LOS ANGELES Greenbrier Cos. plans to double its capacity to manufacture rail tank cars in the next 18 months.
The Lake Oswego, Ore.-based rail car and marine barge builders capital spending plans include a "more flexible, lower-cost manufacturing footprint better suited to our production needs, particularly for tank cars, where Greenbrier plans to nearly double capacity over the next 18 months," chairman and chief executive officer William A. Furman said in a statement accompanying the companys quarterly earnings report April 3.
Furman indicated that the additional capacity would be primarily in Mexico.
The expansion will bring Greenbriers annual tank car capacity to the "mid-7,000 range," chief financial officer and executive vice president Mark J. Rittenbaum said during the companys earnings conference call.
Greenbrier is running two production lines and "we expect that to come to four tank car lines," senior vice president of corporate finance Lorie L. Leeson said.
Furman noted that tank cars account for about 40 percent of Greenbriers backlog, "probably the lowest percentage of any car builder," according to a transcript of the earnings call.
Growing North American oil and gas production and the lack of new pipeline capacity has created a surge in demand for rail tank cars and the steel plateincluding normalized gradesused to build them. Meanwhile, highly publicized accidents and derailments have spurred proposals for enhanced tank-end protection, thicker tank car steel for certain car types and top fittings protection (amm.com, Dec. 30).
Greenbrier said earlier this year that it will design a new generation of tank cars designed to meet new safety standards for oil and other hazardous freight while also making retrofits of "legacy" tank cars (amm.com, Feb. 6).
The company posted net income of nearly $15.6 million in its fiscal second quarter ended Feb. 28, up 12.6 percent from the same period a year earlier on sales that jumped 18.7 percent to more than $502.2 million. The company delivered 3,400 new rail cars during the quarter, down 8.1 percent from 3,700 in the previous quarter ended Nov. 30, while its backlog increased 12.6 percent to 15,200 rail cars from 13,500 in the same comparison.