I read Train's article on EMD last night.
I recall, when news of the sale went through, there were heated discussions about the 710 being dead now, that it could never pass Tier 4.
Well the article reiterates what a couple people have said, EMD already has the NOX resolved without Urea BECAUSE it's a 2-cycle and they think they can meet tier 4 with the 710 without sacrificing power and efficiency. Further, they think they'll meet it before GE and may have a more compelling solution.
Does this change anyone's opinions on the viability of EMD's 2-Cycle platform?
Also, confirmed that they are going to bid on the new Amtrak order and that is in part why they now have EMD Muncie.
The only worrisome issue is that the President Hamilton resigned. He was a big proponent of the work with the 710 and spearheaded much of the post spinoff success of the company.
Given the quote attributed to Marti Lenz regarding 4-cycle diesels and Tier 4, EMD may have concluded that it can't qualify the 265H. But CAT has non-locomotive "irons in the fire" with regard to Tier 4 compliance and one would think that it's putting serious R&D money into qualifying some of its 4-cycle diesels, where their applications require it. Whether results there are applicable to the locomotive application we won't know anytime soon. OTOH, the 710 and/or smaller/larger derivatives might become CAT's Tier 4 solution in some of its other markets, such as stationary generation and marine propulsion. This will be interesting to watch.
Cat has to be looking at EMD's Stationary and Marine sales And one might assume that those customers would probably want to stick with the EMD engines.
It appears that the EMD is now owned in part by Berkshire-Hathaway. I wonder what brand of locomotives BNSF will buy next time they go shopping?
Thanks to Chris / CopCarSS for my avatar.
Murphy Siding It appears that the EMD is now owned in part by Berkshire-Hathaway. I wonder what brand of locomotives BNSF will buy next time they go shopping?
Does Berkshire Hathaway have an interest in Caterpillar? EMD is wholly owned by Progress Rail, which in turn is wholly owned by Caterpillar.
CSSHEGEWISCH Murphy Siding: It appears that the EMD is now owned in part by Berkshire-Hathaway. I wonder what brand of locomotives BNSF will buy next time they go shopping? Does Berkshire Hathaway have an interest in Caterpillar? EMD is wholly owned by Progress Rail, which in turn is wholly owned by Caterpillar.
Murphy Siding: It appears that the EMD is now owned in part by Berkshire-Hathaway. I wonder what brand of locomotives BNSF will buy next time they go shopping?
General Motors sold EMD to Greenbriar Equity Group and Berkshire Partners in 2005. They in turn sold it to Progress Rail in August of this year. As far as I know Berkshire-Hathaway doesn't have an interest in Caterpillar.
Norfolksouthern17 CSSHEGEWISCH: Murphy Siding: It appears that the EMD is now owned in part by Berkshire-Hathaway. I wonder what brand of locomotives BNSF will buy next time they go shopping? Does Berkshire Hathaway have an interest in Caterpillar? EMD is wholly owned by Progress Rail, which in turn is wholly owned by Caterpillar. General Motors sold EMD to Greenbriar Equity Group and Berkshire Partners in 2005. They in turn sold it to Progress Rail in August of this year. As far as I know Berkshire-Hathaway doesn't have an interest in Caterpillar.
CSSHEGEWISCH: Murphy Siding: It appears that the EMD is now owned in part by Berkshire-Hathaway. I wonder what brand of locomotives BNSF will buy next time they go shopping? Does Berkshire Hathaway have an interest in Caterpillar? EMD is wholly owned by Progress Rail, which in turn is wholly owned by Caterpillar.
YoHo1975 ... they think they can meet tier 4 with the 710 without sacrificing power and efficiency. Further, they think they'll meet it before GE and may have a more compelling solution....
... they think they can meet tier 4 with the 710 without sacrificing power and efficiency. Further, they think they'll meet it before GE and may have a more compelling solution....
Thinking you may be able to do something, and having an actual solution are not one in the same.
As of today, the 710 isn't any where near making Tier 4.
