EMD Sale Confirmed

[ATSF90East]

Here's a link to the GM press release:

http://media.gm.com/servlet/GatewayServ ... ocid=11063

[mxdata]

Maybe now General Motors Corporation will send a fleet of plush Cadillac limousines over to take all the graduates of the company college back to Detroit, leaving the rest of the folks at EMD free to bring it back from the abyss.

[Tadman]

The official PRNewswire release.

General Motors Corp. (NYSE: GM), Greenbriar Equity Group LLC and Berkshire Partners LLC today announced that they have reached a definitive agreement in which GM will sell its Electro-Motive Division (EMD) to an investor group led by Greenbriar and Berkshire Partners. Terms of the transaction will not be disclosed. The sale agreement covers substantially all of the Electro-Motive businesses, including North American and international locomotives; power, marine and industrial products; the spare parts and parts rebuild business; and all of Electro-Motive's locomotive maintenance contracts worldwide. Both the LaGrange, Illinois and London, Ontario manufacturing facilities are included in the agreement.

[Komachi]

Ok, EMD's more or less been sold (depending on the UAW, from what I've read), what are the Vegas odds of Berkshire (Greenbriar) continuing locomotive production over gutting and selling off the various sub-divisions of EMD, as has been speculated here in other discussions regarding the (then rumored) sale?

[stentman]

That is difficult to speculate on without having an insiders look at the EMD books. One thing though that is an absolute certainty, is that the equity investors are in this to make a profit, and as much profit as possible. They bought EMD because they saw value in something, whether that is breaking up the company or reviving EMD into the dominant locomotive / engine builder you can be sure that the course they choose will give them the best return.

I think you'll know pretty soon what they intend to do - they will not sit long on an asset like this without making some major changes to unlock value. I'm personally hoping for the revival of a great locomotive works as mx stated above. There is a lot of potential here, and I hope they can execute. I'd also love to see a PO from BNSF for some locomotives this year. How many years has it been? Too long.

[Nasadowsk]

Let's see:

Huge renewal parts business to thousands of clients on every continent, engineering/tooling costs already swallowed by GM, plus a slow and on the way out locomotive manufactuing operation.

-Or-

Huge cost to develop a new prime mover to meet future EPA regulations, new locomotive designs, and then attempting to market them.

Gee, isn't too hard to figure out. I figure, at best, EMD will be making diesel engines for some new applications where they can squeeze the design past the EPA. New locomotives? They'll fill out their existing orders and whatnot.

The thing being, the buying company wants profits or instant cash for what they paid. That sugessts strongly that loco production will go away.

Or, they could turn and sell EMD to bombardier. I don't see why BBD would want it, though.

[byte]

Or, they could turn and sell EMD to bombardier. I don't see why BBD would want it, though.

I was actually thinking of Alstom instead. EMD's already done work for them (the prime movers for the new NJT locomotives), and while they have a good foothold in the railcar industry in north america, they're still relatively unproven in locomotive design. Buying the locomotive-related assets from the new owners of EMD would give them a great start in America, and unlike GM, Alstom's primary purpose is the construction of trains, so we wouldn't see the skimping of R&D as we've seen under GM's reign.

[Nasadowsk]

<i>I was actually thinking of Alstom instead. EMD's already done work for them (the prime movers for the new NJT locomotives), and while they have a good foothold in the railcar industry in north america, they're still relatively unproven in locomotive design.</i>

Maybe.

<i> Buying the locomotive-related assets from the new owners of EMD would give them a great start in America, and unlike GM, Alstom's primary purpose is the construction of trains, so we wouldn't see the skimping of R&D as we've seen under GM's reign.</i>

Actually, they build ships, electronic stuff, etc etc etc. They're semi big in France w.r.t. rail equipment, but it's not their exclusive business by any means. But then, MOST rail equipment makers can't survive on the rail market alone.

But, for BBD or Alsthom, beyond some design data and maybe prime mover designs, there's nothing much EMD's manufacturing brings to the table. Both can design a locomotive, the 710 and 645 are acnient designs with real issues that need solving to be viable 10 years from now. I won't even mention the H motor...

Alsthom already makes diesel engines, some of which are suitable for lightweight diesel locomotives. I suspect if they wanted to make a go in the US passenger market, a serious one, they could really cut into GE's lead, provided they can get the reliability. GEs' prime movers are far too heavy for passenger use. Alstom's are much better suited. They could field and market a 100ton, 4000 hp passenger diesel in the US easy, IMHO. That would basically kill MPI's prospects, and seriously challange GE. But, right now, not many passenger locomotives are needed in the US (there's a surplus), and the few agencies that are buying have no real idea what they're doing anyway....

[Tadman]

Alstom has no money. It's already heavily subsidized by the French Government and couldn't afford to buy EMD. But yes, I don't see much in EMD's future for new engines. They'll likely function as a parts manfacturer and leasing company.

