I was involved in some manner with locomotive purchases from the late 70s to mid 90s.
My take is more that GE caught up with EMD in terms of quality and design and beat them in price because of a lower cost structure.
The incremental improvements they made to the Dash 7 and Dash 8 line were pretty drastic. A C40-8 was a pretty good locomotive in most every respect and not anything like a U36C.
EMD paid autoworker rates on labor in La Grange while GE paid much lower machinist and electrician rates at Erie. GE costs were lower so they could undercut EMD most every time.
GE also managed to capitalize on the inherent efficiency advantage of their four stroke. They were typically 1-2% better in fuel economy during a time when it really started to matter.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
I've never run a GE. A couple three F's and a GP9. Oh, and some ALCO's. Love those ALCO's.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Falcon48 The railroad I worked for in the 1980's-90's (now merged out) had been an exclusive EMD customer for many years. They switched completely to GE for new locos after serious quality problems with new EMD power (it may have been the SD-50 or the SD-60) and stayed that way to merger.
The railroad I worked for in the 1980's-90's (now merged out) had been an exclusive EMD customer for many years. They switched completely to GE for new locos after serious quality problems with new EMD power (it may have been the SD-50 or the SD-60) and stayed that way to merger.
I remember reading about problems with the 50 series, especially the GP50 model.
I think most fans still think of EMD and GE products as they were back in the 1960s and 1970s. While I have always favored EMD over GE myself (My favorite engines to run are the SD70m model, although ours are beginning to show some age.) I have to admit that the quality of EMD has slipped over the years. GE on the other hand seems to have improved in the same time frame.
Jeff
They were ready to come back though before Union Pacific came calling and ended plans to acquire SD80MAC's.
Toyota and Honda started making serious inroads into GM's sales in the 70's. Remember the Arab Oil embargo of 1974? As a result Car sales shifted to smaller cars. GM had trouble building smaller cars for less money and still being profitable. There were two direct results from this and one indirect result. First GM needed to invest a lot of money into the Car divisions, which took away from the other GM divisions, and second GM started to outsource a lot of their parts production without beefing up their Quality Control staff with results as you can imagine. The indirect effect of these moves caused EMD management to go from a place where up and coming promising talent could go for the initial independent fledging before they were sent to manage one of the Car divisions, to a place where "Old-Boy" managers who couldn't cut it with the Car divisions were sent instead of firing or retiring them. The 50-series badly hurt EMD, the 60-series were better but did have more teething problems than they should have. Almost all 60-series locomotives are still around, particularly if they were purchased rather than leased.
Market focus represents the capacity of managers to constantly — and with clinical detachment — focus the critical cash and human resources of a company and its portfolio only on market opportunities that can create and grow long-term, positive net cash flow. This means that managers and teams must make the tough choices of where to compete and to not compete. It means quickly exiting market segments and opportunities for products, services, and technologies where it just isn’t possible to create positive net cash flow.
There are many examples of companies whose market and strategic planning processes and culture are highly market-focused. General Electric, Wal-Mart, Sony, Toyota, Honda, and Microsoft are a few examples. All of these companies have track records of driving market focus toward opportunities where they can create both wide buyer choice and high cash flows. They also share the clear ability to quickly exit market opportunities that cannot create high, long-run net cash flow.
http://iveybusinessjournal.com/topics/strategy/how-general-motors-lost-its-focus-and-its-way#.VK113NLF-NA
So went General Motors autos. So went General Motors locomotives?
There is also the financial aspect. General Motors was having significant financial problems and could not easily internally finance sales in the last 10+ years. GE, on the other hand, has a very large financial division and has been aggressively providing financial incentives to companies who buy GE products.
GE was the first to come to market with a locomotive that reduced fuel consumption using computers in the 1980s. Reduced fuel costs equaled reduced overhead. After eating EMD's dust, GE invented a better mouse trap and came out ahead.
Also, the wave of mergers reduced the number of Class 1s (the biggest purchasers of new power) to the current four. Most regionals and short lines rely on used locomotives because they don't have the funds for new motive power. For example, there are shortlines, such as the Riverport Railroad, that are using Baldwins from the 50's.
Finally, don't forget all of the companies that started rebuilding locomotives. An SD-40 that has had a new prime mover installed or rebuilt is still cheaper than a brand new locomotive.
Once dominant EMD became complacent, and GE came up from behind to take over the market. That's what happens when managers fall asleep at the switch.
As my boss use to say, EMD's are a Cadillac in a Ford market. In other words, historically EMD,s price has always been higher than GE's and in large institutions such as class one railroads the purchasing department can't justify the extra cost. In the marine transportation business they are more Ma and Pa operations and they know the operational costs a lot better and buy what they want no matter what the initial cost.
Tier 4 has only very recently been an issue and has only affected actual locomotive production this year.
I believe that he's talking about the past 30 years and how EMD went from the dominant locomotive manufacturer to one that more often than not, appears to be barely holding on.
A combination of some of the above - but mainly the inherent technical limitations of the 2-cycle engine design with regard to being able to meet the Tier 4 less air pollution (particulates) requirement; and a management that was too short-sighted - perhaps understandably, what with all the other corporate maneuvering that was preoccupying them - to either recognize and accept that risk, or to develop a feasible alternative in the available time.
Whether they can do that now and make a comeback depends on the funding, patience, and technical know-how from Caterpillar.
It'll make a great case study in the business schools in a few years, when we know how it all turned out.
- Paul North.
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