The Greenbrier Companies

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The Greenbrier Companies

1 Centerpointe Drive
Lake Oswego, Oregon 97035
U.S.A.
(503) 684-7000
Fax: (503) 684-7553

Public Company
Incorporated: 1981
Employees: 2,803
Sales: $530.0 million (1996)
Stock Exchanges: New York
SICs: 3743 Railroad Equipment; 7359 Equipment Rental & Leasing, Not Elsewhere Classified; 6719 Holding Companies, Not Elsewhere Classified

The Greenbrier Companies is the largest manufacturer of railroad freight cars in North America through its Gunderson, Inc. and Trenton Works Limited subsidiaries. Gunderson also refurbishes railroad cars and builds ocean-going barges and other heavy marine equipment, while a third subsidiary, Green-brier Leasing Corporation, owns or manages more than 45,000 rail cars and provides logistical services, including fleet management, warehousing, and new vehicle transport using the Gunderson Autostack system.

The Greenbrier Companies is based in Lake Oswego, a suburb of Portland, Oregon. The Gunderson manufacturing site outside Portland on the Willamette River includes the largest side-launch marine facility on the West Coast. In addition, Gunderson Rail Services, a division of Gunderson, Inc., refurbishes rail cars at facilities in Cleburne, Texas; Springfield, Oregon; Pine Bluff, Arkansas; and Tacoma, Washington. Trenton Works Limited, in Nova Scotia, Canada, includes the largest forge in Canada, capable of making steel forgings up to 100 tons each.

Origins of Greenbrier Companies

Alan James and William A. Furman, two former executives of the Transpacific Financial Corporation, a Northwest-based finance and heavy equipment company, created the Greenbrier Companies as a holding company in 1981. James and Furman had started their own company when they purchased the lease-underwriting division of their former employer in 1974. Through their company, James and Furman had managed the Greenbrier Leasing Corporation for its owner, Commercial Metals Company, since 1979.

The Greenbrier Leasing Corporation was formed in 1970 as a joint venture between the M.D. Friedman Company in Huntington, West Virginia, and the Commercial Metals Company in Dallas, Texas, to acquire and manage a fleet of flatbed railroad cars. In 1979, Commercial Metals bought out M.D. Friedman and hired the newly formed James-Furman and Company to manage the leasing operation. When Commercial Metals decided to sell its leasing operation in 1981, James and Furman purchased it through The Greenbrier Companies. They moved the business from Dallas to Portland, Oregon, soon afterwards.

Gunderson, Inc. Acquired in 1985

In 1985, The Greenbrier Companies purchased the Portland-based Marine and Rail Car Division of the FMC Corporation, restoring the name Gunderson, Inc. Gunderson was a venerable company founded in 1919 as the Wire Wheel Sales and Service Co. by Chester E. Gunderson. He was joined four years later by his brother, Alvin E. Gunderson, and they incorporated in 1921. The original business sold and repaired both wood-spoked and wire wheels.

In the early 1930s, the Gundersons began selling engine parts and by 1935 were also repairing trailer brakes. Two years later, the Gundersons were manufacturing trailers for hauling logs, dry cargo and petroleum products. The company also made Superior School Bus bodies, hearses, and vans. The Gundersons spun off the manufacturing side of the business in 1938, calling it Gunderson Brothers, Inc. They also added underground and above-ground storage tanks to the product line, and purchased the Mogul Transportation Co., which included a small fleet of tanker trucks and trailers. In 1939, Gunderson Brothers introduced one of the first trailers designed for hauling automobiles.

During World War II, the Gundersons manufactured a variety of marine equipment for the U.S. military, including assault landing craft. After the war, the renamed Gunderson Brothers Engineering Corp. continued manufacturing tugboats and cargo lighters for the military and commercial fishing vessels. The company also began manufacturing equipment for sawmills and became a general steel fabricator, erecting buildings and bridges in the Portland area.

From 1946 to 1950, the Gundersons experimented with a variety of innovative products, introducing an aluminum ironing board, cartop carriers, motorized rototillers, and a collapsible, plywood boat. But the company’s primary business had become heavy steel construction; their projects included the Oregonian, Flintcote, and Federal Reserve buildings in Portland. During the 1950s, the company also continued building barges, tugboats, and other marine vessels, including more military landing craft during the Korean War.

In 1958, the Gundersons built their first railroad-car under-frame for the Pacific Fruit Co. Two years later, the company delivered 200 coal cars to the Union Pacific Railroad. Rail cars quickly became a significant part of the company’s business although it continued building bridges, barges, and other marine equipment, including the Floating Laboratory Inverted Platform for the Scripps Institute of Oceanography in 1962 and an experimental, hydrofoil ship hull for The Boeing Co. in 1967. In 1969, Gunderson Brothers produced more than 2,300 railroad cars, along with railroad-car barges for the Pacific Inland Navigation Co. and Crowley Launch and Tug Co. By 1995, Gunderson had built more than 85,000 railway cars.

In 1970, Gunderson Brothers Engineering became Gunderson, Inc., and produced the first 100-ton, all-steel covered hopper cars for the newly merged Burlington Northern Railroad. Throughout the 1970s and into the mid-1980s, Gunderson continued making railroad cars and barges. It also manufactured several oil tankers for Chevron, the first ships built in Portland since World War II. The first of the oil tankers, the 650-foot Oregon, was launched in 1974 and christened by the wife of Oregon’s governor.