[jmp883]

I'm not going to speculate on what will happen to EMD. I'm not an economic expert, I can barely manage my own personal finances.........

It just seems strange to think that the pioneer of diesel locomotion may no longer be a supplier.

My other big hobby interest is aviation and I've always loved what Donald Nyrop, former CEO of Northwest Orient Airlines said in regard to buying engines for his jets:

"When I want jet engines I'll go to Pratt & Whitney, when I want lightbulbs I"ll go to GE."

Of course this statement was made when GE was a relative newcomer to the jet engine field and P&W was already an established entity. The big difference here is that P&W, as well as GE and Rolls-Royce, all have a fairly equal share of the jet engine market with products that are all very close to each other in efficiency and cost. Unfortunately the same can't be said for the locomotive market. GE surpassed EMD and EMD has never been able to completely catch up. And of course GE wouldn't have remained as diversified as they are if the products they produced didn't hold up in the marketplace. It just strikes me a bit ironic that GM, a corporation that is based primarily on building vehicles for various modes of transportation has to sell EMD while their chief competitor, who started out making electrical equipment for residential and industrial uses, is now the leading manufacturer of locomotives in North America.

Ya gotta love it......

Joe P

[Nasadowsk]

<i>It just seems strange to think that the pioneer of diesel locomotion may no longer be a supplier.</i>

Hey, RCA's gone. They pioneered virtually everything electronic, prior to the transistor (which came out of left field and helped kill them, they never got as good or dominant as they should have been in the field). IBM had their tough times - Sperry's out of it (Univac, anyone?). Pioneers come, they stay, sometimes they go. To be fair, EMD was'nt the first with a diesel loco, but they were the first to make it work well, and man, they nice styling pre WWII. Industrial design - another lost art in the US

<i>"When I want jet engines I'll go to Pratt & Whitney, when I want lightbulbs I"ll go to GE." </i>

Heh. Westinghouse fared much worse - test pilots comented of the various Westinghouse disasters "They put out more heat than their toasters and about as much thrust" Circle W got creamed in the field...

<i>Of course this statement was made when GE was a relative newcomer to the jet engine field and P&W was already an established entity.</i>

Commercial. GE was a force from day one in military. But Pratt had the then revolutionary J-57, which was a virtual bombshell when it came out.

<i>The big difference here is that P&W, as well as GE and Rolls-Royce, all have a fairly equal share of the jet engine market with products that are all very close to each other in efficiency and cost.</i>

Get a few airline pilots started on GE Vs Pratt Vs Rolls, some day

<i> Unfortunately the same can't be said for the locomotive market. GE surpassed EMD and EMD has never been able to completely catch up. </i>

GE did it on marketing. They've always been 2nd tier to EMD, but they can out market and hit the numbers that make accounting happy, and wrap it up in a slick brochure. Neither's really a huge force overseas, and not a factor in Europe, though that's a function of management rather than engineering (no reason why EMD couldn't make a competitive diesel in Europe, or EMUs for that matter - GM has the best engineers out there, they just never get to show it...)

Of course, now it's GE vs MPI, I guess. Always boils down to Edison Vs Westinghouse I the end

[jmp883]

Nasadowsk,

You brought up some great points that I had forgotten about, especially the stuff about Westinghouse!

You're also right about the PW vs RR debate.

After reading your post I also remembered that the US's first jet engine was built by GE!

Well, this is a railroad forum, not an aviation or home appliance forum.


Joe P

[NellsChoo]

I don't get it. Why would GM want to loose EMD?? After all these years?? It's like Bentley and Rolls Royce now being owned by Germans. Jaguar being owned by Ford. Will EMD go to the Japanese?

I dunno... I don't get it... selling to non-transportation people seems like a death sentence...

Jonelle

[Stephen]

Jonelle,

Greenbriar Equity Group LLC actually specializes in investing in transportation related assets, so in some ways going from GM (with its focus on automobiles) to Greenbriar might help EMD.
That said, if the new owners don't put some money into R&D there isn't much of a future for EMD.

- Stephen

[Nasadowsk]

<i>After reading your post I also remembered that the US's first jet engine was built by GE! </i>

Yeah, then P&W came out with the J-57, J-52, J-58, J-75, JT-3D, etc, and everyone kinda forgot about GE

Today, they're all the same - simply amazing. Unless you've seen them upclose and talked to the design guys, you have NO idea just how amazing the modern jet engine is.

GM's tossing EMD for a simple reason - more money's going in than comming out. Same reason they dumped Oldsmobile. Will Greenbriar want to dump the R&D in? They know, we don't. We can only speculate. One can argue it both ways, but I don't see a reason to dump millions into R&D for what's far from a sure thing, especially with a renewal parts bussiness that's paid for and just gravy, now.

Or, they could go dormant, and wait for the right time to get back in.