The EMD Situation

[Allen Hazen]

Brian Rice quotes:
"Electro-Motive Diesel Inc., acquired in April 2005 by Greenbriar Equity Group LLC, Berkshire Partners LLC, and "certain related parties."" Trains Magazine Special Edition No. 1-2007 pg 58.

I think the next sentence suggested that one of the "certain related parties" was rumored to be... General Motors.

Which prompts all sorts of speculations (though, since it is just a rumor reported in a Foamer publication, it's probably not good to spend TOO much brain power on them!).

[trainwayne1]

"I think the next sentence suggested that one of the "certain related parties" was rumored to be... General Motors. "

Considering General Motors present state of hemoraging millions of dollars, their involvement may be more of a hinderence than a help.

[Engineer James]

Are they still gonna build em, or just absorb the company, and stop making locomotives....

[junction tower]

GE does not out sell EMD by anywhere close to 7-1. I couldn't come up with the exact totals, but for 2005-2006 in the North/Central/ South American market, I came up with GE: 1441, to EMD 650. The two builders have equal orders for China, and that doesn't include EMD's sales to Europe. I also suspect that if EMD had more plant capacity, they could sell a few more and close the gap. The lead time on EMD's is a little too long in my opinion. In hindsight, they probably should have kept LaGrange and dumped London. LaGrange would still be more than they needed, but they still could have torn down the uneeded part. Look at what they could save not having to ship prime movers to Canada. Perhaps Super Steel could have built an on-site plant to produce the bodywork.

[GOLDEN-ARM]

Backorders? Ever heard "don't count the chickens, before they're hatched"? I agree with the posting, of approximately 2 to 1, on deliveries. Delivered locos pull freight, not locos on backorder. Deliver concrete facts, supporting the 7 to 1 ratio, as well as the plans for current owners, to "gut" EMD, or sell that junk somewhere else. Wild rumors, false statements, and completely unsupportable speculations, will not be allowed, here on this forum. This forum is "Pro-EMD", and tall tales, of the planned demise, won't be allowed here. Back your claims, or watch the topic be locked, or deleted. Thanks, the "Mod-Squad".

[ExEMDLOCOTester]

Backorders? Ever heard "don't count the chickens, before they're hatched"? I agree with the posting, of approximately 2 to 1, on deliveries. Delivered locos pull freight, not locos on backorder. Deliver concrete facts, supporting the 7 to 1 ratio, as well as the plans for current owners, to "gut" EMD, or sell that junk somewhere else. Wild rumors, false statements, and completely unsupportable speculations, will not be allowed, here on this forum. This forum is "Pro-EMD", and tall tales, of the planned demise, won't be allowed here. Back your claims, or watch the topic be locked, or deleted. Thanks, the "Mod-Squad".

Standing & Applauding Loudly !!!!!

Thank You Golden Arm !!!!

[Engineer James]

All I wanted to do, was ask who bought EMD, and what their plans are.

[trainiac]

Backorders? Ever heard "don't count the chickens, before they're hatched"? I agree with the posting, of approximately 2 to 1, on deliveries. Delivered locos pull freight, not locos on backorder. Deliver concrete facts, supporting the 7 to 1 ratio, as well as the plans for current owners, to "gut" EMD, or sell that junk somewhere else. Wild rumors, false statements, and completely unsupportable speculations, will not be allowed, here on this forum. This forum is "Pro-EMD", and tall tales, of the planned demise, won't be allowed here. Back your claims, or watch the topic be locked, or deleted. Thanks, the "Mod-Squad".

I try not to be pro-one builder or the other, but I agree with the above.

I might also add that 30-40 years ago, EMD was out-delivering GE by an enormous margin--almost 6:1 some years--and GE survived. Although EMD is not in as good a position as GE at present, I don't think they can be called "dead".

[es80ac]

The current EMD situation can not be compared to the old GE/EMD situation where GE was starting out and hungry to be in the business. Now if the current owner of EMD is CAT, then I say you are looking at a very good turn around possibility here. But with Greenbriar, you are looking at a bunch of people interested in making a financial killing rather than sell locomotives. The best hope for EMD right now is if they turn around and sell it to someone who does care about this business.

