GM plant changes tracks

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OwlCaboose2853
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GM plant changes tracks

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GM plant changes tracks

A U.S. investment firm is buying the London train locomotive builder.

NORMAN DE BONO,
Free Press reporter
2005-01-12 02:54:48



Train locomotive builder General Motors Electro-Motive has been sold. The London industrial institution, in its 55th year, has been bought by Greenbriar Equity Group, a U.S. investment firm, in a deal believed to be worth about $500 million US, Canadian Auto Workers union president Buzz Hargrove said last night.

The sale price includes the sprawling London plant and another one in LaGrange, Ill.

"We knew this was coming, but I'd be a liar if I said I wasn't disappointed they have chosen to sell us," said Terry Mason, chairperson of CAW Local 27. "(The new owner) will invest in the plant and sell us again. In the long term, this is just back to square one, us not knowing who we will be sold to."

The deal ends years of uncertainty for GM workers. The plant has been rumoured to be on the block and nearly sold to different suitors several times.

"We are very busy this year," Mason said. "We are hiring right now. It's nice to know that while GM wants to get out of this business, our customers still have confidence in us. We can be optimistic the orders are there."

The deal was praised Hargrove, who said GM was not investing in the plant, and Greenbriar has said it will.

"I feel very positive about it," said Hargrove, who will be in London to address the workers today. "GM is winding down its operations other than its mainstream vehicles and there has been less money available for other businesses.

"That was a detriment to our membership," said Hargrove.

Greenbriar has told the CAW it wants to invest in and grow the business and then sell it in five to seven years.

"We have someone buying it who wants to build, who has a business plan and commitment. That is good for our members," Hargrove said.

The union leader was also unfazed by the prospect of the company being flipped n a few years, saying volatile ownership isn't unusual in business.

"I never worry about who owns it. I have been through this so many times that changing hands is just a reality of life. The important thing is there is a commitment to our members and the business."

Greenbriar Equity Group is a $700-million US equity fund run by former Chrysler Corp. vice-chairperson Gerald Greenwald and Boston-based Berkshire Partners, a $3.5-billion US buyout fund.

"I have known Greenwald for 25 years. He is a man of great integrity and very smart," Hargrove said.

GM Electro-Motive builds about 300 locomotives a year, mainly in four different models, valued between $1.4 million and $1.9 million each, said Mason.

The plant employs about 1,000 workers, 657 of which are CAW members, he added.

Curt Swenson, Electro-Motive spokesperson in Illinois, and Greenwald could not be reached for comment last night.

Ravi Samuel, chairperson of the Southwestern Ontario board of the Canadian Manufacturers and Exporters, called the sale the end of an era, recalling a time when GM owned two London plants employing about 3,000 workers.

"It has been one of the major employers in the London area," Samuel said. "Over the years, it has had such a significant history. It is a major loss of an auto company, but we can only hope the new owner continues to produce locomotives and grows the market."

In 2002, GM Defense in London was sold to U.S. defence giant General Dynamics, becoming General Dynamics Land Systems Canada in a $1.1-billion US deal.

COMMUNITY REACTION

- London Mayor Anne Marie DeCicco: "One of my first priorities tomorrow is to follow up. We want to ensure the jobs are secure."

- John Kime, president of the London Economic Development Corp.: "I don't think we'll be too long in getting in touch with the new owners to make sure they are comfortable in London."


http://www.canoe.ca/NewsStand/LondonFre ... 8-sun.html

OwlCaboose2853
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Posts: 2176
Joined: Fri Dec 17, 2004 10:17 pm
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GM to unload train division

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GM to unload train division

Illinois locomotive unit goes in effort to focus on core business of vehicles, loans.

By Ed Garsten / The Detroit News


General Motors Corp. has reached an agreement to sell its LaGrange, Ill.-based Electro-Motive Division for an undisclosed price to an investment group led by the Greenbriar Equity Group of Rye, N.Y., and Boston-based Berkshire Partners LLC.

With the sale of its locomotive division -- expected to be completed by March -- the once highly diversified automaker is now down to its core businesses of building cars and writing loans.

GM is shedding ancillary operations to concentrate management and financial resources on its automotive operations, which are struggling in Europe and North America. With its automotive profits dropping in recent quarters, GM has relied on its huge finance and mortgage arm to generate earnings.

"They need the money," said Sean McAlinden, an economist with the Ann Arbor-based Center for Automotive Research. "Electro-Motive is simply not core to GM's business."

GM's North American automotive operations lost $22 million in the third quarter, the first loss in six years.

In addition to flat U.S. auto sales and generous discounts, pension and growing health care obligations have become a bigger drag on the automaker's earnings.

GM has been steadily downsizing since the early 1990s by consolidating its automotive operations, reducing employment, closing factories and divesting other noncore assets such as Electronics Data Systems Inc., auto parts maker Delphi Corp., Hughes Corp. and DirecTV.

Faced with excess U.S. factory capacity, it is ending production by next month at a Linden, N.J., SUV factory and will close its Baltimore, Md., assembly plant by this summer.

GM expects to cut up to 8,000 U.S. jobs by attrition this year. In Europe, it is eliminating 12,000 jobs at its money-losing European operations by 2006.

GM entered the locomotive business in 1930 when it acquired Winton Engine and Electro-Motive, Winton's biggest customer. Electro-Motive has become one of the world's largest diesel locomotive manufacturers. It has produced more than 58,000 diesel-electric locomotives for customers in 73 countries.

While demand for locomotives has rebounded as the global economy has recovered, Electro-Motive faces stiff competition from rivals General Electric Co.p.'s GE Transportation Systems unit and Germany's Siemens AG.

The division employs 2,600 hourly and salaried workers at operations in LaGrange, Ill., and London, Ontario, Canada.

"Greenbriar and Berkshire Partners have a long-term commitment to creating value in the railroad industry that extends back to the 1980s," Reginald Jones, a managing partner of Greenbriar Equity Group, said in a statement. "Electro-Motive has outstanding products, employees and a truly global franchise, and we believe the company's prospects are bright."

Before the sale can be completed, negotiations with the United Auto Workers union over a new pact covering wages, benefits and pensions must be concluded, and the agreement must be ratified by workers. UAW spokesman Roger Kerson said the union had no comment on the impending sale.

About 800 UAW workers are employed at Electro-Motive's LaGrange plant, where diesel engines are assembled.

But UAW workers at the plant have been without a new contract since September 2003.

http://www.detnews.com/2005/autosinside ... -58877.htm

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