UPDATE: Korean Railcar Maker Obtains $7M to Fund Navy Yard Move

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PHILADELPHIA-Equipped with $7.2 million, primarily in low-cost loans, Seoul, South Korea-based Rotem Co. will begin readying a once-vacant 101,000-sf warehouse in the Navy Yard for production of railcars to the US market. Operations will begin in the third quarter of this year, and the company expects to reach full production here by 2008.

Three years ago, Rotem signed a multi-year lease agreement with Philadelphia Industrial Development Corp., owner of the Navy Yard, for Building No. 603. The value of the lease is undisclosed. The site marks Rotem’s entry into the US mainland market. Now, with a 32-car contract with the North Carolina Transit Authority, a $177-million contract with the Southern California Rail Road Association, and a $244-million deal to assemble 104 railcars for the locally based Septa regional rail system, it begins conversion of the building into what Yeo-Sung Lee, its chief operating officer, calls “a state-of-the-art facility.” He declined to disclose the cost of the conversion. Gov. Ed Rendell says the plant will create more than 215 new jobs within three years.

The state is providing a $2.2-million incentive package and Citizens Bank has awarded $5 million from its job bank program to the project. The state funding includes $1.6 million in Pennsylvania Industrial Development loans, a $500,000-loan through its machinery and equipment loan fund and $100,000 in customized job training assistance.

Under Citizens’ job bank program, loans of between $1 million and $10 million carry a fixed interest rate of 4.99% for the first year, which Ralph Papa, president, says is currently more than 2.75% below the prime rate. Under the program, companies are required to create one job for every $40,000 borrowed within three years of the borrowing. In addition, the lender waives all of the fees traditionally tied to loan applications. Eligible businesses include any manufacturing companies in the state or ones that relocate to Pennsylvania.