Well, I understand the 1-710 engine at Argonne has been tested to Tier 4. They just haven't productized it.
As I've said many times, this is not my engineering expertise, but my experience is that if they're willing to talk to "the media" about it, then they are fairly well along in a solution. It's not pie in the sky in other words. They have an actionable plan that they believe will work.
With all the caveats of futurelooking statements that such a comment implies.
Of course, they just THINK they'll meet it, but to me, making such a claim in a trade magazine is throwing down a gauntlet. And I'm wondering if this public statement by them will change any of the opinions on this board? Some of which seem to find this impossible. EMD says it isn't.
A test Cell is One thing however Real World Testing and running out here is another. See when the EPA Mandated all the Crap on the OTR trucking less than 7 years ago for lower Emissions and Cummins Volvo and Detroit went with EGR. Cat came out with the Acert tech. Companies were told that these engines had TESTED at the same Performance and MPG as the Older Models. Companies were like We Will see.
They came out and All HELL BROKE OUT. The EGRS were Unreliable as HELL and the MPG went from 6-8 depending on engines to 5-6 If you were LUCKY. Then the EPA said So SORRY you need to add a DPF also and it got worse we lost more MPG then we had another issue REGENS that were trucks were Burning down. Yet the EPA said you have to live with it. Now they have forced DPF and SCR on the OTR industry and if your lucky you might get 5 MPG.
The next 2 Generations for Emmissions reductions for the Locomotive Industry and consider this CAT had been the Dominate OTR Engine from Kenworth Peterbilt Volvo Mack and International. Now they are not even IN THE OTR INDUSTRY. Why did they leave the EPA. In order to meet the 2010 dealine it would have cost them close to IIRC in the area of 4 BILLION dollars for the technolgy needed for OTR Trucks. Now remember they were all ready compliant with the 2007 regulations. What is it going to cost for the 710 to be made compliant for Tier 4 for a production run of only 100 units a year.
YoHo1975 ... making such a claim in a trade magazine...
... making such a claim in a trade magazine...
Trust me, Trains Magazine is not considered a "trade" magazine by anyone who actually works in the industry. They are often the last ones to know what is really going on in railroading. This is the same rag who a few years ago predicted the SD70ACe would be embraced by the RRs and easily out sell the GEVO, that GM had no intention to sell EMD, when the rest of us in the industry knew it was a done deal, that the SD50 was actually a good locomotive, etc, etc.
Besides, you are ignoring the 800 pound gorilla in the room, GE. They have a lot more resources to throw at this than even a CAT owned EMD has available. Let's just say for the sake of discussion that EMD is right, that an advanced 2 cycle diesel will be a better platform from an emissions perspective. What you don't know is GE is already investigating new technologies such as this from an R&D angle, and if it were the case, nothing would stop them from selling their own 2 cycle based on GEVO components. Don't even argue about money. They could develop a new engine for less than $100 million, pocket change for GE. And don't even argue no experience in 2 cycle diesel engines because they are a major supplier of 2 cycle EMD parts. Actually, GE's replacement parts are better engineered and manufactured than the original EMD made parts.
edbenton A test Cell is One thing however Real World Testing and running out here is another. See when the EPA Mandated all the Crap on the OTR trucking less than 7 years ago for lower Emissions and Cummins Volvo and Detroit went with EGR. Cat came out with the Acert tech. Companies were told that these engines had TESTED at the same Performance and MPG as the Older Models. Companies were like We Will see. They came out and All HELL BROKE OUT. The EGRS were Unreliable as HELL and the MPG went from 6-8 depending on engines to 5-6 If you were LUCKY. Then the EPA said So SORRY you need to add a DPF also and it got worse we lost more MPG then we had another issue REGENS that were trucks were Burning down. Yet the EPA said you have to live with it. Now they have forced DPF and SCR on the OTR industry and if your lucky you might get 5 MPG. The next 2 Generations for Emmissions reductions for the Locomotive Industry and consider this CAT had been the Dominate OTR Engine from Kenworth Peterbilt Volvo Mack and International. Now they are not even IN THE OTR INDUSTRY. Why did they leave the EPA. In order to meet the 2010 dealine it would have cost them close to IIRC in the area of 4 BILLION dollars for the technolgy needed for OTR Trucks. Now remember they were all ready compliant with the 2007 regulations. What is it going to cost for the 710 to be made compliant for Tier 4 for a production run of only 100 units a year.
