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Analysis of FRA Inspection Data
James H. RaderVP Greenbrier Management Services
Safe Harbor/Copyright StatementUNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This presentation may contain forward-looking statements, including statements regarding expected new railcar production volumes and schedules, expected customer demand for the Company’s products and services, plans to adjust manufacturing capacity, restructuring plans, new railcar delivery volumes and schedules, changes in demand for the Company’s railcar services and parts business, and the Company’s future financial performance. Greenbrier uses words such as “anticipates,” “believes,” “forecast,” “potential,” “goal,” “contemplates,” “expects,” “intends,” “plans,” “projects,” “hopes,” “seeks,” “estimates,” “strategy,” “could,” “would,” “should,” “likely,” “will,” “may,” “can,” “designed to,” “future,” “foreseeable future” and similar expressions to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from in the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, reported backlog and awards are not indicative of our financial results; uncertainty or changes in the credit markets and financial services industry; high levels of indebtedness and compliance with the terms of our indebtedness; write-downs of goodwill, intangibles and other assets in future periods; sufficient availability of borrowing capacity; fluctuations in demand for newly manufactured railcars or failure to obtain orders as anticipated in developing forecasts; loss of one or more significant customers; customer payment defaults or related issues; sovereign risk to contracts, exchange rates or property rights; actual future costs and the availability of materials and a trained workforce; failure to design or manufacture new products or technologies or to achieve certification or market acceptance of new products or technologies; steel or specialty component price fluctuations and availability and scrap surcharges; changes in product mix and the mix between segments; labor disputes, energy shortages or operating difficulties that might disrupt manufacturing operations or the flow of cargo; production difficulties and product delivery delays as a result of, among other matters, costs or inefficiencies associated with expansion, start-up or changing of production lines or changes in production rates, changing technologies, transfer of production between facilities or non-performance of alliance partners, subcontractors or suppliers; ability to obtain suitable contracts for the sale of leased equipment and risks related to car hire and residual values; integration of current or future acquisitions and establishment of joint ventures; succession planning; discovery of defects in railcars or services resulting in increased warranty costs or litigation; physical damage or product or service liability claims that exceed our insurance coverage; train derailments or other accidents or claims that could subject us to legal claims; actions or inactions by various regulatory agencies including potential environmental remediation obligations or changing tank car or other rail car or railroad regulation; and issues arising from investigations of whistleblower complaints; all as may be discussed in more detail under the headings "Risk Factors" and “Forward Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2015, and our other reports on file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. Except as otherwise required by law, we do not assume any obligation to update any forward-looking statements.
Copyright © 2016 by Greenbrier Management Services, LLC (“GMS”). These slides may not be copied, distributed or publicly displayed, in whole or in part, and no derivative works may be made of these slides, without the advance written permission of GMS. If you or the party you represent signed a confidentiality agreement with GMS which covers the event where these slides are presented by GMS, these slides constitute confidential information of GMS protected by such confidentiality agreement.
2
Origin of Data
• Inspection Process and Data Collection• Freedom of Information Act Request• Data Analysis by Major Part and Section
3
Inspection Process and Data Collection
• The front lines in the inspection and civil penalty process is the FRA Safety Inspectors.• FRA employs hundreds of safety inspectors, which are supplemented by the states participating in
enforcement of the federal rail safety laws.• These inspectors routinely inspect the equipment, track, signal systems, hazardous material
shipments, and observe the operations of the nation’s railroads. • They also investigate complaints filed annually by those alleging noncompliance with the laws.• When inspection or complaint investigation reveals noncompliance with the laws, each
noncomplying condition or action is listed on an inspection report. • Where the inspector determines that the best method of promoting compliance is to assess a civil
penalty, he or she prepares a violation report, which is essentially a recommendation to the FRA Office of Chief Counsel to assess a penalty based on the evidence provided in or with the report.
• FRA enters the inspection reports into its enforcement data system.
4
Freedom of Information Act Request
• Under the Freedom of Information Act (“FOIA”), individuals may request enforcement data from the FRA Office of Safety Assurance and Compliance.
• The enforcement data identifies the major rule and section written on the FRA inspector’s report.• Using the major rule and section, filtering the data by the number of defects, and then charting the
defects provides a “snapshot” of the agency’s enforcement findings.• These findings provide evidence of weaknesses in the Nation’s training and educational programs
with respect to the items under observation.• The goal of this presentation is to bring awareness of FRA’s enforcement findings so that individual
companies can address gaps in their training programs and employee training needs.
