LAKE OSWEGO, Ore., Aug. 20, 2018 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) and Watco Companies, LLC have entered an agreement to discontinue their GBW Railcar Services (GBW) railcar repair joint venture. Under the agreement, the repair shops and employees at each location will return to management by their previous operators. The plan enables both Greenbrier and Watco to better capitalize on current trends in North America's railcar repair market, meeting demand for railcar repair services within their respective business models.
Greenbrier and Watco formed GBW in 2014 by combining their shops into a nationwide network of railcar repair facilities. The venture was intended to address booming demand for tank cars in oil by rail service, including tank car retrofits. That market never fully materialized. In dissolving the venture, the assets and employees of 12 shops return to Greenbrier and 14 shops return to Watco. Four mobile shops will be transferred to Watco.
Shops returned to Greenbrier will be managed by Rick Turner, Senior Vice President for Wheels & Parts at Greenbrier Rail Services. Turner has been a leader in the railcar aftermarket business for nearly 25 years, with primary responsibility for Greenbrier's 12 wheel shops and parts businesses. Turner has served on the Board of Directors of GBW since its formation. Turner and his team have a deep familiarity with the operations and customer base of the repair shops. Their objective will be to return Greenbrier's railcar repair operations to profitability. A wholly-owned and smaller network of railcar repair shops strengthens Greenbrier's integrated business model in which new railcar design, engineering, manufacturing, sales and leasing is supported by aftermarket products and services. Greenbrier owns a railcar lease fleet of more than 8,500 railcars and provides fleet management services to owners of more than 368,000 railcars. Railcars in the owned and managed fleets receive approximately 175,000 repair and maintenance hours per year. With its return to sole ownership of its former repair shops, Greenbrier is positioned to offer strategic access to railcar repair and maintenance services to Greenbrier's customers.
Rick Webb, Watco CEO and GBW's current operations leader said, "One of the main reasons GBW was formed was to provide capacity to service, recertify and retrofit North America's tank car fleet. For a variety of reasons, tank car services and retrofits never materialized in the volumes anticipated by Watco and Greenbrier at the time we formed GBW. The current arrangement is the best course of action. Greenbrier has been a great partner since 2014 and will continue to be a valued customer and supplier."
William A. Furman, Chairman and CEO said, "Watco is one of the world's finest short line railroads, port and terminal operators. We have had an excellent multi-decade relationship with Watco, and have enjoyed many synergies together. That will not change."
Furman concluded, "We thank Watco for their partnership at GBW. And, we welcome our returning and new Greenbrier employees. We also look forward to maintaining our close relationship with Watco and will explore new opportunities to collaborate in other areas to serve the needs of our customers."