Greenbrier and GIMSA Form New Railcar Manufacturing Joint Venture
LAKE OSWEGO, Ore., Oct. 16 /PRNewswire-FirstCall/ -- The Greenbrier Companies (NYSE: GBX) and Grupo Industrial Monclova (GIMSA) announced today the formation of a joint venture to build new railroad freight cars for the North American marketplace. The railcars will be built at GIMSA's existing manufacturing facility, located in Monclova, Mexico. Greenbrier and GIMSA will each maintain a 50% interest in the joint venture. Railcar production capabilities will include a variety of new conventional railcars, and production is expected to commence in the second calendar quarter of 2007 with an initial focus on covered hopper cars. Capacity is expected to grow to 3,000 new railcars annually, with multiple production lines and about 1,200 direct workers. The Greenbrier Companies is a leading supplier of transportation equipment and services to the railroad industry. It is the only new railcar builder with facilities in all three NAFTA countries. GIMSA is a privately-held industrial company founded in Monclova by the Harold R. Pape family, in the early 1950s. GIMSA has annual revenues of approximately $300 million and operates in three principal divisions: Industrial, Mining and Commercial. GIMSA's Industrial Division's facility in Monclova currently performs other heavy manufacturing. William A. Furman, president and chief executive officer of Greenbrier, said, "Consistent with our stated strategy, we continue to emphasize lower- cost production out of the U.S. and Mexico, rather than our Canadian facility, which is currently being used for specialized capacity. We are very pleased to be joining forces with GIMSA, a well-respected company which has heavy manufacturing capabilities, high quality standards and an excellent business reputation. We anticipate Greenbrier - GIMSA will be a key contributor to Greenbrier's new railcar production going forward. This joint venture will allow us to quickly capitalize on the current demand for new railcars, at a modest initial investment of less than $10 million for one production line. We are confident that the joint venture will produce high-quality freight cars for the North American marketplace, consistent with Greenbrier's industry leading reputation in railcar engineering, manufacturing and services. The first order for the new facility for 500 covered hopper cars will be placed by Greenbrier." Furman continued, "The Monclova facility is located 125 miles from the U.S. - Mexican border, with good rail connections and close proximity to key suppliers and customers. The facility has an experienced management team headed by the chief executive officer of GIMSA, Mr. Gerardo Benavides Pape, grandson of GIMSA's founder. The joint venture will report operationally to Mr. Alejandro Centurion, who is senior vice president and head of Greenbrier's North American freight car manufacturing operations based in Portland, Oregon. Operations in Monclova will be directed by Mr. Jesus Gil, chief operating officer of GIMSA's Industrial Division, since joining GIMSA in 2005. Mr. Gil has over 20 years of experience in heavy manufacturing, including seven years with Trinity Industries as general manager of its Sabinas and Monclova new railcar manufacturing facilities in Mexico. Under terms of the joint venture, Greenbrier will provide marketing and sales, and freight car engineering, manufacturing and procurement expertise. GIMSA will provide manufacturing know-how, existing facilities, personnel, equipment and infrastructure." GIMSA is a major supplier in Mexico of lime and fluxes necessary for the production of steel. It also provides other services and products for the steel industry and, through its Industrial Division, is a significant buyer of steel in Mexico. GIMSA's Monclova facility, built in 1951, is located adjacent to the FerroMex main rail line, with 8 industrial bays and 370,000 square feet of production space on a 59-acre site. Greenbrier -- GIMSA will occupy a portion of the total plant space. Monclova's existing machinery and equipment include: a CNC plasma cutting machine, press brakes, milling machines and plate bending rolls. It has the capacity to fabricate jigs and fixtures and provides a highly-skilled labor force with many years of experience in steel fabrication. GIMSA currently manufactures and assembles heavy equipment assemblies, including drilling platforms, power generator facilities, locomotive parts, and pressure vessels at Monclova. The facility has a multi-national customer base which includes Fortune 500 companies. The Greenbrier Companies (www.gbrx.com), headquartered in Lake Oswego, OR, is a leading supplier of transportation equipment and services to the railroad industry. The Company builds new railroad freight cars in its manufacturing facilities in the U.S., Canada, and Mexico and marine barges at its U.S. facility. It also repairs and refurbishes freight cars and provides wheels and railcar parts at 23 locations across North America. Greenbrier builds new railroad freight cars and refurbishes freight cars for the European market through both its operations in Poland and various subcontractor facilities throughout Europe. Greenbrier owns approximately 9,000 railcars, and performs management services for approximately 136,000 railcars. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This release may contain forward-looking statements. Greenbrier uses words such as "anticipate," "believe," "plan," "expect," "future," "intend" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, actual future costs and the availability of materials and a trained workforce; steel price increases and scrap surcharges; changes in product mix and the mix between manufacturing and leasing & services segment; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, changing technologies or non-performance of subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment; all as may be discussed in more detail under the heading "Forward Looking Statements" on pages 3 through 4 of Part I of our Annual Report on Form 10-K for the fiscal year ended August 31, 2005. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward- looking statements.
SOURCE The Greenbrier Companies
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