there was tremendous potential and we were going to make a lot of money. But I needed something to supplement it," until the cash flow improved, Ford says.
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Title Annotation:Wye Mountain Rail International
Author:Haman, John
Publication:Arkansas Business
Date:Sep 28, 1998
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