Exactly. Also, no one should be surprised when many of the EPAs future mandates, including Tier 4, get pushed back "indefinitely" after the results of the 2010 mid-term elections, and what I'm predicting will happen after the 2012 elections. Politics is as much a part of this as engineering.
GP40-2 YoHo1975: ... making such a claim in a trade magazine... Trust me, Trains Magazine is not considered a "trade" magazine by anyone who actually works in the industry. They are often the last ones to know what is really going on in railroading. This is the same rag who a few years ago predicted the SD70ACe would be embraced by the RRs and easily out sell the GEVO, that GM had no intention to sell EMD, when the rest of us in the industry knew it was a done deal, that the SD50 was actually a good locomotive, etc, etc. Besides, you are ignoring the 800 pound gorilla in the room, GE. They have a lot more resources to throw at this than even a CAT owned EMD has available. Let's just say for the sake of discussion that EMD is right, that an advanced 2 cycle diesel will be a better platform from an emissions perspective. What you don't know is GE is already investigating new technologies such as this from an R&D angle, and if it were the case, nothing would stop them from selling their own 2 cycle based on GEVO components. Don't even argue about money. They could develop a new engine for less than $100 million, pocket change for GE. And don't even argue no experience in 2 cycle diesel engines because they are a major supplier of 2 cycle EMD parts. Actually, GE's replacement parts are better engineered and manufactured than the original EMD made parts.
YoHo1975: ... making such a claim in a trade magazine...
Can you cite the issue dates for your contention that TRAINS predicted GM wouldn't sell EMD(I seem to remember reading the opposite) and that the SD70ACe/M-2 would outsell the GEVO? I do recall reading comments like that on the forums but not in the magazine.....
There's no question that Caterpillar is entering the locomotive business as an underdog but, like GE, they are one of the world's largest and most respected builders of Capital Equipment and have a strong track record of doing well with businesses they acquire. I.M.O the biggest boost to EMD's business will be CAT's ability to provide financing to locomotive customers, a General electric striong point...
I'm just glad to see two strong US based competitors in the Global Locomotive Market..
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
Exactly, nobody is suggesting that Cat isn't the underdog. I'm not trying to claim that EMD is perfect and it will all work out and they will be number one and life will be good.
I'm merely saying that that which was rumor and fanboy speciulation has now made it from named EMD sources into industry magazines. It is no longer just rumor.
And it took big monstrous GE years to take over for GM, Money didn't solve their problems immediately then so I don't think money is going to solve those technical problems now.
Even if I agree that Trains isn't an industry magazine, Railway age has the same exact quotes on the subject. So again, EMD has told the public: "We WILL do this."
Yes, ACERT had issues, There were rumors that one thing CAT wanted out of EMD was the talent that made the 710 T2 compliant .
I have a friend that works in one of the major trucking manufacturers (won't say which) who is flabbergasted that GE and EMD have managed to meet T2 with their products and their fuel economy and emissions, so giving chapter and verse on the problems of the trucking industry really doesn't hold sway with me.
The only thing I've seen Trains say about EMD is that the ACe and M-2 have marked a small resurgence in quality and orders. And that appears to be true. EMD would be gone before the ACe was in existence if it weren't for UP and their giant SD70 order. That is no longer the case. EMD makes sales and in fact, in this horrible economy, assuming the graph in Trains is accurate, GE has given up far more production than EMD. They of course had further to fall.
This is a message board, and even the technically knowledgeable are not privy to everything going on in the engineering groups at GE and EMD, or, if they were, they certainly wouldn't have the right to talk about it.
