Trinity Industries defers railcar manufacturing

By Susanne Retka Schill | January 12, 2009
Web exclusive posted Feb. 2, 2009, at 4:14 p.m. CST

As a result of the slowdown in the ethanol industry, Dallas-based railcar manufacturer Trinity Industries Inc. announced it has elected to indefinitely defer an $800 million investment in approximately 10,000 railcars for multiple players in the industry. The cars were scheduled for delivery to Trinity's leasing company in 2010 and 2011.

Following the removal of these railcars, TrinityRail, a division of Trinity Industries, had an order backlog of more than 8,000 railcars at the end of 2008, totaling approximately $720 million. "For planning purposes we have removed certain railcars from TrinityRail's order backlog due to the lack of stability in the economy, credit markets, the volatility in the ethanol industry, and changes in the financial condition of certain third-party lessees," said Timothy R. Wallace, Trinity's chairman, chief executive officer and president. "This is a long-range planning decision and the removal of the 2010 and 2011 railcars from the backlog does not impact our current production plans for 2009."

The company has idled four manufacturing facilities in Missouri, Oklahoma and Texas, as well as reduced its workforce. "These are very difficult times for the North American railcar manufacturing industry and the global economy as a whole," Wallace said. "We have significantly reduced our railcar manufacturing capacity in the last few months and will continue to monitor demand very closely. We have seasoned management with deep experience in working through various cycles in the economy and remain prepared to adjust with the cyclical nature of our businesses. We expect to reduce railcar manufacturing capacity further if demand does not recover in the near-term. It is not a pleasant experience to reduce our workforce and we are sensitive to the timing of these necessary actions."