I read with interest the story in Trains about EMD. With only seven major purchasers of locomotives on this continent, and only two major builders, do railroads purchase from both bullders in order to ensure that both builders survive and that competition is maintained? And one would assume that those carriers who buy from only one builder exclusively would be ok with only one builder in the market. When there are so few purchasers and only two suppliers a purchase decision by any one of those buyers could potentially throw one bulder to the wolves. Basically that’s what happened to MLW back in the 80s…onyl two major buyers in that case…and both rejected their locomotives in favor of EMD (not without reason of course).
I have heard that “preserving competition” idea bandied around before. You have to keep both sides ‘honest,’ lest they get lazy with the idea that they’re the only game in town, so you’ll be forced to buy what they offer.
That does presume that both (or all) builders are offering something useful.
That’s a good presumption…and I believe that in our case with two locomotive builders…that is the case. I don’t think EMD’s product is vastly inferior to GE’s and vice versa. Back in the 80s it could be argued that MLW’s products were not as good as EMD’s…however even in that case CN and CP it could have been argued that CN and CP could have worked with the builder to iron out the bugs…a true partnership does require cooperation and collaboration from time to time, and had CN and CP done that they would now still have a third builder to work with.
That has been confirmed here at least once within the last 2 years or so by an authoritative source with one of those Class I’s. The same concerns and behavior can be seen in the airline industry - i.e., Boeing vs. Airbus. And computers - MicroSoft dominates, of course, but there are other Operating Systems out there which are adopted instead for various reasons. More than one observer has commented that “Competition is good for the soul”. A ‘check-and-balance’ system of some kind is essential for proper functioning of the market, and has value beyond the mere price of the latest order for locomotives. I suppose there are limits to how far ‘down’ the underdog can get until the industry will forsake it - but then there are still a few minority-builder types to possibly pick up the slack.
Don’t forget the already-purchased locomotives from that builder, either, which will continue to need spare/ replacement parts, technical support, possible upgrades/ rebuilds and enhancements, etc. Some of that could be provided by ‘after-market’ vendors, sure - but none of them are likely to have the technical and test knowledge of the engines themselves and ‘overall view’ that the builder does.
Fortunately, there appears to be enough life left in EMD to keep the ‘horse race’ going for the forseeable future, which will be good for everyone involved.
- Paul North.
This discussion has become heated in the Locomotive forum in the EMD rising thread.
1: Operating Systems is simply not a valid comparison. There are specific applications where linux or Windows are the only viable option and, because of that, there’s no need to “preserve the competition.”
I think that the case for this in Locomotives is overstated…in the year 2010.
10 years ago, Union Pacific put in an 800 locomotive order with EMD for SD70Ms. They did that in part to keep EMD afloat and in part, because GE was overbooked.
As the Trains article states and as others through the industry will say, the ACe and M-2 are solid products and EMD has regained market share IN A DOWN ECONOMY. Yes, they still have fewer orders than GE, but they are not being kept on life support in order to provide competition.
Remember EMDs cost more up front, so footing the bill for an ACe as an act of charity is going to be frowned on by the finance department even though their maintenance over time is less.
If the financials allow the long term approach to things, and I think that’s a cornerstone in railroading, spending a little more now to save more later probably makes good fiscal sense. AKA buy one good one instead of two or three less expensive ones.
Also…if one locomotive builder goes down, the only one left in the market will freely raise prices as it sees fit. Can you imagine if EMD or GE had no competition? It would be …you want a locomotive? Here it is…take it or leave it.
Exactly. Any competent and honest modern purchasing and procurement person will tell you that the last position they want to find themselves in is having only a ‘sole-source’ for a major and essential component of their business. The ‘best practices’ of that profession put a lot of effort into developing a ‘diversity’ of and alternative suppliers/ vendors/ purveyors - some of that is motivated by lower price competition, sure, but it’s also to have a variety of features and associated ‘price points’ to choose from when needed, to avoid vulnerability in the event of natural disaster or man-caused events, political turmoil, business misjudgments, and other adverse circumstances. Which is why over recent decades we saw the Krauss-Maffei diesel-hydraulics testing here, the ASEA AEM-7 instead of both EMD’s and GE’s electric locomotive offerings for ConRail or Amtrak, the Swedish ICE high-speed train as a precursor to the Acela, the Romanian “Quarter-Horse” switcher, the ALCo line continuing limited production as MLW, BN’s propane or natural-gas fueled locomotives, and no doubt some others of like kind that I’ve since forgotten.
- Paul North.
Keep in mind these two things things.
ONE: GE and EMD aren’t the only locomotive builders around, unless you’re talking about road power.
TWO: Ge and EMD don’t have all the same things. for example, GE has Locotrol whereas EMD has better moving diesels.
Well, Locotrol works perfectly well in an EMD as it does in a GE and has for many many many years.
I’m not saying support for multiple sources isn’t desirable. That alone explains how Caterpillar was able to put out it’s failed attempts in the past . I’m saying, in the year 2010, EMD isn’t a charity case. It offers a valuable product.