The expansion advances Greenbrier’s broader strategy of targeted vertical integration and footprint flexibility, ensuring that production capacity can be shifted or scaled as market conditions change.
Market Shifts and Resiliency
The COVID-19 pandemic gave us an opportunity to adapt and evolve to meet the needs of a changing market. Severe supply chain disruptions across sectors made business difficult, in our industry and beyond. We saw rail shipments sharply drop early in the pandemic due to weak consumer demand. Then, demand rebounded quickly, resulting in significant material delays and shortages as suppliers ramped back up.
Greenbrier’s successful recovery was in many ways due to our sourcing team, which handled these disruptions exceptionally well. Their work enabled Greenbrier to meet demanding production schedules while withstanding industry-wide shortages.
These disruptions underscored the value of targeted vertical integration within our North American footprint.
Insourcing at Scale
At our 2023 Investor Day, we announced plans for an insourcing program across multiple facilities to bring more primary parts and sub-assemblies in-house. We conducted a make-vs.-buy analysis to determine which parts to insource and which to continue outsourcing.
Highlights:
- Modernized Equipment: The pieces of equipment are new, so they have enhanced safety features and more precision when cutting, bending and drilling.
- Timeline: Project planning through completion occurred over three years, and notably, the construction of the new insourcing building was completed in 10 months from breaking ground to making pieces.
- Workforce Impact: Introducing additional types of production in Greenbrier’s facilities means we are not only providing the job itself, but we are also offering specialized training to run these new machines, meaning employees can learn new skills.
The results of these efforts have been promising, including reduced waste, greater control over quality standards and lead times, lower trucking emissions, and lower inventory levels. We achieved the following benefits at our Central Mexico facilities:
- In-house Processing: A 225% increase in steel processed in-house.
- Improved Supplier Proximity: 52% of suppliers are now within a 40-mile radius.
- Reduced Emissions: CO₂ reduced by an average of 44.7 tons per month.
Vertical Integration and Footprint Flexibility
Insourcing is one dimension of our efforts to strengthen operational and supply chain resilience. Another is railcar maintenance and restoration work that maximizes flexibility across our North American footprint.
Today, our North American new railcar manufacturing facilities also offer railcar restoration services, such as rebodying and requalifying railcars at scale.
In addition to being accretive to Greenbrier, these programs also support our efficient use of capacity. By strategically leveraging our manufacturing facilities for larger-scale railcar restoration work, we can ensure our resources are effectively deployed and maintain the flexibility to adapt to varying market demands. Railcar repair and requalification work can be performed at our manufacturing facilities or maintenance locations, depending on various factors such as the nature of the work and the order size.
This allows us to create as much flexibility as possible within our operations. By prioritizing capacity and process control, we can efficiently manage workflows across our facilities, maximizing output while maintaining quality.
Positioned for Today’s Trade Environment
Amid global trade uncertainty, tariffs, and an upcoming USMCA review, our pivot to insourcing and footprint optimization could not have come at a better time. While many companies across industries, including rail, are grappling with tariffs or seeking North American suppliers, Greenbrier divested from countries of concern years ago. Our steel is sourced primarily in the U.S. and shipped to our U.S. or Mexican facilities for assembly, reinforcing our supply chain firmly within our North American network.
As we reflect on our journey, it’s clear that our vertically integrated model reduces exposure to tariff swings and global supply disruptions. At Greenbrier, we support 24,000 North American workers and manufacture and maintain railcars across 32 states. That impact is possible thanks to a well-integrated North American rail network and an effective strategy.
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