Are GE's 645 parts better all around or is it just their 645F block that is better?
Do they make a 1033 part as well?
It's also worth remembering that GM was trying to stave off financial issues for much longer than just the past couple of years and EMD suffered because of it.
We shouldn't conflate engineering issues and corporate issues with regards to recent EMD history and what they and their platform are capable of.
The axiom of Fast, Good, Cheap, pick 2 would seem to apply in Locomotive manufacture just as it does in Electrical and computer engineering.
With regard to the fast-good-cheap triangle, have there been instances with EMD and GE in which a railroad that was inclined to place an order with one of those manufacturers ended up ordering from the other manufacturer because the latter manufacturer could deliver the locomotives more quickly?
Back in 1999 we would have been in what is call Teir Zero Emmisions. Then in 2000 We had Teir 1 Rammed UP the collective OTR Industrys Backside. See in 1999 The EPA without any evidence accused the Engine Manufactors of having a so called Cruise setting on the Engine Settings. Were the Engine had a special Fuel Setting were it polluted more but got better Fuel Economy. They never could Prove it but refused to Certify any of the New Engines for 2000 Unless the Engine Makes Agreeed to the Sped up Introduction of the Emissions Standards. So basically they Forced the Engine Makers to agree that they were cheating and then as Punishment forced them to cut the timelime in 1/2 on each step for reductions in emmissions. In 2000 there was the First change we got by with no loss in Mileage just ran them hotter for less NOX. Then the Second step which was not supposed to happen til 2008 was forced on in 2004. The Next one which was not even supposed to happen til 2015 was forced on us in 2008. Then we have the last round which was supposed to be in 2019 yet the EPA forced it in 2010.
Do not give the EPA or the CARB board an inch or they will take 20 MILES from you from your HIDE every time.
I don't believe there is any meaningful connection between Caterpillar and Berkshire Hathaway. B-H's public filings certainly do not include Cat among its operating entities. There is a web site out there -- "Warren Buffet Watch" -- that lists the 15 largest investments of B-H in companies they do not control. Cat is not on that list.
So the answer is that no, nobody's opinion has changed on this topic with the recent information.
There are some people I've encountered who wouldn't believe that EMD could make a Tier 4 710 if they had a 16-710XX-T4 dropped on them.
My opinion of EMD's R&D efforts and its future competitiveness with GE hasn't changed because I didn't -- and still don't -- have an opinion on those issues. The article is an interesting discussion of some -- but I'm relatively confident not all -- of EMD's plans; however I base my opinions regarding locomotive technology on (1) the number of locomotives that railroads actually order and (2) how reliably those locomotives perform after delivery.
The carriers want to see at least 2 manufacturers of locomotives....so they can play each off against the other and attempt to secure better pricing on the locomotives they actually end up buying. I do believe that the carriers have actually bought 'inferior' product, just to keep the 'competition' in business.
Never too old to have a happy childhood!
YoHo1975 It's also worth remembering that GM was trying to stave off financial issues for much longer than just the past couple of years and EMD suffered because of it. We shouldn't conflate engineering issues and corporate issues with regards to recent EMD history and what they and their platform are capable of.
Very, very true. I recall that during GM's financial struggles during 1991-1992, EMD took major engineering headcount and capital investment hits. No doubt the ramifications from these cuts were felt right up to the point where GM divestied itself of EMD!
Mike
YoHo1975 It's also worth remembering that GM was trying to stave off financial issues for much longer than just the past couple of years and EMD suffered because of it.
What??
From 1980 to 2005, when EMD was sold, GM made $60 Billion in profits.
GM didn't start tanking until 2 years after it sold off EMD.
GM didn't invest in EMD not because it didn't have the money, it realized that EMD's base platform could no longer compete with GE in its current form, and wasn't worth investing in.
If you want to be an EMD fan-boy, that's ok. Just stop trying to rewrite history in the process.
GP40-2: GM didn't start tanking until 2 years after it sold off EMD.
