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Will EMD Sales Catch Up to GE?

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Will EMD Sales Catch Up to GE?
Posted by K. P. Harrier on Friday, April 27, 2007 9:59 PM

Locomotive sales wise, GE is running circles around EMD.  This is so because with relative product parity, a lower price usually wins the sales contracts.   A lower price comes from more efficient, streamlined manufacturing processes.  When EMD increases its efficiencies, sales increase.  But GE in turn enhances their efficiencies, and the overwhelming sales ratio returns in favor of GE.  Is there, though, a magical point where no future efficiencies are possible, and sales will equalize?  Will sales then shift to crew comfort and their handling preferences in operations?  Or, perhaps the preference of shop maintenance crews?

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Posted by Railfan1 on Saturday, April 28, 2007 10:38 AM
Not until EMD can come up with something railroads want to buy more of than GE units. Make something your customer likes more, and it will beat the competition.
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Posted by jsoderq on Sunday, April 29, 2007 7:34 AM
Actually it has a lot more to do with the fact GE finances theirs, EMD doesn't. Would you buy a car financed or for cash?
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Posted by CSSHEGEWISCH on Sunday, April 29, 2007 9:12 AM

 jsoderq wrote:
Actually it has a lot more to do with the fact GE finances theirs, EMD doesn't. Would you buy a car financed or for cash?

Actually, a better analogy would be either financing your car through the dealer or financing it on your own through your bank or credit union.  Although I have paid cash for my current vehicleBig Smile [:D] that usually isn't a realistic option for railroads purchasing locomotives or rolling stock.

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Posted by Railfan1 on Sunday, April 29, 2007 11:55 AM
Ohhhhhh......................
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Posted by PBenham on Sunday, April 29, 2007 7:01 PM

Electro Motive has a chance to catch GE, by being able to innovate and utilize the template used by Japanese and European builders. They will put your choice of engine, your choice of generator and traction motors together and even do it at a facility of your choosing. Motive Power does this on their units as does NRE, they get the components together, and then they are built where you wish, when you need them. For the overseas market, this can mean considerable savings in shipping costs, since the components are no where near as heavy and expensive to ship as an entire locomotive. It can mean that more "home made/manufactured" components can be used. The savings come from not having to ship some components at all, and the jobs stay at home. Which can be very important to some customers.

The big thing is that EMD has GM off it's back.

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Posted by JonathanS on Tuesday, May 1, 2007 10:56 AM

GE has a lot more to offer than just locomotives.  GE rents freight cars, rents maintenance equipment and vehicles, offers insurance, offers fleet management of locomotives and railcars built by anyone, and a whole host of other services.  When a railroad "bundles" a purchase of locomotives with some of these other services they can leverage a much deeper discount than can be obtained with just a locomotive purchase.

EMD cannot at this time offer anything equivalent.  Years ago GM used the opposite method.  That is, "If you don't buy our locomotives you do not get any of our parts or automobile traffic."  The justice department had to step in to stop that practice.

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Posted by cpbloom on Saturday, May 5, 2007 5:47 PM

 JonathanS wrote:
Years ago GM used the opposite method.  That is, "If you don't buy our locomotives you do not get any of our parts or automobile traffic."  The justice department had to step in to stop that practice.

I heard about this. Does anyone have any additional information? 

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Posted by JonathanS on Monday, May 7, 2007 1:51 PM
 cpbloom wrote:

 JonathanS wrote:
Years ago GM used the opposite method.  That is, "If you don't buy our locomotives you do not get any of our parts or automobile traffic."  The justice department had to step in to stop that practice.

I heard about this. Does anyone have any additional information? 

Look at the Wall Street Journal Articles at this web site.

http://www.carofthecentury.com/gm's_first_crack_at_futuristic_engineering,_the_train_of_tomorrow.htm

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Posted by beaulieu on Monday, May 7, 2007 3:16 PM

EMD can be less expensive than GE. Here is an excerpt from a Kansas City Southern filing with the SEC last year; KCSR is the US Railroad subsidiary, while KCSM is the Mexican subsidiary.