[Komachi]

G-A,

The "Mod Squad..." Man that takes me back. Although, I was more partial to Chips, Starsky and Hutch and Kojack ("Who loves ya, baby?!?!?") myself.

Well, enough reminissing, getting back to the topic at hand...


Backorders...

Backorders are a very grey area.

A.) They don't actually exist, except as a potential serial number in a database.
B.) They haven't been paid for (unless I'm mistaken, railroads don't pay up front for locomotives, until they've been delivered).
C.) Units on backorder have been known to be canceled.

So, in regards to the discussion of GE outpacing EMD, they're an unknown factor and purely of a theoretical nature. They can be mentioned, but can't exactly be added to the equation. They have a potential to become locomotives, but aren't until the unit rolls off the erecting floor.


However, as to the discussion of the possible fate of EMD by Greenbrier...

I'm going to joint the pessimists on this one. Not because I'm an ALCohaulic (and no, I don't need a 12-step program, thanks), but because the "doom" scenerio has played out a time or two before in the past.

But, again, that's speculation only, and also to be left to the realm of theoretics and speculation... for now, anyway.


Although, since the Cat question has been brought up...

Given the current corporate climate and the animosity between the unions and the big yellow kitty, what are the odds of it actually happening. Just wondering.

[ExEMDLOCOTester]

In Janurary 1981, EMD had enough orders on the books to build 4 units and 2 engines per day for the next two years. By March of 1981 that number dropped to around 1.8 units per day and 2 engines per day for the next six months. The mass layoff was not fun. When I started in 1977, EMD enjoyed 78% of the GLOBAL market, and in 1979 we were building 5 units, 4 engines, and point something Mobile Power & Skid units PER DAY. When the bottom fell out EMD hired a consultant to find inefficiencies in the system. One issue is that EMD had 10 locomotives worth of parts laying around the property, not comitted to orders. Another issue was that EMD could make more $$$$$ due to import / export laws if the Locomotives were assembled in Canada, then shipped to the US as complete units.

In 1976 Someone high up in the food chain at EMD decided that computers were a passing fad, and EMD would not build micro processor units. That decision placed EMD 2 years behind in development and the scramble to catch up was disastrous.

[trainiac]

I'm curious... Does anyone have an idea of how low production would have to go for EMD to close up shop? Even if they're being largely outsold by GE, EMD's production in the last 2 years has still been in the hundreds of locomotives per year. Forgive me if I look to the past again, but MLW/BBD and FM both had several years of zero or single-digit production before leaving the locomotive business.

[es80ac]

Well the past few years 2002-2004 been pretty bad at EMD. If it wasn't for the UP order of SD70M, the number would be around 100 or less for each of the year according to my estimates. Domestically there were a few SD70M build for CSX, but that was pretty much about it.

I don't think order numbers alone will dictate if EMD will stay in business or not, Greenbriar might possibly looking at if or not manufacturing locomtive is profitable enough for them to continue to do that. (if they don't sell out sooner)

[mxdata]

You only need to go as far as the Winton Engine Company (Cleveland Diesel Division) for an example of how a once major business can suffer a reversal of fortunes and be successively downsized out of existence. Once one of the largest diesel builders in the world, they expanded tremendously during World War Two, just as EMD did, only to see their market collapse in the early postwar years. They had no railroad market to help keep them going, and their newest plant (Plant 3) was eliminated first (it went to EMD) putting them back in their old facilities. As the business continued to decline the assets were sold off piece by piece and their final products were built elsewhere (at EMD). What was finally left, the parts business, was folded into EMD and then sold off the Hatch & Kirk. Nowadays hardly a sign of them left anywhere except an occasional manual showing up on eBay. Sales of product in southeast Asia may look good on the books right now but usually only result in a flood of copycat parts entering the US market a little while down the road. That is one of the things that happened to Cleveland Diesel decades ago and nothing has changed much since then.

[BlackDog]

Greenbriar and Berkshire, weren't they the money firms for the WC? Maybe they will lure Reilly McCarron to EMD so he can lower the stock and sell it to the CN. It worked before...