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Supply Side: Greenbrier, Wabtec

Written by Marybeth Luczak, Executive Editor
Wabtec Corporation employees gathered this week to celebrate 60 years of locomotive production in Brazil. (Photo Collage Courtesy of Wabtec, via Twitter)

Wabtec Corporation employees gathered this week to celebrate 60 years of locomotive production in Brazil. (Photo Collage Courtesy of Wabtec, via Twitter)

The Greenbrier Companies’ leasing subsidiary has entered into a new term loan to finance the continued growth of its fleet. Also, Wabtec Corporation is celebrating 60 years of locomotive production in Brazil.

The Greenbrier Companies on Aug. 3 reported that its Greenbrier Leasing subsidiary has a new $150 million term loan. Non-recourse to Greenbrier, the loan will mature in July 2027 and is said to have terms similar to Greenbrier Leasing’s term loan completed in August 2021. According to the company, half of the loan amount was drawn at closing, with the balance to be used within the next six months.

“Liquidity in the current economic environment aligns with our leasing strategy and supports Greenbrier’s broader goal to grow the services business,” The Greenbrier Companies President and CEO Lorie Tekorius said. “I would like to thank our banking group for their ongoing support of Greenbrier through this transaction. Importantly, interest rates on Greenbrier’s long-term debt are fixed at attractive levels, with no material debt maturities until 2026. Strong liquidity, combined with our new railcar backlog valued at $3.6 billion as of May 31, 2022, and continued high lease-fleet utilization, positions Greenbrier well to navigate current macroeconomic conditions.”

In related developments, Greenbrier in July reported the financial results of its third fiscal-quarter ending May 31, 2022.

1962: First Locomotive Plant Opens in Campinas, Brazil (Photograph Courtesy of Wabtec)

Wabtec in 2022 is celebrating 60 years of locomotive production in Brazil.

“Throughout Wabtec’s history in the region, the company has been at the forefront of change, always pushing the railroad industry forward,” Wabtec LATAM President and CEO Danilo Miyasato says. “When Brazil nationalized the local production of the first AC44 locomotives in early 2008, Wabtec was pioneering a new local market for large, technologically advanced locomotives. Today, Wabtec has more than 500 of those locomotives in operation, providing a significant productivity boost for national railroads.”

Wabtec’s story started in 1962 when GE built its first factory in Campinas, Brazil. Just two years later, the company signed a contract with the Government of São Paulo to build 40 small locomotives—the first completely manufactured in Brazil, according to Wabtec, which merged with GE Transportation in February 2019. The company opened its Contagem, Brazil, factory in 1972, and the team started supplying small locomotives, engines, equipment and specialized labor for the Carajás Railroad, which connects the states of Pará and Maranhão.

1972: Contagem, Brazil, Plant Opens (Photograph Courtesy of Wabtec)

“Growth in locomotive manufacturing stalled in the country from 1988 through the mid-2000s, as Brazil’s industrial focus shifted from the rail industry to agricultural machinery and automobiles,” according to Wabtec. “During this period—known as the ‘dead years’—the Contagem plant adjusted to the changing market and focused on providing repair and maintenance services for the rail industry.”

In 2005, the Contagem team began producing small locomotives for export and modernizing Brazil’s aging locomotive fleets. “Soon, the rail industry in Brazil experienced a transformation with a wave of privatizations and concessions,” according to Wabtec. “To support the changing rail industry, Wabtec began developing and producing large locomotives above 4400 hp, leveraging [a] … partnership with the federal government to nationalize locomotive production.” This was done under the leadership of then Wabtec LATAM President Rafael Santana, now Global CEO of Wabtec Corporation.

“Wabtec started working with the Brazilian Development Bank on its Nationalization Program and the government of the state of Minas Gerais,” says Wabtec LATAM’s Danilo Miyasato. “We became the first company in the rail sector to obtain credit approval to support the nationalization plan and advance the country’s rail infrastructure.”

In 2011, Contagem attracted approximately R$28 million in new investment, Wabtec reports, “to double its installed capacity and increase production to 100 locomotives per year. And in 2012, it celebrated 50 years of manufacturing locomotives in Brazil, surpassing 1,300 locomotives delivered in country.”

2018: Mixed Model Moving Assembly Line Inauguration (Picture Courtesy of Wabtec)

The plant unveiled a new approach to manufacturing locomotives in 2018 with a “mixed model moving assembly line” based on Lean Manufacturing. Unlike traditional stationary production lines, the mixed model moving line is designed for employees to assemble different locomotive configurations on the same line as the units slowly move down the track, according to Wabtec, which noted that the assembly line cut lead time by approximately 20%, reduced inventory by $1.75 million, and created 1,256 square meters of space savings within the factory.

The Contagem team also developed the BBI locomotive to serve the needs of Brazilian customers.

Today, Contagem builds locomotives, both new and overhauled, designed to operate on Brazil’s two track gauges—1.6 meter (5 feet, 3 inch) broad gauge and 1 meter, clearance-restricted narrow gauge. It also manufactures locomotives for India, Australia, New Zealand, Nigeria and other African countries.

In addition, the new Wabtec Technology Center located in southeastern Brazil (Juiz de Fora) focuses on the development of digital solutions to increase productivity, fuel efficiency and safety throughout the country’s rail network, according to Wabtec.

“Combining these digital technologies with equipment innovations such as the [Wabtec] ES44Ci and FLXdrive locomotives will help Brazil reduce its carbon emissions, while also opening the door to new opportunities,” Wabtec says.

2021: Celebrating the 500th AC44 (Photograph Courtesy of Wabtec)

In related developments, Wabtec on Aug. 6, 2021, celebrated modernizing its 1,000th locomotive in North and South America with delivery to Norfolk Southern of the AC44C6M 4463, a rebuilt 1998-vintage GE Dash-9. The 500th modernization occurred at the Contagem plant, for logistics and transportation company Rumo and freight railroad MRS Logística S.A. The final product was an AC44i converted from an AC4400 and repowered, with an EVO prime-mover replacing a 7FDL16.

Also, Wabtec Corp. in spring 2022 debuted its new ES44ACi diesel-electric locomotive, built at the Contagem plant, following eight years of work with operators in Brazil’s rail market.

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