 

On August 23, 2006, KCSR entered into an agreement with Electro-
Motive Diesel, Inc. to acquire 30 locomotives to be delivered to KCSR
from June 2007 through September 2007 at an aggregate cost of
approximately $61.4 million. On August 14, 2006, KCSM entered into an
agreement with General Electric Company to acquire 30 locomotives to
be delivered to KCSM in December 2006 and January 2007 at an
aggregate cost of approximately $63.7 million. We intend to finance
these locomotives through equipment lease financing consistent with
past practice.

On September 28, 2006, KCSR and KCSM entered into a letter of intent
with General Electric Company to purchase an aggregate of 80
locomotives to be delivered in late 2007 through August 2008 at an
aggregate cost of approximately $160.8 million. The letter of intent
also provided KCSR and KCSM with an option to acquire an additional
aggregate of 40 locomotives. If such option is exercised, the
additional 40 locomotives would be delivered in 2008. Each of KCSR
and KCSM anticipates entering into definitive agreements with General
Electric Company in the fourth quarter of 2007 with respect to these
locomotives.

On November 29, 2006, KCSR entered into a letter of intent with
Electro-Motive Diesel, Inc. to acquire 70 locomotives to be delivered
to KCSR from October 2007 through April 2008 at an aggregate cost of
approximately $140.9 million.

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Posted by Railfan1 on Monday, May 7, 2007 4:39 PM
 cpbloom wrote:

 JonathanS wrote:
Years ago GM used the opposite method.  That is, "If you don't buy our locomotives you do not get any of our parts or automobile traffic."  The justice department had to step in to stop that practice.

I heard about this. Does anyone have any additional information? 

Talk about motive.

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Posted by carnej1 on Wednesday, May 9, 2007 11:33 AM
 I am under the impression that GE has much greater manufacturing capacity than Electromotive, even when EMD's penchant for outsourcing assembly is considered....

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Posted by bakupolo on Wednesday, May 9, 2007 11:43 PM
If I were a railroad I would buy some of each if only to keep EMD viable and somewhat competative with GE. If EMD goes under I would be at the mercy of GE and facing the 100% certianty of big price increases.
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Posted by trainfan1221 on Friday, May 18, 2007 11:38 AM
I've heard that modern EMDs are fine, if not a bit weird looking.  If you ask me, the problem with both is that they only catalog a couple (or is it only one) types of locomotives.
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Posted by CSSHEGEWISCH on Sunday, May 20, 2007 6:58 AM

 trainfan1221 wrote:
I've heard that modern EMDs are fine, if not a bit weird looking.  If you ask me, the problem with both is that they only catalog a couple (or is it only one) types of locomotives.

Times have changed a bit since 1965 when EMD announced its "biggest news since 1939" with the unveiling of the 645 engine.  EMD listed nine (count 'em) models in its catalog:  SW1000, SW1500, GP38, GP40, SD38, SD40, SDP40, SD45 and DD40.  Both SW's had a Flexicoil truck option, the DD40 was later withdrawn and replaced by the SDP45.  GE offered the U28B/C and U30B/C, Alco had a fairly broad Century Series line-up.  Only EMD actively went after the switcher market.

You're right, EMD and GE only catalog mainline freight locomotives now:  EMD with the SD70M-2 and SD70ACe, GE with the ES44AC and ES44DC, the ES40DC on NS is a de-rated ES44DC.  All of the other categories are covered by the small builders:  MPI, NRE and Railpower.

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Posted by JT22CW on Sunday, May 27, 2007 11:39 PM

 CSSHEGEWISCH wrote:
You're right, EMD and GE only catalog mainline freight locomotives now
GE still has the Genesis on their catalog; it's even available with the GEVO now and AC traction as standard.  (No buyers as yet, though.)