No GM started to "Tank" when Roger Smith became chairman in the 70's. It just took 30 years for events to catch up. The main problem was that in 2006 GM was paying 3 times as many people (retirees) to not work for them as they did to work for them. For those 30 years the problem was GM's one-size-fits-all brand of management that hurt the non-consumer product divisions, such as Detroit Diesel, Allison, , Terex, EMD, and Fridgedaire a non core product. EMD was constrained by a GM style labor agreement where the engine division had something like 100 different job description where GE had only 4. When things get a little slow 4 people is all you need to build one diesel whereas at EMD you would still have to have 100, most of which would do their little part and spend the rest of the day reading the newspaper. Then there's the making process where every manager has to get a consensus to get a decision anyrthing done. Detyroit Diesel is a good example. For many years they had been losing money and as a money losing proposition GM didn't want to put more money into it. When Roger Penske took over it made a profit in its first year. Penske's method is to give each department head all the authority to make the decisions and if you screw up your fired. He didn't have to fire many people.
GP40-2 YoHo1975: It's also worth remembering that GM was trying to stave off financial issues for much longer than just the past couple of years and EMD suffered because of it. What?? From 1980 to 2005, when EMD was sold, GM made $60 Billion in profits. GM didn't start tanking until 2 years after it sold off EMD. GM didn't invest in EMD not because it didn't have the money, it realized that EMD's base platform could no longer compete with GE in its current form, and wasn't worth investing in. If you want to be an EMD fan-boy, that's ok. Just stop trying to rewrite history in the process.
YoHo1975: It's also worth remembering that GM was trying to stave off financial issues for much longer than just the past couple of years and EMD suffered because of it.
It would be nice if this post made a point besides being insulting.
Making 60billion in 20 years is nice, but doesn't actually tell you anything. Over the course of those 20 years.
In fact, I can't find a link for that number, but even if I could, it doesn't tell you anything about real performance.
http://www.economist.com/node/13782942
The economist is a trusted source.
GM has been losing market share and profit margin since at least the mid 1980s. They had significantly bad performance from 1991-1993. They had a huge pension and benefit funding crisis following 9/11, they divested themselves of their share in suzuki, they cut their dividend in half and their financing arm struggled.
GM was not a solid car company. It was a company hiding it's problems in it's size.
EMD suffered along with everyone else. McCook's erecting hall was closed and moved to London, in order to save money, not because the facility was unusable.
Yes, the Failure of the H engine caused serious problems for EMD, but they were only major problems, because GM couldn't afford to fix them.
The very notion that General Motors, a company that owns EMD, Detroit Diesel, all their car companies doesn't think they are capable technologically of meeting GE is absolutely ludicrous...unless you acknowledge that GM was suffering financially. That is the ONLY way it makes sense.
And remember, the H engine has sold overseas and they still had significant marine sales. They had their partnership with Argonne and it is very very very telling that the independent EMD was able to regain a bit of their market share. EMD became a valid option again.
Your notion that GM realized that the base platform could no longer compete in it's current form and wasn't worth investing in makes absolutely no sense. Why, why in the good lord's name would GM decide that it wasn't worth investing in, but then keep the company for a few years? What sense does that make at all? If they aren't going to invest, if they don't think it's a worthwhile business to be in, then they would have sold as soon as possible, not wait around for half a decade developing a Tier 2 engine and limping along.
That's not good business.
YoHo1975 If they aren't going to invest, if they don't think it's a worthwhile business to be in, then they would have sold as soon as possible, not wait around for half a decade developing a Tier 2 engine and limping along.
If they aren't going to invest, if they don't think it's a worthwhile business to be in, then they would have sold as soon as possible, not wait around for half a decade developing a Tier 2 engine and limping along.
They were trying to dump off money losing EMD for years. The problem was nobody wanted to buy it. Limping along was their only choice. It would have been cheaper just kill it, but GM was locked into pension liabilities and union contracts. GM had to continue to assume certain EMD liabilities even after the investment group took control for the deal to go through. The bottom line, even after 2 ownership changes is EMD still doesn't have a product that can compete with their competition.
