The Greenbrier Companies, Inc. (GBX) has suspended new railcar production at its Greenbrier Gunderson flagship manufacturing facility in Portland, Ore., due to the economic impacts of COVID-19.
Greenbrier said “adjustments in production and staffing levels respond to current and anticipated levels of new freight railcar demand, along with earlier announced plans to cut costs and strengthen the balance sheet globally.” Greenbrier’s Jones Act-compliant marine business will continue operating.
Last week, Greenbrier Gunderson ended production on its double-stack intermodal line. That manufacturing line has run nearly continuously for 25 years. The current action is required due to a surplus of intermodal units in the North American rail fleet and declining intermodal rail loadings, accelerated by the effects of COVID-19. Greenbrier Gunderson’s current food-grade refrigerated and insulated boxcar line will close when current work-in-progress concludes in July. That line may restart after the current crisis subsides.
Workforce reductions at Gunderson will affect approximately 200 employees, including production workers and office staff. All impacted employees are entitled to receive severance packages based on years of service, which are coordinated with various state and federal government benefits. Employees are eligible to receive enhanced government benefits, with Greenbrier-paid severance benefits bridging to government programs. Access to some public programs has been delayed due to challenges with registration and delivery of payments.
Greenbrier is responding to the current economic downturn by increasing its liquidity and cash flow to benefit the entire enterprise, while keeping its workforce safe through rigorous health protocols in its offices and factories. In North America, manufacturing workforce reductions have occurred primarily in Mexico as well as employee reductions at selected international locations. During its current fiscal year, Greenbrier has reduced its global workforce by 3,700 people, more than 20% of its total employment, which exceeded 17,100 people at the beginning of its fiscal year 2020.
Greenbrier Gunderson’s marine operations continue at full strength with nearly 500 full-time workers and a backlog that extends through calendar 2020. Greenbrier’s worldwide operations constitute “Essential Infrastructure” and “Essential Businesses” as defined by the U.S. Department of Homeland Security, other U.S. and international agencies, and as included in all “stay at home” orders issued in the jurisdictions where the Company operates.
“It is difficult to part with Greenbrier Gunderson workers who have served us for many years and persevered though this and other national emergencies,” said Greenbrier Chairman and CEO William A. Furman. “Going forward, we intend to identify opportunities to profitably build railcar products at Greenbrier Gunderson. Meanwhile, we plan to keep and deploy some of our most experienced team members to other locations in our network, where different kinds of railcars are built. Current conditions require us to simplify and streamline our organization to increase total liquidity from $620 million at the end of the fiscal second quarter to $1 billion by the end of fiscal 2020.”
“The safe and efficient movement of goods is integral to economies around the world,” Furman concluded. “Rail transportation is essential for supply chains in light of the COVID-19 crisis, providing smoother and safer border crossings and reducing the risk of viral transmission by human contact. Rail is more environmentally efficient than other modes of freight transportation. Its limited use of fossil fuels benefit society and the planet by producing about one-third of the hydrocarbons per tonne-mile as compared to trucks, and consuming about one-third of the fuel per tonne-mile. It will play an important part in any economic recovery, both near-term and longer-term, when greater stability and predictability has resumed.”