UTLX Dramatically Scales Back Tank Car Production

(BRK.A), (BRK.B)

The collapse in crude oil prices that has shuttered wells in the United States, and lowered oil train traffic for BNSF Railway, is also impacting the Union Tank Car Company (UTLX).

UTLX has announced that it is cutting its production by 50-percent.

The Berkshire Hathaway-owned company will cut 230 jobs in Houston, Texas, and also plans to lay-off employees at its plant in Alexandria, Louisiana, as well.

UTLX has sent a Worker Adjustment and Retraining Notification letter to the Texas Workforce Commission notifying it that the tank car facility located on Old Beaumont Highway 90 will be the source of the Texas layoffs.

UTLX will still employ 323 people at the Houston facility after the job cuts are completed in June.

Jeremy DeLacerda, UTLX manufacturing general manager, cited the “current market conditions and the industry-wide demand outlook for railroad tank cars,” as the reason for the lay-offs and production cuts.

“When the economy rebounds and greater demand returns, I look forward to increasing our staffing levels accordingly,” DeLacerda added.

Not the First Time

This is not the first time that UTLX has had to dramatically scale back production due to soft demand.

The UTLX manufacturing facility at England Airpark in Alexandria, Louisiana, endured similar lay-offs in 2006.

“You never want to hear news like this, but it’s not a surprise,” notes Jim Clinton, president and CEO of Central Louisiana Economic Development Alliance

“We knew they would have to cut production on some level,” Clinton added. “I’m sure they were hoping it would not be to the extent this apparently is. But the market is what the market is. They’re a good company that’s responding to market conditions.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.