5
DATA ANALYSIS BY MAJOR PART AND SECTION49 CFR: Selected Railroad Transportation Statistics
6
91200
307077
4106106
247384
25140
1,13847
0 200 400 600 800 1,000 1,200
INSPECTIONSDEFECTS
VIOLATIONS RECOMMENDEDINSPECTIONS
DEFECTSVIOLATIONS RECOMMENDED
INSPECTIONSDEFECTS
VIOLATIONS RECOMMENDEDINSPECTIONS
DEFECTSVIOLATIONS RECOMMENDED
INSPECTIONSDEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 171, GENERAL REQUIREMENTS
7
8
1710002 1710012 1710016 1710022 17100252013 70 1 34 12014 50 1 2 242015 179 20 1
0
20
40
60
80
100
120
140
160
180
200 PART 171, GENERAL REQUIREMENTS2013 2014 2015
9
5,05210,954
4084,726
11,170168
5,08610,515
3975,190
12,389381
5,32011,468
780
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
INSPECTIONSDEFECTS
VIOLATIONS RECOMMENDEDINSPECTIONS
DEFECTSVIOLATIONS RECOMMENDED
INSPECTIONSDEFECTS
VIOLATIONS RECOMMENDEDINSPECTIONS
DEFECTSVIOLATIONS RECOMMENDED
INSPECTIONSDEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 172, HAZARD COMMUNICATION, TRAINING, AND SECURITY
10
1720200 1720201 1720202 1720203 1720204 17202052013 32 397 619 306 652014 32 546 254 155 2006 112015 385 570 722 276 142
0
500
1000
1500
2000
2500 PART 172, SHIPPING PAPERS2013 2014 2015
11
1720330 1720302 1720332 1720303 1720304 17203262013 167 107 79 94 74 472014 159 87 124 46 26 252015 121 120 56 93 13 29
020406080
100120140160180
PAT 172, MARKINGS2013 2014 2015
12
1720400 1720401 1720406 1720407 1720419 17204262013 68 4 2 12014 8 1 1 1 12015 1
01020304050607080
PART 172, LABELING2013 2014 2015
13
1720516 1720504 1720508 1720502 17205192013 1444 850 125 130 922014 1301 863 139 124 852015 1593 528 157 164 106
0200400600800
10001200140016001800
PART 172, PLACARDING2013 2014 2015
14
1720704 17207022013 4727 3982014 3762 6052015 3524 1305
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
PART 172, TRAINING2013 2014 2015
15
1720802 1720800 17208202013 351 19 52014 485 13 42015 423 18 7Total 1259 50 16
0
200
400
600
800
1000
1200
1400
PART 172, SECURITY2013 2014 2015 Total
16
3,496
3,571
1,072
3,230
3,227
1,137
3,236
3,359
852
2,860
2,859
915
2,932
3,078
936
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 173, SHIPPER’S REQUIREMENTS
17
1730031 1730024 1730427 1730026 173024B2013 2895 211 93 58 872014 2962 181 12 31 222015 3221 222 39 52 23
0
500
1000
1500
2000
2500
3000
3500
PART 173, SHIPPER'S REQUIREMENTS2013 2014 2015
4,155
4,608
262
4,400
4,721
351
3,195
3,437
264
3,106
3,391
349
2,838
3,145
444
0 1,000 2,000 3,000 4,000 5,000
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 174, CARRIAGE BY RAIL
18
19
1740050 1740059 1740009 1740003 1740026 1740024 17400672013 1170 555 519 360 435 132 1122014 2111 914 517 352 354 182 1012015 1645 987 574 444 252 500 98
0
500
1000
1500
2000
2500
PART 174, CARRIAGE BY RAIL2013 2014 2015
808
2,838
25
755
1,738
63
789
2,356
32
1,008
4,125
109
954
2,273
75
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 179, SPECIFICATIONS FOR TANK CARS
20
21
1790007 1790022 1790200 1790006 1790100 17902012013 2245 83 10 1 7 32014 1511 136 15 46 18 72015 2539 156 97 31 1 12
0
500
1000
1500
2000
2500
3000
PART 179, SPECIFICATIONS FOR TANK CARS2013 2014 2015
11
11
4
30
28
9
77
78
4
9
9
1
16
42
1
0 10 20 30 40 50 60 70 80 90
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 180, QUALIFICATION AND MAINTENANCE OF TANK CARS
22
23
1800513 1800517 1800509 1800511 1800515 18000032013 31 34 9 2 22014 20 4 1 1 22015 6 1 4
0
5
10
15
20
25
30
35
40
PART 180, QUALIFICATION AND MAINTENANCE OF TANK CARS2013 2014 2015
24
14,804
16,770
374
16,339
18,219
473
16,064
18,805
644
16,016
18,176
347
16,845
19,623
622
0 5,000 10,000 15,000 20,000 25,000
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 215
25
2150123 2150119 2150301 2150103 2150127 2150117 2150121 2150009 2150013 21501252013 7757 3688 1539 966 1000 1186 629 561 631 2572014 7974 3042 1980 1129 1068 861 679 405 240 3172015 7310 2845 1778 1087 847 706 601 411 320 344
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
PART 215, FREIGHT CAR SAFETY STANDARDS2013 2014 2015
26
294
331
1
68
74
0
82
150
0
79
89
0
118
161
0
0 50 100 150 200 250 300 350
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 224, REFLECTORIZATION
27
2240103 2240105 2240101 2240107 2240106 22401092013 50 17 68 9 62014 46 8 2 11 3 42015 195 82 10 25 14 5
0
50
100
150
200
250
PART 224, REFLECTORIZATION2013 2014 2015
28
31,774
35,982
369
34,392
39,413
516
37,815
42,330
458
39,017
43,946
452
40,264
44,832
544
0 10,000 20,000 30,000 40,000 50,000
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 231, SAFETY APPLIANCE STANDARDS
29
2310136 2310130 2310126 2310138 2310140 2310134 2310114 2310110 2310144 23101202013 18787 4395 3172 2090 2451 2489 2209 1567 1670 13722014 17063 4021 2936 2620 2240 2251 1738 1452 1216 12542015 14460 3957 3060 2449 2138 1929 1753 1169 1232 1054
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
PART 231, SAFETY APPLIANCE STANDARDS2013 2014 2015
30
27,940
31,881
740
28,887
32,935
1,013
30,529
34,731
867
30,350
34,130
802
34,666
39,030
1,025
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
INSPECTIONS
DEFECTS
VIOLATIONS RECOMMENDED
2015
2014
2013
2012
2011
PART 232, POWER BRAKES
31
2320103 2320205 2320409 2320105 2320305 232000B 2320015 2320309 2320203 23203032013 26940 3973 1438 385 284 459 278 216 106 822014 25817 3596 1297 373 323 251 253 122 209 1402015 25780 3045 1100 326 377 272 222 87 108 171
0
5000
10000
15000
20000
25000
30000
PART 232, POWER BRAKES2013 2014 2015
