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 Wants to Retain Control of Transportation Division

General Electric wants to maintain some form of control of its GE Transportation division, either by making it a separate public company or merging it with another company controlled by GE shareholders.

The Wall Street Journal quoted unnamed sources as saying that GE views its transportation unit as a model for restructuring other divisions.

GE had been looking to sell its transportation division in the face of pressure from some investors to break up GE in the wake of years of declining profits. There also have been concerns expressed about questionable accounting practices.

GE Transportation has a locomotive assembly plant in Lawrence Park, Pennsylvania, (Erie) that is winding down the production of new locomotives and transitioning to an as yet unspecified new role.

It also has two engine plants in Grove City, Pennsylvania, one that build engines and another that refurbishes them.

Erie, Grove City Plans to Benefit From GE Order

GE Transportation has signed deals worth $900 million to build 300 switch engines for the Kazakhstan national railroad.

The agreement is expected to boost the fortunes of GE Transportation’s Grove City, Pennsylvania, engine plant and, to a lesser extent, its Erie assembly plant.

The order is not expected to have a major effect on the Erie plant, which GE has said will cease assembling locomotives by the middle of next year.

However, a GE spokeswoman said that engineers based in Erie will work on the order.

The engines for the Kazakhstan order will be built in Grove City. Final assembly of the locomotives will take place at a GE plant in Kazakhstan.

Kazakhstan Temir Zholy, the state-run railroad of Kazakhstan is GE Transportation’s largest international customer.

Aside from the 300 switcher locomotives, the contracts call for GE to maintain and repair 175 Evolution™ Series passenger locomotives.

The first two switchers are expected to be delivered in 2019, with the remainder to be delivered over the next 10 years.

GE Transportation Seeking New CEO

GE Transportation is seeking a new CEO after Jamie Miller was promoted to chief financial officer of parent company General Electric effective Nov. 1.

Miller replaces Jeffrey S. Bornstein, GE vice chair and chief financial officer.

In a news release, GE said that Miller became president and CEO of GE Transportation in October 2015 and led the business through difficult cycles in the mining and railroad industries.

As CEO of GE Transportation, she helped oversee GE Transportation’s Brilliant Factory initiative, the business’s digital transformation, and opened markets around the world and revenue opportunities outside the traditional verticals.

“Leading GE Transportation the last few years has been one of the greatest honors in my career,” Miller said in a statement. “We developed products and services our customers needed to move goods more efficiently, reliably, and safely in today’s challenging marketplace. The business also opened up exciting commercial opportunities in markets with tremendous growth potential like Egypt, India, and Kazakhstan.”

GE Transportation has a locomotive assembly plant in Lawrence Park, Pennsylvania, near Erie, and two engine plants in Grove City, Pennsylvania.

A new CEO of GE Transportation will be named in the coming weeks. In the interim, Pascal Schweitzer, GE Transportation’s global services leader, will serve as acting CEO.

GE Erie Locomotive Plant Facing a Crossroads

The future of the General Electric Transportation locomotive assembly plant in Erie, Pennsylvania, may be hanging in the balance after the company and its union failed to agree on a contract revision.

GE Transportation and the United Electrical, Radio and Machine Workers of America conducted 60 days of talks, but have agreed only on the fact that they cannot come to an agreement.

The company is urging the union to allow its members to vote on the company’s latest offer, even though union leadership rejected it.

That offer would involve the transfer of 122 workers, reduce the number of job classification from 56 to 22, impose an unpaid lunch period and eliminate piecework.

New employees and those called back to their positions from furlough would be paid about 40 percent less than current employees.

The carrot being offered by GE is that it would invest $50 million in an initiative dubbed Reinvent Erie to modernize the Erie plant and spend another $64 million to fund up to 350 early retirement options.

GE said it would also agree that no more work would be transferred for at least three years and that 150 new jobs would be created through new lines of work during that period.

The offer remains valid for another two weeks, but union leadership said it would not allow its members to vote on the proposal.

“We don’t vote on proposals,” said Scott Slawson, president of UE Local 506. “We vote on agreements and there is none to vote on.”

Not surprisingly, management and the union’s leadership don’t see the situation in the same way.

Randy Biletnikoff, general manager of Erie operations, told the union in a letter, “We believe it would be unfortunate if we left these negotiations unconcluded and unsuccessful because employees were not allowed to make a deliberate and informed decision about the company’s last proposal.”

Richard Simpson, vice president of the global supply chain at GE Transportation, told the Erie Times-News that although he understands the union’s reluctance to take a lower wage, it must consider the realities of the local marketplace.

“I have hired over 500 in this area over the last two to three years,” he said, a reference to an expansion that took place in Grove City, Pennsylvania, where engines are built and rebuilt. “I have a pretty good idea what the market will bear. Right now, Erie continues to price itself out of the market.”

But as Slawson sees it, GE is asking the union to vote on its own demise.

“They don’t respect our decision,” he said in reference to union leadership rejecting the company’s latest offer. “They want us to vote on our own demise. They are pushing buttons all through the plant trying to interfere with the union’s process.”

Slawson told the Times-News that the union has seen employment in the Erie plant fall by 1,500 following a massive layoff earlier this year.

The bargaining process, he said, was supposed to be about the planned loss of 181 jobs, but the company’s best offer addressed preserving only a third of those jobs.

“One of the things we agreed on is we are not bringing legacy employees back at less than they were making when they left,” Slawson said of the union leadership’s position.

Simpson said GE agreed to protect the average wage of $33 an hour and allow raises that total $1.20 an hour to take place over the next three years that were negotiated in an earlier contract.

The pay for new and recalled employees would average $20.82, which Simpson said is slightly above average for the Erie labor market.

