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Hugh Hamilton sells power and lots of it. Hamilton began rebuilding and selling industrial locomotives in 1980 in his ten-acre plant on the edge of Greenville, South Carolina. These smaller locomotives are the tugboats of the railroad world, moving hundreds of thousands of pounds of rail cars and cargo arriving each day at industries across the country.
"Our clients are chemical companies, steel mills, paper mills, electric utilities, food industries, mining companies, the military, transit authorities, government agencies and export enterprises," Hamilton said. Owner and CEO of Republic, Hamilton takes great pride in his operations and product.
"Our company started by rebuilding military switchers and we've rebuilt virtually every type from the smallest yard switchers to the largest road locomotives," he said. "In 1990, we began building new locomotives."
The result of Republic's R&D was the RX500 AC traction powered industrial switch engine. The first redesign of an industrial locomotive since diesel replaced steam more than sixty years ago, the diesel/electric engine saves an estimated million gallons of fuel over the life of the locomotive. The RX500 has also cut emissions by ninety percent making it not only cost-effective, but eco-friendly as well.
Other innovations include a traction system that provides greater adhesion eliminating wheel slip and a "vigilant" safety system with total lockdown programmable brakes. The dual control stands provide improved visibility for the operator and a driving control that works like a joystick simplified operation.
"We have a patent on this control stand and joystick design," Hamilton explained from the deck of one of the safety yellow engines. "It's easy to operate, which lowered the learning curve." A ring of the bell, a blast of the horn and the hulking bumblebee moves swiftly forward, massive power at the touch of a finger.
At around a million dollars per unit, locomotives are not impulse buys. And while the company has always been strong, Republic experiences the monthly fluctuating cash flow common to small business. While one month might bring three sales, the next might bring only one. Complicating this is the length of time it takes to build a locomotive-thirty days if all parts are on location, but months more if there is a wait for components like electronics or raw materials like steel. With more than a hundred vendors, managing production time is a challenge. To offset possible delivery delays of locomotives to his customers Hamilton built up a strong inventory.
"We had millions of dollars of inventory, but a business has to have cash to meet monthly obligations," Hamilton said. "So for years we had a line of credit with a traditional bank and that worked well for us."
Then the recession hit and the financial institution Hamilton had used was unable to continue to extend Republic's line of credit.
"We were coming off many good years of business. We were profitable, had considerable inventory, but the bank we had our line of credit with got into bad trouble. They were under the gun from the Feds," Hamilton explained. "It was an uncomfortable time all around."
Hamilton said he tried to work with other lending institutions, but found his calls unreturned and the process stalled. Then someone recommended BCI Lending. He made contact and their Greenville area representative, Logan Bagley, came to the plant for an initial assessment.
"Logan looked around and we talked, then we set up another meeting for the Columbia folks to come for a visit." Hamilton was impressed that Mike Sandusky, Ed Kesser and Larry Jones were all involved. "The big guns came on site and asked a lot of questions."
Hamilton gave them a tour of his 30,000 square foot manufacturing plant. The facilities include heavy overhead cranes, metal fabricating equipment, a machine shop, a modern paint booth, outside storage tracks, testing tracks and administrative offices. Hamilton explained his patented designs on the RX500, all his product improvements, as well as standard and custom equipment options. Then they sat down and looked at financials, marketing and the sales force.
"We've grown every year," Hamilton said. Republic Locomotive has a number of revenue streams. In addition to the new products they produce, Republic also rebuilds or remanufactures industrial switchers, road switchers and line haul locomotives. They offer field service and repairs, contract maintenance, consulting services, engineering studies, operating training and a small fleet of locomotives for lease.
Hamilton felt that BCI Lending understood his business and his company's financial needs. "They are astute, efficient and professional. They understand the challenges of running a business," he said. After their thorough assessment, Hamilton said everything moved forward without a glitch. "There was a lot of paperwork involved," he said, "but they simplified everything."
BCI Lending helped Hamilton secure an SBA loan that he used to consolidate a few debts. The bulk of the money he kept to cushion monthly cash flow fluctuations, giving Republic Locomotive the liquidity it needed.
"Cash is a huge deal with small companies. Income fluctuates. One month may be gangbusters with multi-million dollars of deals and the next couple of months things can cool. With this SBA loan, I don't worry during cooler months," Hamilton said.
Hamilton expresses his appreciation for the manner in which BCI Lending does business. "They're invested in their clients like old time bankers. They may not make character loans, but they do take the character and history of the businessperson into consideration. They take calculated risks, like all good business people do."
The economy may have derailed for a while, but Republic Locomotive stayed on track and moving forward with a little help from BCI Lending.
For more information on Republic Locomotive visit
www.republiclocomotive.com.
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