By The Associated Press
Tuesday, December 15, 2009
Greenbrier Cos. said Tuesday its rail car production contract with a unit of General Electric Co. has been cut by more than half.
The new modified contract calls for Greenbrier to deliver 6,000 railcars to General Electric Railcar Services Corp., down from 11,900 in the original contract signed in 2007.
Under the original deal, Greenbrier was to manufacture the new cars over an eight-year period. About 600 railcars have been delivered so far.
The new contract calls for Greenbrier to build the first 3,800 cars by July 2013. Greenbrier said these cars will now fetch a higher price than in the original deal. The delivery of these cars has also been extended by 27 months.
The remaining 2,200 cars are expected to be delivered over the next five years, depending on certain contract conditions.
The new deal also gives the Greenbrier a new five-year deal to perform railcar maintenance and refurbishment work for General Electric Railcar Services, with a minimum value of $25 million.
With the new contract, Greenbrier's new railcar manufacturing backlog is 4,900 units as of November 30 — a value of about $430 million. That excludes the 2,200 cars for which delivery is subject to conditions.
Greenbrier said that by stretching out new railcar production schedules, it has stabilized its production at current levels for at least the next two years.
Shares of the company rose 11 cents to $11.61 in midday trading. GE shares fell 18 cents to $15.77.