What's next for GE and Erie?

[MEC407]

Op-ed from GoErie.com:

Erie's GE workers for now are left to guess what work would be routed to Texas or wherever. Zaczyk speculated that it would involve final assembly of locomotive kits, much like GE's arrangement with some foreign customers.

But Texas isn't Kazakhstan, and any sizable shift of work from Lawrence Park to elsewhere in the country would be worrisome. That's especially so if GE can get serious labor savings out of the deal.

Read more at: http://www.goerie.com/apps/pbcs.dll/art ... /OPINION05

[GEVO]

It's contract year so the games have begun. First Lynn, then Texas. Next an impact study. All trying to pin everything on the workers and make them look bad. Where will it end up? Who knows. If recent history of corporate greed is any example, the jobs will be shifted south or overseas while the ones at the top continue to rake in millions.

Krenicki, who led GE Transportation from June 2000 to January of 2003, collected a salary of $1.4 million. He also received a $3 million bonus, $4.07 million in option awards, $4.5 million in deferred compensation and $192,000 in other compensation for a total of $13.2 million.

Rice, who ran GE Transportation from 1997 to 2000, collected a salary of $1.82 million. Combined with his bonus, option awards, deferred compensation and other income, Rice earned $14.3 million.

Jeff Immelt, the company’s chairman and chief executive, was paid a total of $21.4 million, according to the report.

[RickRackstop]

I wonder what GE is worried about? Up till now their price has been lower than their main rival EMD.

[MEC407]

Maybe CAT is going to lower EMD's prices. Hard to say...

[GEVO]

Looks like they made a decision.

May 12, 2011, GE Transportation to build plant in Texas, add 250 jobs in Erie

Lawrence Park-based GE Transportation has announced plans to build a new $96 million manufacturing facility in Fort Worth, Texas, creating about 500 jobs.

[Ira]

What is the long term picture for the Erie plant in GE bigger plans? Will Erie be eliminated all together or down sized to a small # of employes. Why not invest the $ in the Erie plant, plenty of room there, expand. Just looks like GE is making way to eliminate the grip of the old ways of doing business.

[MEC407]

Article from GoErie.com:

Caterpillar might be described as the face of the competition.

It is the largest player in the mining trucks business, a segment for which GE Transportation builds key components. But Caterpillar is also the new owner of Electro-Motive Diesel, GE's key competitor in the locomotive business.

GE Transportation spokesman Stephan Koller has said in the past that Caterpillar pays its employees between $14 and $18 an hour, while GE employees in Erie average about $30.

There's little doubt that GE Transportation would like to close that gap, moving wages closer to market-competitive wages established recently at GE plants in Louisville, Ky., and Schenectady, N.Y.

Read more at: http://www.goerie.com/apps/pbcs.dll/art ... EWSSITEMAP

[MEC407]

More on the GE labor negotiations:

The company's four-year labor agreement with those workers, including 3,200 at GE Transportation in Erie, expires at midnight tonight.
...
While GE Transportation has added nearly 1,000 workers in recent months, including most of those laid off in 2009, it seems fair to predict that some future expansions might be shifted to lower-wage workers in Texas.

Roger Zaczyk, president of Local 506 of the United Electrical Radio & Machine Workers in Lawrence Park, said by e-mail Saturday afternoon that, "The negotiations have been slow. GE is trying to use the tactic that 'everyone else is taking concessions' and 'the volatile economic climate.'"

Read more at: http://www.goerie.com/apps/pbcs.dll/art ... EWSSITEMAP

[MEC407]

GE to invest $200 million in locomotive plants. From Reuters:

General Electric Co said on Sunday its GE Transportation unit will invest about $200 million in a Fort Worth, Texas, locomotive plant and to upgrade its operations in Erie, Pennsylvania.

GE Transportation will create more than 500 new manufacturing jobs in Texas by 2012 with the potential for up to 275 additional jobs in subsequent years, the company said.

The Texas facility will start production in the third quarter of 2012.

GE also said it will invest in technology upgrades at its more than 100-year-old manufacturing facility in Erie, Pennsylvania, to meet accelerating domestic and global demand.

