GE Business Units on the Block

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GE Business Units on the Block

Unread postby Saturnalia » Tue Oct 31, 2017 11:51 pm

Haven't tossed up anything for discussion in awhile...let's try this out. I've been considering this question since Alstom and Siemens announced their merger, and now GE is evaluating all of their business units. Could we be approaching a seismic shift in the railroad supply world?

My take:

Quietly, China and India have been pursuing their own railroad technology, which would make sense, particularly for China. We can simply not expect a nation like that not to have their own suppliers and developers. Naturally, there is more competition than ever in the world for large industrial products: locomotives are no exception.

I think what we're seeing play out is a realignmnet from multiple western firms grinding it out amongst themselves to a pivot where they must face their new eastern competitors. GE and EMD can't rely on export contracts since China's firms are more than willing to bid, and bid low.

Recently, we learned at Altsom and Siemens are planning to merge their transportation businesses, creating one of the largest - if not the largest - railroad suppiers in the West - with the stated intention of doing it to go up against increasing competition from China.

I would not be at all shocked if there was further consolidation of the railroad supply business. EMD seems safe under Caterpillar, but if GE's locomotive business is about to be orphaned, I'd think Siemens is a likely pickup candidate, which would give them a firm foothold with which to battle it out with their new rivals.

Siemens is a proven railway suppier already, obviously, and as I recall, has been furnishing equipment for GE and/or EMD for years.

Could we be seeing the rise of a new signalling, train-control, and locomotive empire?

The market will decide, but I sure think it's sliding that way!

(I also posted this as a reply to a thread on Trains' site, looking to see thoughts here as well)
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Re: GE Business Units on the Block

Unread postby SousaKerry » Wed Nov 01, 2017 3:15 pm

I think EMD is a victim of it's own good products. Class 1 railroads are still rebuilding SD-40 variants that are approaching 50 years of service soon. While GE for obvious reasons does not have that problem with it's own equipment(nobody rebuilds U-boats) they are competing with SD-40s as well in the medium HP market. And the big reason for all of this is our own government regulations. You can have basically a brand new locomotive with an old frame call it a rebuild and have half the pollution crap to deal with. All this makes it darn hard to sell new locomotives. Couple that with a surplus of older power being stored and the red inc adds up quickly.

It will eventually swing back the other way but it will take time. It will also take a company with enough guts to hold the stock brokers at bay that are screaming about their dividends and divisions that are bleeding money at the moment.
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