Railcar Firm Greenbrier Announces Layoffs

In response to the general economy and weak demand in the rail supply market, The Greenbrier Companies (NYSE: GBX) announced it will be laying off approximately 150 employees. Besides downsizing its work force, Greenbrier will also implement wage reductions and other cost-cutting measures.

These actions will result in approximately $16 million of annualized savings in general and administrative expense ($7 million) and cost of revenue ($9 million). These are on top off about $10 million in savings realized from initiatives undertaken in the company's fiscal year 2008.

Greenbrier currently produces new railcars on five production lines at three facilities in North America: GIMSA and Concarril in Mexico, and Gunderson in Portland, Ore. Gunderson also performs railcar refurbishment work and marine barge manufacturing. "Based on current market demand, it is unlikely we will be able to continue to support current levels of new railcar production," said William A. Furman, president and CEO. "We will likely consolidate production and temporarily shutter one of our Mexico facilities this summer until new railcar demand improves. The move could affect about 700 workers."

Depending on the outcome of negotiations with its joint venture partner at GIMSA and with a major customer, Furman said he expects to continue production on both production lines at GIMSA and shut down production at Concarril.