CN Orders 60 More Locomotives From GE

Canadian National has ordered another 60 new locomotives from GE Transportation. That will bring the carrier’s order of new units to 260.

CN ordered 200 new locomotives last December with all of the units to be built in Fort Worth, Texas, and coming with a multiyear service agreement.

The locomotives include Tier 4 Evolution Series locomotives, which are equipped with GE’s GoLINC Platform, Trip Optimizer System and Distributed Power LOCOTROL eXpanded Architecture, GE officials said.

In upping its locomotive  order, CN cited traffic growth this year, with North American rail volume up 3.5 percent so far this year.

GE Transportation, Wabtec to Merge

Wabtec has agreed to acquire GE Transportation in a transaction valued at $11.1 billion, which includes a $1.1 billion net tax benefit.

The merger will make GE Transportation a wholly-owned subsidiary of Wabtec, which is headquartered in Wilmerding, Pennsylvania.

Wabtec will become a Fortune 500 company with revenues of more than $8 billion. The combined company is expected to have 27,000 employees.

It is not clear what effect the merger will have on the Erie locomotive assembly plant where production of new locomotives is winding down as the facility transitions to an as-yet unspecified new role.

A spokesman for the union that represents workers at the facility in Lawrence Park expressed hope that Wabtec would reverse that decision.

GE Transportation also has engine plants in Grove City, Pennsylvania.

Wabtec, which got its start as Westinghouse Air Brake and is now formally known as Westinghouse Air Brake Technologies Corporation, will become a major player in the global railway equipment and services market with operations in more than 50 countries.

General Electric and Wabtec said in a statement on Monday that they expect synergies of around $250 million by 2022.

The merged company will operate as Wabtec and more than 23,000 locomotives in its global installed base and components on virtually all North American locomotives and freight cars.

GE is to receive at the closing of the deal $2.9 billion in cash for a 9.9 percent stake in the new company, while its shareholders will receive a 50.1 percent stake. Wabtec shareholders will hold the remaining 49.9 percent stake.

Wabtec Chairman Albert Neupaver will be the executive chairman of the merged company with Raymond Betler serving as president and CEO.

The company will have its headquarters in Wilmerding, which is a Pittsburgh suburb. GE Transportation is currently headquartered in Chicago.

GE Transportation President Rafael Santana will become president and CEO of Wabtec’s freight division, which will be based in Chicago.

Wabtec Chief Operating Officer Stephane Rambaud-Measson will become president and CEO of Wabtec’s transit segment, which is based in Paris.

GE will designate for nomination three independent board members.

The locomotive assembly business is prone to cyclical swings, but GE Transportation’s earnings before interest, taxes and depreciation is expected to grow from about $750 million this year to between $900 million and $1 billion in 2019.

The company has a backlog of about $18 billion including about 1,800 new locomotives and another 1,000 units to be rebuilt and upgraded.

In the past two quarters, GE Transportation has received orders worth $3.6 billion.

The merger is not expected to be completed until early 2019 and is subject to approval by the U.S. Securities and Exchange Commission.

GE Transportation spokeswoman Deia Campanelli said the GE Transportation name is expected to continue in some fashion, but those details have not been worked out.

Scott Slawson, president of Local 506 of the United Electrical, Radio and Machines Workers of America, which represents about 1,500 employees at the GE Transportation plant in Erie, told the Erie Times-News that there remain many matters for the union to work through between the time the deal closes and when the union’s contract expires in June 2019.

“If Wabtec is going to be a new employer to us, there are a lot of benefits to employees that we currently have with GE,” he said. “We have to bargain those things away from GE and make sure everyone gets what is in the contract. There is never anything easy. It means a lot of work. You have to be on your toes.”

However, Slawson said he is trying to see the merger as a positive. “At this point we have no reason to look at this any differently.”

GE Transportation said in summer 2017 that it planned to phase out production of new locomotives in Erie by the end of 2018.

The company has a newer and non-union assembly plant in Fort Worth, Texas, that is expected to continue building new locomotives.

“I think a fresh set of eyes might look at things differently,” Slawson said. “Mistakes are made. Hopefully our new employer is willing to listen.”

Slawson told Trains magazine that perhaps a Pennsylvania-based company might be willing to return some work to the Erie plant.