This year, GE Transportation has announced more than 1,900 new U.S. jobs, including nearly 1,000 at its Erie site.

Read more at: http://www.reuters.com/article/2011/09/ ... VK20110918

[MEC407]

From American Machinist:

Citing “rising demand for products and exports” of its locomotives and mining equipment, GE Transportation is launching a $231-million capital-improvement program for plants in Pennsylvania and Texas.

Click here to find out more!
For its Erie, Penn., locomotive plant, GE outlined a $58-millon project for new research and testing cells, facilities improvements, and equipment to reduce engine emissions and improve fuel efficiency of its locomotives, marine engines, and stationary power units. The testing cells are intended to develop a new locomotive design that will meet the U.S. EPA’s emerging Tier 4 emissions standards (taking effect in 2015.)

Also at Erie, GE will invest $38 million to increase capacity and modernize machining, equipment, and tooling producing locomotives, mining truck drive systems, and other transportation products. Another $40 million is earmarked for plant upgrades and site beautification at the Erie plant.

Read more at: http://www.americanmachinist.com/Classe ... &NIL=False

[MEC407]

Profits up 94% at GETS.

From Erie Times-News:

GE Transportation, a manufacturer of locomotives, mining equipment and products for other infrastructure industries, said that third-quarter profits rose 94 percent to $196 million, up from $101 million in the third quarter of 2010.

Revenue also jumped by 48 percent, to $1.287 billion, for the three-month period that ended Sept. 30. That's up from revenue of $869 million from the same period a year ago.

Read more, and see a nice photo of locomotives under construction, at: http://www.goerie.com/article/20111022/ ... rd-quarter

[Allen Hazen]

Rough arithmetic: GE Transportation's earnings (<$200M) for the quarter were about 6% of GE's total ($3.4 Billion) for the quarter.

Not sure how many locomotives GE Transportation sold in the period, but I'm guessing between 100 and 200 (200 would make an annual rate of 800, which is about what GE's peak in the past decade has been). So, a $2 Million - $3 Million apiece, sales of new locomotives are somewhere in the range of one sixth to one half of GE Transportation's revenues for the quarter: a fairly wide range, but as of right now it's the ONLY estimate I have of how big a fraction of GET's business is locomotive sales. (Obviously the locomotive business, when you factor in spare parts and maintenance contracts, is bigger than just sales of new units.)

(Thanks, MEC407, for watching for these news items and letting us know about them! Much appreciated at my end.)

[MEC407]

With Cat/Progress cutting EMD worker wages in half, it should be interesting to see what effect that has on EMD locomotive prices. If Cat/Progress uses that as an opportunity to price their locomotives significantly lower than GE, GE would have to respond in some way or another if they want to maintain their position as North America's #1 locomotive builder.

Healthy competition is usually good, but the battle to be the lowest-priced builder of anything, whether it's computers or refrigerators or automobiles, can often (but not always) result in reduced product quality/reliability. Considering how remarkably reliable locomotives have become in recent years, I'd hate to see the industry go backwards and end up where it was in the days of the SD50 and C39-8.

[MEC407]

From The London Free Press:

Many Electro-Motive workers would not only earn half of what they had been making if they accept the contract offer on the table, they'd earn about half the wages of General Electric locomotive employees doing similar jobs in Erie, Penn.
...
"To build locomotives is not an easy thing," Zaczyk said. "There are miles of wire in there. You're like in a computer room in the front of a GE locomotive. There are all kinds of diagnostics going on, all kinds of lights and gizmos and you name it. It's almost like a spaceship."
...
"We're talking about $2-million units here, not $20,000 cars. It's not like flipping burgers. If Progress Rail drops the price a bit because they cut salaries, do you think a customer will care? The quality isn't going to be there. Every day that our plant is down, GE is going to capitalize on that."

Read more at: http://www.lfpress.com/news/london/2012 ... 42821.html

[Jay Potter]

This and a number of other Internet discussions I've read in recent years have included references to GE locomotive prices being lower than EMD locomotive prices; however I don't recall any of those discussions citing any actual prices. Can anyone provide any specific pricing examples?