“I am deeply disappointed,” Simpson said. “In my 32 years with the company, it is the most attractive I have ever seen assembled. “The company and the union have both made valiant efforts, but the divide was significant.

“They have what I think is our best offer. I urge them to take it to the members and take it to a vote. If the membership decides that it is not a good idea, we accept that.”

Although GE officials have not said so in public thus far, the specter looming over the failed contract talks is that the plant may close and/or more job cuts will be imposed.

Even if the union had accepted GE’s offer, Slawson said it might not matter.

“General Electric is going to do what General Electric is going to do,” he said. “GE has proved time and again that two-tier wages don’t mean anything to them. They closed Appliance Park in Louisville where they had three-tier wages. It didn’t matter.”

As for the contention that a $20-an-hour job is no better than no job at all, Slawson said, “Everybody is going to have their opinion, and I very much respect that, but we are going to argue for what is best for our members. When you reduce wages by that much, it’s going to affect people’s lives.”

Standing by and watching is Barbara Chaffee, CEO of the Erie Regional Chamber and Growth Partnership, which has urged the union leadership to conduct a vote.

“The impact of not reinventing GE Transportation Erie, of not making it a marketplace-competitive facility, has an impact on the entire Erie region,” she said.

Simpson said he’s prepared to begin recalling furloughed workers immediately if the union agrees to the company’s proposal.

And if the union balks at calling a vote or rejects the company’s offer?

“Without cultural and wage-structure changes I do not see a significant investment like Reinvent Erie,” Simpson said. “I believe this proposal would have stemmed the downward trend and brought some real stability to the plant and, frankly, to our community.”

GE to Build GEVO Engines in Russia

General Electric Transportation recently signed a business plan to launch a venture with Transmasholdings to build GEVO locomotives at a new facility in Penza, Russia.

The company said the agreement is part of a series of initiatives aimed at accelerating GE’s localization of technology across the oil and gas, power, and transportation industries in Russia.

Locomotives built in the plant will be used on Russian Railways. Initial production is expected to be up to 250 engines per year for locomotives and other uses.

It is not clear what, if any, effect this will have on production at GE’s Erie, Pennsylvania, manufacturing plant or Grove City, Pennsylvania, engine plant.

Union officials in Erie are bracing for layoffs this year after the company said that locomotive orders are expected to decline.

GE Transportation Names New President

GE Transportation has named Jamie Miller as president and CEO, effective Oct. 1. She will succeed Russell Stokes.

Miller joined GE in 2008 and previously served as senior vice president and chief information officer, overseeing the company’s global information technology strategy, services and operations.

In a news release, GE said that the company is undergoing structural changes, including the acquisition of the power generation business of Alstom.

Alstom will acquire GE’s Global Signaling business, which over the years has absorbed such railway signaling and communications companies as Harmon and Harris Electronics.

Alstom’s C&S business in North America includes the former General Railway Signal, which it acquired from Sasib several years ago.

“As we position GE as the premier digital industrial company, create new markets and enhance our product portfolio, Jamie will be instrumental in delivering better, faster solutions for GE Transportation’s customers,” said GE Chairman and CEO Jeff Immelt. “Her strong operational rigor and track record of executing large transformational projects will be key to advancing GE Transportation’s digital and industrial strength,”

GE Transportation has a locomotive assembly plant in Erie, Pennsylvania, and an engine plant in Grove City, Pennsylvania.

GE Tests 1st Tier 4 Compliant Evolution Engine

GE Transportation announced this week that it has evaluated the performance, emissions and mechanical properties of its GE Evolution Series Tier 4 engine.

It is the first engine to be tested at its Grove City, Pa., plant and will now be sent to one of GE’s locomotive assembly facilities to be installed into a GE Evolution Series Tier 4 locomotive. GE has assembly plants in Erie, Pa., and Fort Worth, Texas.

“We are committed to delivering Evolution Series Tier 4 locomotives to our customers. We’ve already manufactured 27 engines and the completion of this test is a major step forward in our Tier 4 journey. Through the efforts of the GE team in Grove City, we’ll be able to validate the test cell and the production process and make improvements to our overall plan,” said Tina Donikowski, vice president of GE Locomotives, Marine, and Stationary & Drill, in a news release.

The Grove City plant handles new and remanufactured diesel engines for locomotives, marine and stationary power applications.

Producing 3,000 engines a year, Grove City is one of the largest locomotive diesel engine manufacturing sites in the world.
GE began building Evolution Series engines in 2003.

GE to Hire 50 at Pennsylvania Engine Plant

GE Transportation wants to hire 50 machinists at its diesel engine plant in Grove City, Pa.

The plant, located about 70 miles south of Erie, Pa., where GE has a locomotive assembly plant, will be building the engines for 233 Evolution Series locomotives that are being send to Transnet, a South African rail, port and pipeline company.

That deal, worth $700 million, was announced in March 2014 and delivery will be made in 2015.

The Grove City plant will also build a new Tier 4 engine that complies with federal environmental regulations.  In addition to railroad locomotive engines, the Grove City plant also builds engines for marine and stationery power applications.

“We’re excited to start the pursuit and interviews of qualified machinists to join the GE team and fill these critical roles across our new and remanufactured engine plants,” said Andy Newpher, Grove City plant executive. “Our customers ultimately determine our success, and as the demand and our production volume increases, we’re focused on finding, attracting and developing skilled employees who will mesh with our culture rooted in compliance, quality and safety. I’m eager to meet with candidates for these roles who possess the foundational characteristics to excel, including positive attitude, strong work ethic, customer-focused dedication and team player mindset.”

Interested and qualified applicants should apply at www.getransportationjobs.com. Current GE employees are also eligible to receive up to $1,000 for referring new team members.