Mervis to build $35M railcar refurbishment plant in Kansas

HUTCHINSON, Kan. — A Danville, Illinois-based scrap metal and recycling company plans to build a $35 million plant in Hutchinson to refurbish railcars used to transport crude oil and other combustible liquids.

Mervis Industries projects that its new offshoot, Mervis Railcar, will employ 150 people within three years of opening at an industrial park in the city, The Hutchinson News reported.

The plant is being planned amid growing pressure to improve the safety of tank cars used to transport the increasing volume of oil that new drilling methods are producing. U.S. railroads, which carried just 9,500 carloads of crude in 2009, shipped an estimated 434,000 tanker loads in 2013. A May study by Congressional Research Service forecast 650,000 carloads of crude oil would to be carried by rail this year.

But the increase in transport by rail has also resulted in an increase in accidents involving crude oil shipment, including a July 2013 accident in Lac Megantic, Quebec, in which a trainload of oil parked on a shortline track came lose and rolled into the Canadian community. It derailed and caught fire, killing 47 people and destroying much of the town’s center.

The Association of American Railroads mandated new safety enhancements in 2011 for the types of tankers that carry oil and ethanol. Now, the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration is proposing that older cars be retrofitted to those standards.

Adam Mervis, the president and CEO of Mervis Industries, said that besides retrofitting tankers, the Hutchinson plant also could convert tankers for nonhazardous uses or recycle old tankers. He said the company also envisions that workers will perform inspection work.

Part of the deal for locating the plant in Hutchinson included the purchase of a switching and terminal service that connects to two railways. Federal authorities must still approve the transfer.

In the meantime, the company has started engineering work on the plant design. Groundwork will likely begin in February, but building construction won’t start until spring, the newspaper reported.