Raymond E. Grabowski, the president of the Lake Shore Historical Society in North East, Pennsylvania, said his group’s museum might be able to incorporate into its exhibits the technological advances made by Wabtec.

“One day, we hope we can look back and tell future generations that these too were proudly developed and made in Erie.,” he told Trains.

GE Modernizes 100 NS Locomotives

GE Transportation said it has finished modernizing 100 locomotives for Norfolk Southern.

The work involved giving locomotives upgraded control systems and in some cases converting the units from DC to AC traction.

The work was performed at the GE locomotive assembly plant in Fort Worth, Texas.

“”We’ve seen our modernization program grow 20 times since 2015,” said Pascal Schweitzer, GE Transportation’s vice president, services. “Over the last decade, GE has transformed more than 2,000 locomotives for customers worldwide, including for the majority of the Class 1 Railroads in North America as well as international customers.”

So far in 2018 GE has received 225 orders for locomotive modernizations.

GE Transportation Likely to Take a Hit

GE Transportation may be among the business units of General Electric that will see an aggregate $20 billion worth of businesses cut from the GE’s portfolio within the next two years.

The Wall Street Journal reported that third quarter earnings statements from the locomotive and jet engine maker will reduce the company’s cash-flow outlook by $5 billion  to $7 billion.

GE managers have slashed $1.2 billion in costs from business units so far this year, surpassing the original $1 billion goal.

Earlier this year, GE Transportation said it will move locomotive production from its Erie Assembly plant in Lawrence Park, Pennsylvania, to a newer plant in Fort Worth, Texas, by the end of 2018.

The Erie plant will remain open producing parts and working on unspecified non-locomotive projects.

GE CEO John Flannery has ordered a review of every business unit and business practice, including expensive annual retreats to Florida and the company’s fleet of executive jets, both of which have been reduced.

GE to Cease Making Locomotives in Erie

GE Transportation said this week that it would end locomotive production at its Erie assembly plant by late 2018.

The company said that the design and develop center at the plant will remain open. The plant will also make prototypes and spare parts. Approximately 575 workers will lose their jobs.

The announcement cited downturns in freight traffic and a global market for locomotives. Locomotive production once done in Erie will be consolidated in an assembly plant in Fort Worth, Texas, which opened in 2013.

Opened in 1910, the Erie plant, which is located in Lawrence Park township, once employed 2,000. The workforce has been steadily reduced in recent years.

Aside from the Erie plant being old, it was also more costly to operate.

The Erie Times-News reported that the average salary of a production worker in Erie is more than $30 per hour where new hires at the Fort Worth plant are paid about $17 per hour.

The Erie plant was unionized but the Texas plant is not.

Earlier this year, GE Transportation CEO Jamie Miller said the the company would focus on the global new locomotive market.

In the past year GE has landed an order for 1,000 locomotives to be built for Indiana and 133 for South Africa.

In North America, GE is going to emphasis re-manufacturing older locomotives and upgrading the technology on those units to monitor performance.

Orders for new locomotives in North America have all but vanished with Class 1 railroads mothballing more than 4,000 locomotives in response to a freight recession that began in 2015 and management practices that are seeking to move tonnage in fewer trains.

General Electric itself has been in turmoil in the past few months with CEO Jeffrey Immelt stepping down an activist hedge fund pushing GE management to step up its cost cutting.

GE said earlier this year it would reduce expenses by $2 billion over the next two years.

GE to Layoff 250 at Texas Locomotive Plant

The Erie, Pennsylvania, locomotive assembly plant is not alone in seeing worker layoffs.

GE Transportation Services plans to furlough 250 workers at it Fort Worth locomotive assembly plant this year, starting in April.

“The North American rail market continues to be challenging. Freight rail volume has dropped year-over-year and the number of parked freight locomotives remains high,” GE spokesman Tim Bader told Trains magazine. “As a result, production volume is down at the facility in Fort Worth, Texas, requiring only 50 percent of the site’s available capacity.”

Bader said furloughed employees will receive company benefits and be eligible for state unemployment insurance.

Those workers not being laid off will be working 32-hour weeks beginning in June.

Since opening in 2012, the Fort Worth plant has built more than 1,000 locomotives for such railroads as Union Pacific, BNSF Railway, Canadian National and Ferromex.