The underserviced and ageing rail infrastructure in the eastern states has created an attractive market opportunity for niche wagon and rail maintenance player Gemco Rail Pty Ltd, based in Forrestfield.
Gemco, owned by listed Maddington company Coote Industrial, plans to set up an office and two workshops in the east once it finalises the acquisition of Melbourne-based locomotive and re-manufacturing service provider, RTS Group.
The RTS deal, due to be signed off on September 1, is the latest for Gemco Rail, which will undertake an acquisition offensive over the next few years to muscle in on the Australian locomotive, bogie repair and wagon maintenance sector.
Since joining Coote's rollingstock services division in August 2007, Gemco Rail has grown from a $50 million business to a $150 million operation, employing more than 200 full-time staff across four states.
Gemco Rail chief executive Satwant Bassan said Coote had given the company the financial backing it needed to facilitate its aggressive expansion strategy.
"They really operate at arm's length and have allowed the management team here to make and implement key decisions," he said.
Growing at almost 8 per cent a year over the past few years, the company's customer base now includes BHP Billiton, RailCorp, Pacific National, John Holland and SCT logistics.
WA Business News understands Gemco Rail is in talks with Oakajee Port and Rail Pty Ltd to be involved in the development of the $2 billion Oakajee Port project in the state's Mid West.
Gemco Rail general manager of business development, Ross Kiesey, said with the company fully booked for work until December 2009, shifting some operations interstate would free-up much-needed space in its Abernethy Road workshops.
"The eastern states deal ultimately will allow us to broaden our workshop capacity, because the situation we're facing is that we're working at full capacity here," Mr Kiesey told WA Business News.
He said the new workshops, to be built in Newcastle and Melbourne, would enable the company to provide a quicker turnaround in projects in the eastern states.
Gemco Rail general manager of rail operations, Terry Kiernan, said the move east would also provide the platform for the company to significantly increase its wagon maintenance program.
He said although an almost saturated market in WA had forced the company interstate, Gemco Rail would remain headquartered in Perth.
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