GE Wants To Modify Greenbrier Railcar Contract
LAKE OSWEGO, Ore. (AP) -- General Electric Co. is seeking to reduce, cancel or delay railcar deliveries from Greenbrier Cos., possibly forcing the freight car equipment manufacturer into another round of job cuts, Greenbrier said Thursday.
The company said it is discussing with General Electric Railcar Services Corp., a division of the Fairfield, Conn.-based industrial and commercial conglomerate, the possibility of reducing, delaying or canceling GE's purchase of 11,900 new tank and covered hopper cars over eight years.
Deliveries of railcars to GE began last December, "after substantial capital investment and design and engineering resources devoted by Greenbrier over the last 15 months based on the contract with GE," Greenbrier said.
The 11,900 railcars under the GE contract represent about 75 percent of Greenbrier's backlog, Greenbrier said.
A message seeking comment was left with a spokesman for GE Rail Services in Chicago.
Greenbrier, based in Lake Oswego, Ore., said in February it will reduce its work force by approximately 150 positions to trim costs in the deteriorating economy. The cuts will involve layoffs and early retirements. The job cuts could affect up to about 1,000 workers, or nearly 20 percent of the company's work force, it said Thursday.
"Additional significant reductions in work force and cost cutting measures will be necessary if production under the GE contract is substantially modified," Greenbrier said.
About 500 railcars called for by the contract are scheduled for delivery in fiscal 2009, with the remainder scheduled for delivery over the next seven years.
Shares of GE rose 24 cents, or 3 percent, to $6.92 in morning trading. Greenbrier fell 60 cents, or 19 percent, to $2.52.