It was reported this morning on LocoNotes that Progress Rail is buying EMD.
Details can be found here-
http://www.breitbart.com:80/article.php?id=xprnw.20100601.CG12502&show_article=1
VERY interesting…we’ll see very soon how General Electric reacts to this news.
The linked news release says the price is $820 million, and that EMD will become a wholly-owned subsidiary of Progress Rail - which itself is a wholly-owned subsidiary of Caterpillar, Inc.
This acquisition makes a lot of sense to me. I was wondering what EMD was going to do for some ‘deep pockets’ to keep itself going and remain a competitior to GE. Cat has wanted into this market for years, but few of its efforts seemed to gain sufficient traction [pun intended]. This is the classic U.S. business alternative - “If you can’t beat them - buy 'em !”.
Thanks for posting this, Dale. [tup]
- Paul North.
It would seem to be another facet to the old saying about " Change being the one constant in life…"
The one question that springs to mind about this acquisition is " Is there any relationship between the entity of Warren Buffett’s Berkshire Hathaway group and this entity that is Berkshire Partners,LLC. or to include; Greenbriar .???
If there is, it would sure bode changes in the BNSF equipment area(?). One thing about it it will sure make some ultimatye changes in the 1’ to 1’ Scale railroad environment.[%-)]
Be interesting to see how this all shakes out ,over time.[2c]
Berkshire Partners and Berkshire Hathaway are two completely distinct companies (this subject came up on the boards numerous times when GM sold EMD):
http://en.wikipedia.org/wiki/Berkshire_Partners
So Cat finally gets it’s prize… Many may recall that Caterpilla
Interesting speculation on whose engine technology will be used.
Blade and/or backhoe optional locomotives soon?
Simple answer, whichever sells better. Likely the Marine and power products segments will be combined, at least will have a common sales force.
I would imagine that Caterpiller would have a hard time ending the 710 engine for Railroad purposes. The question is which design is better in marine and power apps and which has a bigger install base.
Is Caterpiller the type of company that would nix and outside design over their inhouse design? or would they choose the best?
And of course the other question is what of the Diesel engine designers.
EMD hasn’t been doing much lately, so maybe it’s a non-issue, but I would expect there is a lot of redundancy there…Of course, EMD seems capable of making an engine used in Rail Applications where as Cat seems to be less capable there.
Anyway, I’ve been expecting EMD to somehow combine with a manufacturer of Gensets and used engine sales. It makes a lot of Synergistic sense.
I don’t see GE doing anything in the face of this news. Why should they?
No - it’s just that a different kind of ‘track’ might be used under those future SD’s . . . [;)]
One benefit that comes to mind for EMD is financing locomotive sales through CAT. GE has had a big advantage because of their commercial financing branch.
I assumed that EMD leasing was equivalent…when backed by GMAC.
EMD’s marine/power generation sales of 710 based units is much larger than the GE marine/power plant applications. Since the 710 still has some ‘growth’ left in it, and it is Tier II certified - it will be around for the near future. This will allow the CAT/EMD engineers to develop a new power plant of the future. Sales have been poor since the recession(GE sales have been just as bad, but they have other revenue sources).
CAT has tried to get into locomotive power plants several times, but their higher speed engines have been considered ‘rough’ running. This could be a very good marriage of resources.
Jim
Don’t forget the H-Engine which I understand to be not unpopular in Marine and power applications.
It also represents a shift away from the 2-cycle Diesel that was EMD’s bread and butter.
The question is does Cat give EMD the resources to build the successor to the 710? Or do they give them the technology and stability to develop off of the H-Engine or off Cat products in the 4 cycle arena. Or do they just RIF a bunch of people form one or both organizations and call it good?
I wonder how many Engine design Engineers EMD still employs?
More than you might think. It has taken a lot of engineering expertise to take the 710G engine that didn’t meet Tier 0 emissions standards to one that meets Tier 2. Just because they still call it a 710 engine doesn’t mean that there are many parts that are the same as those installed on the first 60 series locomotives.
I have no doubt, but most if not all of that work was done when they were still a division of GM, I’m wondering if in their quest for profitability, how many of those people were let go in the past 5 years. And what of the H-engine design team which I assume was a separate group. Probably all RIF’d. Does EMD, today have the staff to build the replacement for the 710/H-engine Or is it just skeletal?
Its a funny thing that in the EMD engineering department there a lot of people that use to work for “Harvester” now International Truck and Engine in Melrose Park and visa versa.
Used to live a few miles east of their place. What were they called after International Harvester, but before the current name?
Did EMD poach these people to replace retirees or restaff after cuts or just natural attrition? I would think that those 2 are your best options if you work on that type of product and want to stay in Chicago.
The 710 is one of the most popular medium speed diesel engines in the world especially in heavy haul locomotive applications so I expect it to stay around for the foreseeable future and quite probably go through further development.
As far as possible 4 cycle developments while the 265 H engine will have support for some time due to the large locomotive order being built in China,It makes no sense at all for CAT to develop a clean sheet engine just for EMD locomotive applications. I would strongly suspect that future 4 cycle EMD engines will be developed from the CAT C280 and/or C175 engine families.
Some seem to be of the opinion that CAT can never built a decent locomotive prime mover of it’s own design due to the MK5000C (CAT 3612 engine) flop but I would point out that the EMD H engine was not successful in the North American Market either…
I wonder what will happen with the EMD ECO power 710 rebuild program for medium horsepower locomotives given that CAT/Progress Rail have been very active in developing repower packages using iin-house engine designs, the 3500 series in particular. These medium horsepower engines actually have had some decent marketshare in the Global locomotive market and recently have made some in-roads in the US…
They haven’t really made any inroads in the US. There has been some testing on the NS and no further orders.
The 710ECO has the advantage of being an EMD 710 which as you rightly point out is popular and has parts commonality and design similarity to a huge install base of EMD locos the world over. I don’t see how the Cat powered product stands a chance.
As for the H engine, it’s my understanding that not all of the SD90s problems were related directly to the prime mover.
I don’t know enough about Diesel engine manufacture to be able to give an educated opinion, but Cat’s problems aren’t just the MK5000, they have been involved in various and sundry attempts to enter the market that have largely failed. EMD seems to simply know what a locomotive needs out of a diesel engine. So I wouldn’t discount the work that they did on the H engine. It’s equally plausible that that work will influence all of Caterpillar’s designs.
Wonder if they will move the assembly plant into the states? [:-^]