Rail cars are rolling down the line again
- Jeanie Senior
- Portland Tribune - News
• Gunderson factory fires up to fill a healthy $230 million in orders for freight containers
After a couple of down years, Gunderson Inc.'s factory on Northwest Front Avenue is bustling again.
Three lines of rail cars Ñ new boxcars, refrigerated boxcars and double-stack container cars Ñ are emerging at a steady clip. Next to the Willamette River on the 75-acre factory site, workers are completing two giant oceangoing barges.
Gunderson, in survival mode since car orders dropped off in 2001, is hiring. The plant's work force, which fell to 700 during the bad times, is climbing back to 1,100.
Freight car manufacturing, always cyclical, is on a definite upswing. Since May, Gunderson's parent company has received $230 million in orders for 4,300 new rail cars, the highest backlog since November 2000.
Gunderson, which has built almost 1,000 rail cars for the frozen-foods market since the mid-'80s, just announced a $20 million order from leasing company Cryo-Trans Inc. to build 100 new refrigerated cars and refurbish another 105.
The cars will be built at Gunderson's Portland shop, then moved to the Gunderson Rail Services shop in Springfield for completion Ñ including installation of refrigeration units and insulation.
The recession wasn't kind to Gunderson's publicly traded owner, the Greenbrier Cos. Inc., which saw its revenues for the year that ended Aug. 31 fall to $305.6 million, a considerable decline from $509 million in 2001 and $590 million in 2000.
A variety of forces besides the weak economy caused the Lake Oswego-based firm to decline, including the Sept. 11, 2001, terrorist attacks and a rail-car supply bubble resulting from two mega-railroad mergers.
'After 9-11 people just stopped buying,' said William Furman, Greenbrier's president and chief executive officer.
Industrywide, the results were grim. Car orders dropped from 70,000 a year to 20,000. In 2000, Gunderson had a backlog of 6,600 rail car orders. By 2001, the backlog had withered to 2,900.
'It was pretty scary,' Furman said.
Greenbrier is one of North America's four largest rail car builders; its double-stack container cars dominate the market.
The company also owns or manages a fleet of 50,000 rail cars, one of the largest nonrailroad-owned fleets in the United States. That branch of the company's business earned almost $74 million in 2002.
But manufacturing, which drives company revenues, took a back seat in 2002 to other sources, from rail car repair and refurbishment to rail wheel services, barge building and car leasing.
While Greenbrier cut back at Gunderson to survive the downturn, it closed its factory in Nova Scotia for five months and shut down for eight months a factory it co-owns in Mexico with Bombardier Transportation of Canada.
Furman said it's notable that Greenbrier, 'instead of going to cheaper labor,' kept its Portland plant open and worked to stabilize and protect the Gunderson work force, which he described as efficient and high quality.
'We did a lot of things to make this company stay here,' said Gunderson President Thomas Sass. He holds quarterly meetings with all the plant's workers, who are not unionized, talking to groups of 50 to 100 people.
'I told them in 2000, we are going to survive this, but we are going to have to stay together,' Sass said. Straight talk and accessibility helped, he said.
The continuing focus on quality as well as productivity has paid off elsewhere. Gunderson's workplace accident rate, for example, dropped drastically after employees with less than a year on the job were issued green hard hats.
The majority of accidents involve rookies, Sass said, and the green hats put other employees on notice to look out for their less experienced Ñ and perhaps less wary Ñ co-workers.
Furman readily acknowledged that Greenbrier has gone through some tough times, although he said the cash situation stayed healthy. Now, he said, 'We're running the company for endurance and liquidity.'
When revenues fell, executives took a 10 percent pay cut.
'It wasn't fair to lay off factory workers and have executives earning bonuses and (getting) perks,' said Furman, who didn't take his $100,000 bonus last year. His pay, according to a Seattle Times story on Northwest executive salaries, dropped 41 percent, to $558,849, reflecting Greenbrier's lowered income.
He sees more profitable times ahead, thanks to busy rail traffic and an improving national economy Ñ and barring an oil shock, another terrorist attack or U.S. involvement in a prolonged war.
Higher cost of business
Although Furman said Greenbrier is happy in Portland, he also warned: 'It's going to be more difficult for companies like us to stay here.'
Translation: Oregon is an expensive place to do business, particularly for heavy industry, with high costs for labor, energy and transportation. Perhaps, Furman suggested, governments need to consider business retention along with quality-of-life items such as bike paths and light rail.
Greenbrier's Portland operations, including Gunderson, produce a $46.3 million payroll. That amount is multiplied by a number of factors. Gunderson, for example, buys much of its supplies, including steel, from Oregon companies.
But, Furman said: 'Manufacturing is mobile. We could move.'
Noting the economic boost that comes from businesses like Gunderson, Esco Corp. and Oregon Steel Mills Inc., he added: 'I think generally, in Portland, we don't have the focus on the importance of the business agenda as part of the public agenda in the city, county and state.
'The state has many problems, and education is one of them. É If you have to train your own work force É ,' Furman said, not completing the sentence.
That's a reference to the fact that, despite the region's high unemployment rate, Gunderson has trouble finding qualified welders. As a result, the company offers an extensive training program for welders, which Furman calls 'Gunderson University.'
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