Thirty years at the minimum, really even longer. It takes a bit of time to run a great enterprise like GM into the toilet.
Take it from someone who came of age in the 1960s, when it looked like the General owned half the world. There were plenty of early milestones in the collapse we've just witnessed. Think of the shabby development work preceeding the 1971 Chevrolet Vega, the 1978 Olds diesel engine, and the 1981 Cadillac V-8/6/4, then consider the myopia of the peace-at-any-price labor agreements (ignoring the hungry, quality-minded, non-Big Three competition). These are just a few of the highlights.
The downfall was already in process thirty years ago, and pretty much kept getting worse. Given the pattern of looming failure, it would have been surprising to see relatively small EMD escape from the larger GM death spiral, which it didn't. By the early 1990s, of course, GE had taken over the locomotive market.
GM started ruiining itself a long time ago.
GP40-2 . The bottom line, even after 2 ownership changes is EMD still doesn't have a product that can compete with their competition.
. The bottom line, even after 2 ownership changes is EMD still doesn't have a product that can compete with their competition.
By what measure? The Tier 2 engines have marked a return to quality product and have driven sales. Driven sales in a down economy.
The only reason EMD still exists is because of the monster UP order of SD70s, but that was 10 years ago and those engines are delivered. EMD is now selling ACes to most of the market. Those aren't pity sales. Yes, GE is still outselling them...a bit, but in an absolutely dismal market, it's telling that EMD is making sales at all. With the ECO market potential on top of it.
And Cat has been eyeing EMD for years. EMD was put up for sale in 2004 GM couldn't afford to keep her and she'd been run into the ground. CAT tried to buy the company then.
I few things just got jarred loose that need to be commented on as well.
EMD has/had other problems that affected sales
1: The price of an SD70 was and is more than the price of a Dash-9/AC/GEVO. The cost to maintain is lower (or so I've been told by multiple sources), but the up front cost is more. This is a difference in marketing in sales, not something inherent. GE took advantage of this along with a more stable product.
2: In a related issue, GMAC started having trouble at the same time which culminated again with 9/11 and of course only got worse with the recession. GE finance is bigger and better capitalized. It is simply speaking cheaper and easier to lease with GE. Lease at a cheaper rate
These 2 combined make sense. GE provides a less expensive engine that is easier to finance. It is generally more reliable up front (10 years ago), so between the lease and the reliability, it's easy to swallow the higher price for maintenance.
EMD on the other hand costs more and is harder to finance, parts and Maintenance are less expensive, but it's a bigger drag on the books.
This has nothing to do with the quality of the engineering or the product except indirectly. This is about Sharp pencil guys in the Finance department.
And this is the single biggest thing Cat can do to help EMD. Provide financing support. They aren't as big as GMAC, but they also aren't in as much pain.
Does financing really matter when selling locomotives to Class I railroads ? Maybe to regionals, shortlines, or others with limited cash reserves or 'lines of credit', but most Class I's could pay cash for 100 new locomotives a year if they wanted to or had to. Also, as 'rolling stock' locomotives can be financed by the modern versions of 'equipment trusts', and the lenders also have the unusual advantage of the exemption from the 'automatic stay' in the fortunately now-unlikely event of bankruptcy proceeding. All of which says to me that the capital and financing resources of CAT vs. GE might not be relevant to locomotive sales - or a least not the determining factor.
And the one technical observation I can make: The 'duty cycle' of loads and changing between the various throttle settings has to be radically different between Over-The Road trucks - changing every minute or two, main line locomotives - changing maybe every hour or so, and marine and stationary applications - running hours, maybe even days, on the same setting. Wouldn't that affect the emissions compliance ability of an engine, as I understand that a lot of the problem occurs when the engine is not at equilibrium, but is either 'spooling up' to its maximum speed - think of ALCo's 'turbo lag' - or slowing down from same ?
- Paul North.
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