Al Gunderson died in 1971 and the company was sold two years later to the FMC Corporation. Chester Gunderson was then in ill health and died in 1974. FMC expanded Gunderson’s rail-car operations and, in 1978, built the 580-foot, triple-deck La Reina, then the largest roll-on, roll-off railroad barge in the world. Under FMC, Gunderson also unveiled a prototype, inter-modal freight car built for the Itel Corporation, a cargo barge built for the Zidell Exploration Co. that could be converted to a petroleum tanker, and an ice-breaker barge, also built for Zidell. The Greenbrier Companies purchased the rail car and marine division from FMC in 1985, during a restructuring of the chemical and heavy-equipment manufacturing conglomerate.

In 1985, the renamed Gunderson, Inc. introduced the Twin-Stack, an innovative railroad container car that had been developed as a prototype by FMC. The Twin-Stack, a system for transporting automobiles in standard intermodal trailer containers, quickly became the mainstay of Gunderson manufacturing. From an initial order of 500 in 1985, Twin-Stack production rose to nearly 3,000 in 1990.

Greenbrier Goes Public in 1994

With a surge in railway freight, sales at The Greenbrier Companies more than doubled between 1989 and 1993, from $113.6 million to $264.3 million. Profits increased nearly fivefold, from $1.76 million to $8.2 million. In 1994, The Green-brier Companies decided to go public. James, then chairman, and Furman, then chief executive, retained 65 percent ownership of the company.

In 1995, The Greenbrier Companies acquired a majority interest in the Trenton Works, a railroad-car manufacturing facility in Nova Scotia, Canada. The purchase nearly doubled the company’s rail-car manufacturing capacity to more than 5,000 a year.

Like Gunderson, the renamed Trenton Works Limited was a company with a storied history. In 1872, two blacksmiths, Graham Fraser and Forrest MacKay, formed the Hope Iron Works in Trenton to make anchors and iron fittings for sailing ships. In 1878, they changed the name to the Nova Scotia Forge Company.

The Nova Scotia Steel Company, the first steel-making plant in Canada, was established in Trenton in 1882 specifically to supply Nova Scotia Forge. In 1895, the two companies, along with the New Glasgow Iron, Coal and Railway Co., which was then mining iron ore at Wabana, Newfoundland, merged under the name Nova Scotia Steel. In 1890, Nova Scotia Steel merged with Sidney Mines to become the Nova Scotia Steel and Coal Company.

Steel making ended abruptly in 1904 because of the poor quality of iron ore available locally, but two rolling mills were added to the company in 1910, and Nova Scotia Steel and Coal began manufacturing heavy forgings. In 1912, the company formed the Eastern Car Company at a site adjacent to the forge to manufacture railroad cars. The Dominion Steel Corporation also established a cast-iron railway wheel foundry on the same site, adding a bolt and rivet factory in 1913.

In 1921, as the era of rapid rail expansion came to an end, the Nova Scotia Steel and Coal Company merged with Dominion Steel to become the British Empire Steel Corporation, which was then acquired by Dominion Steel and Coal Corporation, Ltd., in 1928.

Company Perspectives:

“Greenbrier’s business strategy is to maintain its leadership position as a manufacturer and developer of intermodal equipment and to exploit its complementary strengths in surface transportation equipment leasing, railcar refurbishing and conventional railcar manufacturing.”

A.V. Roe Canada Ltd. acquired controlling interest in Dominion Steel and Coal in 1957, and sold the Trenton Works to Sidbec, a Quebec government corporation. A management group, Hawker Industries Ltd., later acquired the Trenton Works from Quebec, and was itself acquired by Hawker Siddeley Canada. Hawker Siddeley sold the Trenton Works to Lavalin Industries, then part of the Lavalin Group, in 1988. Lavalin spun off the railroad-car manufacturing facility in 1991, which operated independently as Trenton Works, Inc. until it was purchased by The Greenbrier Companies.

Transportation Logistics in the 1990s

In 1995, Gunderson launched its first barges built since the company was acquired by the Greenbrier Companies. The two 296-foot, ocean-going hydraulic-dump barges, built for The Dutra Companies of San Rafael, California, were designed for hauling waste out to sea.

A year later, The Greenbrier Companies began providing logistical support for companies that were shipping products by rail, including warehousing and vehicle transportation. To gain a toehold in the expanding transportation-services market, The Greenbrier Companies acquired Interamerican Logistics, Inc., Ontario, Canada, and Superior Transportation System, Lake Oswego, Oregon, merging them with the Autostack Corporation to form Greenbrier Logistics Inc.

Despite consolidations in the rail industry in the late 1990s, including the proposed merger of the CSX Corporation and Conrail, Inc., the outlook for continued growth at The Green-brier Companies remained strong. Only about ten percent of Greenbrier Companies’s freight cars were sold or leased to Class I railroad companies, and Greenbrier Companies expected an increase in orders from short-line railroads spun off in the mergers. In addition, railroad freight was increasing significantly as more shippers turned to intermodal transport. Industry analysts also predicted a healthy future for logistics companies as railroads began outsourcing more of their needs, including the repairing and refurbishing of railway cars, which continued to be a significant share of Greenbrier Companies’s business.

The Greenbrier Companies did receive a setback in 1996 when year-long negotiations with Conrail Inc. to manufacture and repair freight cars in Pennsylvania collapsed, apparently because neither company could guarantee enough business to make the joint venture viable.