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August 25, 2010

Orders for rail cars are good news for Gunderson barge builders

Orders for railcars and railcar refurbishment just booked by the Greenbrier Companies [NYSE:GBX] ,are good news for workers at its Gunderson facilty in Portland, Oregon.

The company will switch 175 workers from its ocean going marine barge production at Gunderson to new railcar production.

Greenbrier says it is in discussions with its largest marine customer [which, from a glance at its order book, appears to be Crowley Maritime] about "contracts in backlog due to an industry-wide slowdown in marine demand. This customer represents over 85 percent of the company's marine backlog - approximately $75 million as of May 31, 2010. These discussions may result in cancellation, modification or postponement of the orders. Such an event is likely to occur, and any compensation or alternative production the company receives may not be adequate to replace the lost revenue and margin."

Greenbrier disclosed in May 2010 that it had slowed its marine production rates. It says it has reduced those rates further during the current fiscal quarter. It notes that "beginning in the company's first fiscal quarter of 2011, marine production rates will be reduced again due to the greater need for a rail workforce, uncertainty surrounding production of the current backlog, overall softness in the marine market and continued concern about the City of Portland's River Plan, which Greenbrier believes is a long-term threat to marine jobs on the Portland waterfront. Greenbrier anticipates that revenues and margin from its marine operations will be lower in its fourth fiscal quarter than in previous fiscal 2010 quarters, and that fiscal 2011 marine revenues and margin will be lower than 2010 revenues and margin. "

Greenbrier president and CEO, William A. Furman said, "These recent developments show the value of our flexible workforce and the importance of our diversification efforts in recent years. Our integrated business model is creating value for our customers, shareholders, and other stakeholders. In the current environment, we were able to adjust resources quickly across multiple disciplines. For example, we were able to divert experienced marine labor when faced with uncertainties in marine demand to support new rail demand.


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