Throughout the term of the agreement, both companies will collaborate to match CIT Rail’s railcar maintenance requirements with available shop capacity, “maximizing shop utilization and reducing out-of-service time for CIT railcars,” Greenbrier said. “We expect the repair work we performs under the agreement will enhance revenue and gross margins for our Wheels, Repair & Parts segment starting in our 2014 fiscal year.”
CIT Rail is one of the largest freight car owners in North America with a fleet of approximately 104,000 railcars and 400 locomotives. “CIT aims to provide its customers with high quality and dependable railcar assets, and this agreement will serve to secure shop space for preventative railcar maintenance, regulatory certifications, lining and paint work, and other standard service needs,” Greenbrier said. “The arrangement will primarily focus on expanding service offerings for CIT’s tank car customers, but will also offer mechanical services for other car types in CIT’s fleet.”
Greenbrier is certifying several of its existing maintenance shops to add tank car maintenance capacity to service emerging demand.
“Our network strategy is designed to provide large fleet owners with consistent, high quality, and responsive maintenance services that reduce fleet downtime,” said William G. Glenn, Senior Vice President responsible for Greenbrier’s Wheels, Repair & Parts operations. “This agreement pairs two industry leaders. CIT Rail will have access to the repair capacity they need, offering their customers a superior level of service, while Greenbrier gains a sustained flow of repair work.”
“Our fleet maintenance agreement gives CIT Rail the opportunity to make a significant commitment to meet the future repair needs of our growing base of tank and general freight car customers,” said Jeff Lytle, Senior Vice President, Sales for CIT Rail. “We are pleased to be working with Greenbrier and to have preferred access to high quality, dependable repair support for our tank car fleet.”
Greenbrier has also recently entered into multi-year maintenance agreements with two separate Class I railroads to perform preventative maintenance programs on parts of their fleets.
These three multi-year supply agreements are elements of Greenbrier’s previously announced plan to enhance margins and improve capital efficiency in its Wheels, Repair & Parts segment. Greenbrier is also proceeding to sell or close eight Wheels, Repair & Parts facilities that are either non-core or otherwise underperforming and implement initiatives to improve profitability and reduce capital employed at another six facilities currently underperforming. Greenbrier expects these actions to result in a minimum return of capital of $25 million by Dec. 31, 2013.