China doesn't need (or want) GE Transportation

Posted by Steve Sweeney
on Saturday, November 18, 2017

Readers and even one or two Trains correspondents have asked me in recent days why I didn’t write about China’s CRRC as a potential bidder for GE Transportation. And, to a lesser extent, Canada’s Bombardier.

My plain and simple explanation: Both are poor fits for GE Transportation as it stands today.

Bombardier first. The Canadian industrial giant is in trouble. It makes airplanes and passenger trains for international markets but relies heavily on support from the Province of Quebec and the Canadian national government for investment and low-interest financing.

So, while having a money-making (but show me the financial statements) GE Transportation would help give a shot in the arm to the ailing company, you have to wonder if the locomotive maker wouldn’t be just there to support the rest of Bombardier. You also have to wonder if the heavy industrial components of GE would mesh well with the more refined and sleek products of Bombardier. In railroading terms, this would be an end-to-end merger with separate markets, cultures, and products. I just don’t see this as likely, unless … unless Bombardier swoops down and takes just locomotives.

Now, for CRRC.

As much as we Americans like to think that we have the biggest and best of everything. We do not. Not always, anyway. CRRC is one example. The Chinese conglomerate can make turn-key railroads: rails, ties, tie clips, rolling stock, locomotives, signaling systems — you name it, they make it for railroads. Quibble, yes quibble, over perceived quality differences between Chinese-made rail supplies and similar goods made by U.S. or European counterparts, but there are few.

The Chinese company and affiliates and sister companies have already built railroads in Africa and Asia, not to mention much of China’s high-speed rail network. CRRC supplies locomotives to South America and is now selling subway cars in the U.S.

So when it comes to GE Transportation, the only thing it has to offer CRRC are heavy-haul diesel-electric locomotives and the software that goes with them. But is it worth spending the money and then dealing with U.S. politicians and newspaper editorials bemoaning takeover of an American industry by a competing foreign power? I think not.

CRRC will do just fine without GE. I think the real question is, what happens when CRRC decides to make 4,000 hp diesel-electric locomotives to compete with what’s left of GE Transportation?

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