Greenbrier Companies is pushing more deeply into maintenance as the drive to get more use out of railcars puts more pressure on equipment upkeep.
The railcar manufacturer this month purchased most of the assets of Rail Car America, a railcar repair company, for $34 million. The sale includes Rail Car America’s American Hydraulics division and Brandon, a wholly-owned subsidiary.
Greenbrier, which already runs its own car repair business through its Rail Services unit, said demand for railcar repair and refurbishment is accelerating as the North American fleet continues to age and record freight volume place an increasing amount of stress on equipment.
“This expanded geographic coverage will meet customer requirements to work with fewer suppliers and provide seamless, high-quality service, with close proximity to a shop network, and quick turnaround times,” said Tim Stuckey, president of Greenbrier Rail Services.
The acquisition complements other recent parts acquisitions, Stuckey said, in-
cluding a joint venture with Ohio Castings, which makes railcar side-frames and bolsters, and YSD Industries, which makes boxcar door and roof products.
The acquisition will give Greenbrier one of the largest shop networks in North America with 23 repair and wheel shop locations, and is expected to generate about $160 million in revenue for the unit after the deal closes. Rail Car America generates nearly $40 million in annual revenue with a workforce approaching 400 people.
Greenbrier, which also owns about 9,000 railcars and provides services for 135,000 railcars, is in a position to benefit from strong demand for rail equipment.
“Covered hoppers (excluding large hoppers used mostly for plastic pellets), intermodal cars, open-top hoppers, gondolas, and tank cars are in strong demand and compose the bulk of the railcar manufacturers’ sizable backlog,” said John Larkin, an analyst with Stifel Nicolaus. “Demand for flat cars and center-beam cars have weakened as the housing construction industry has cooled off.”
Larkin said fears of heightened de-
Boise Cascade and Watco Companies canceled the sale of Boise’s Minnesota, Dakota & Western Railway to Watco because conditions of the deal were not met within the time specified under an agreement reached in July.
The Pittsburg, Kan.-based short line operator, which owns 16 railroads in 14 states, planned to acquire the stock of the paper company’s rail operation subject to the approval of both company’s boards of directors. Terms of the deal, which was expected to close by the end of August, had not been disclosed.
As a result, Boise will retain ownership of the railway and MD&W’s portion of an international rail and toll bridge that links the communities of International Falls, Minn., and Fort Frances, Ontario. Watco will continue to provide service to Boise at its paper mills in DeRidder, La., and Wallula, Wash.
mand for ethanol could touch off a period of overbuilding within the nation’s tank car fleet. “The ramifications of such a phenomenon are that the tightness in the railroad tank-car and tank-truck markets could soften over the next few years, even as the volume of ethanol to haul grows dramatically.”
BY JOHN GALLAGHER
Union Pacific Railroad is trolling the newly stocked labor pool after Ford Motor announced it will be cutting 25,000 to 30,000 hourly wage jobs and 10,000 salaried positions by the end of first quarter 2007.
“With nearly 40 percent of its workforce reaching retirement age in the next 10 years, Union Pacific Railroad is aggressively recruiting and hiring new employees to ensure consumer products, automobiles, coal and food continue to move across the nation’s rail system,” UP said. “This could be great news for the thousands of employees who are impacted by recent area job cuts announced in the automotive industry.”
UP was caught short-handed after misreading the speed with which the economy was bouncing back from the recession caused by the “dot-com” bust in the late
1990s. The slow reaction to the surge in transportation demand led to several years of sluggish service while the railroad scrambled to build up its ranks.
UP is looking to stay ahead of the hiring curve by anticipating a new wave of retirements.
“While we don’t expect all employees to take retirement the minute they are eligible, we do want to add employees now so they will have the opportunity to learn and gain the experience needed to maintain the high standards set by our current employees,” said Barb Schaefer, UP’s senior vice president for human resources.
The Mayo Clinic contends the Federal Railroad Administration is relying on old information in assessing the Dakota Minnesota & Eastern Railroad’s billion-dollar federal loan and should therefore start its review process over again.
“The FRA is relying on a dated, insufficient (environmental impact statement) that the Department of Transportation’s General Counsel’s Office has indicated is problematic,” said Steve Ryan, of Manatt, Phelps & Phillips, counsel for the Rochester Coalition, which represents the Mayo Clinic.
“When considering granting a $2.3 billion taxpayer-funded loan –– the largest federal loan to a private company in U.S. history –– the federal government needs to use up-to-date information. This is like an employer using a 10-year-old resume to make a 25-year job appointment.”
In August, FRA said it would adopt the Surface Transportation Board’s final environmental review of DM&E’s coal line extension and rail rehabilitation project as part of its assessment of DM&E’s loan. The review is currently under a public comment period that ends Oct. 10.
However, the Mayo Clinic claims federal regulations give FRA no authority to incorporate the STB’s EIS in the loan process.
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