Trinity, GATX Set 5-Year Railcar Deal

Railcar manufacturer Trinity Industries and equipment leasing firm GATX agreed on terms for Trinity to supply GATX with 12,500 railroad tank cars and other freight car types over five years.

The two companies did not say how much the deal is worth. Trinity earlier reported that on Dec. 31, 2010, it had an order backlog of about 5,960 cars to build of various types, with a value of $458 million.

GATX President and CEO Brian A. Kenney, said the five-year deal “provides GATX with clear visibility into its new railcar delivery schedule.” The lessor also buys used railcars in the secondary market and places spot market orders for new cars.

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Stephen Menzies, Trinity’s senior vice president and head of the rail group in a company that also builds barges, wind towers and construction steel products, said the GATX order gives Trinity “a level of production continuity over the next five years.”

GATX in a filing with the Securities and Exchange Commission said under the agreement that was effective March 14 it will buy 2,500 cars per order year, with the majority to be tank cars each year.

Unless the two parties decide otherwise, it said car pricing “will be on an agreed upon or cost-plus basis subject to certain specified adjustments and surcharges.” The deal expires five years from its effective date or when the last of the 12,500 cars is delivered, whichever is later.

-- Contact John D. Boyd at jboyd@joc.com.