EMDiesels has the GP20D (switch engine) in addition to the road diesels.

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Posted by mj5890 on Monday, May 28, 2007 8:51 AM

 JT22CW wrote:

GE still has the Genesis on their catalog; it's even available with the GEVO now and AC traction as standard.  (No buyers as yet, though.)

I thought that GE cant make the Genesis desing anymore because it dosnt meet nose crash standards.

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Posted by CSSHEGEWISCH on Tuesday, May 29, 2007 7:57 AM
 JT22CW wrote:

 CSSHEGEWISCH wrote:
You're right, EMD and GE only catalog mainline freight locomotives now
GE still has the Genesis on their catalog; it's even available with the GEVO now and AC traction as standard.  (No buyers as yet, though.)

EMDiesels has the GP20D (switch engine) in addition to the road diesels.

The GP20D is sold under the EMD name but is actually built by MPI at Boise.  It's an arrangement similar to that where White sold a line of road tractors under the White Freightliner name although Freightliner Corp was actually building them.  The only GP20D's are owned by CIT Financial (in CIT blue) and are leased to UP in the Houston area.

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Posted by garyla on Tuesday, May 29, 2007 9:07 AM

How times have changed!

It feels strange to see the suggestion that the carriers might buy some EMD units just to keep GE from taking over the whole market.  At least it does for me, because I'm old enough to remember the era when it appeared that some Alco and GE units were bought just to keep General Motors from eliminating any competition.

EMD may have used some heavy-handed methods to improve sales back in those days, but probably didn't need to do so.  The working SP engineer I knew told me (in the 1970's) that the GE's he ran spent vastly more time down than did the EMD's, and were more trouble in general.  By that time, of course, Alcos were hardly even in the picture on mainline freight.

As long as the new independent EMD is well capitalized, perhaps it will do a lot better than it would under GM ownership, and maybe it'll gain back market share.  Nowadays, the General just doesn't look like an all-powerful force in the business world, and has plenty to occupy it in the automobile game.

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Posted by JT22CW on Tuesday, May 29, 2007 1:29 PM
 mj5890 wrote:
 JT22CW wrote:
GE still has the Genesis on their catalog; it's even available with the GEVO now and AC traction as standard.  (No buyers as yet, though.)
I thought that GE cant make the Genesis desing anymore because it dosnt meet nose crash standards.
They can't make the old Genesis (you can't make a grandfathered design as new); but there's nothing stopping them from making an updated, fully-compliant new Genesis.  (Except lack of orders, that is.)
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Posted by mj5890 on Wednesday, May 30, 2007 5:13 PM

 JT22CW wrote:
T

hey can't make the old Genesis (you can't make a grandfathered design as new); but there's nothing stopping them from making an updated, fully-compliant new Genesis.  (Except lack of orders, that is.)

So they can still make it?? what is difrent about it?? did they strengthen the nose or something??

But if they got orders??  Would they have to make a new desing or would they use the same desing but make it meet crash test standards??????

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Posted by Anonymous on Monday, June 4, 2007 6:21 PM

Does anyone know what a current model Diesel - EMD or GE - has as a base price? Granted, that is a bit vauge but just curious for a ballpark.

 Thanks,

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Posted by Anonymous on Tuesday, June 12, 2007 10:09 AM

My guess would be somewhere in the neighborhood of $2 million.  That's cash, not financing, which would drive the cost up higher.

Funny.  I can see a VP for motive power wandering into GE or EMD and getting hit up by a salesman... who promises a sweet deal on the latest GP or SD "after he talks to his manager..."

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Posted by Anonymous on Tuesday, June 12, 2007 10:18 AM

Hmpf...I'm really surprised that's all, though that seems to be the norm. Not that $2 million isn't allot of money, mind you, but I would have thought it would have been substantially more.

 "Gimmie two!"

  

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