This looks like a good one, too bad i know squat about runnin a railroad. Now we switch this to mowers or fleet trucks and im in.
Adrianspeeder
This looks like a good one, too bad i know squat about runnin a railroad. Now we switch this to mowers or fleet trucks and im in.
Adrianspeeder
Which DRGW power do we want to look at getting rid of and why? What do we want to replace them with?
Randy
regarding the dash 9 being the best value as of today, these guys seem to have made their decision to buy emd as of these 1990 numbers. will they be inclined to switch to ge? i guess the clue is "…the UP buying 1000 sd70m 's ".
any way knowing nothing about the individual condition of these units or about their industry reputation, on behalf of the stockholders i would initially suggest culling the oldest units…say 6 of the gp9’s and 12 of the gp30’s. your earlier comment on rebuilt prices will lead me to hope i can get $150,000 per unit for a $900,000 total which i’ll put to use for first year’s maintainence. this leaves $10,000,000 to spend… before leverage. as to leverage i’ll put down $10,000,000 as 20% on a $50,000,000 order for 18 sd70mac’s which seem to have done well in the ns coal fleet (bobwilcox needs).
this gives me more net power on the same number of units. the financing costs of around 6% and continuing maintainence will need to be carried on the units profitability in up coming years.
randy, you’re the salesman in this exercize and the expert on the subject. where are we as far as the real world? what principles should the thread now deal with?
Your points on the DRGW fleet are in line with current reality , and your planned purchse of the EMD product makes perfect sense. The newer locomotives will be better on fuel, more reliable, and you can replace older units almost on a 2 for 1 basis. If you do switch to a GE product don’t forget that you will need the training and tooling thay goes along with this purchase and that cost should be added on to the purchase price. The KCS did just that a few years ago, they went from an all EMD railroad and bought several GEs. The real point of this exercise is to make you think ! You have a good grasp on the economics of railroad locomotive purchasing. Yes you can sell your excess locomotives and reduce capital expense.
Randy
randy,
thank you. this was fun.
ericsp’s input on the old roster gave the exercise a good focus point.
again, thank you.
I would get rid of all of the GP30s and GP35s. I might send a few GP35s per year somewhere to be rebuilt to GP38-3s, if local traffic warrented it . Also, the SD40T-2s, GP40s, and GP40-2s will probably need to be rebuilt soon, maybe even the SD50s. The GP40s were built in 1966-1971, the SD40T-2 were built in 1974, 1975, 1977, 1978, & 1980. Most of the GP40-2s were built in 1972-1974, with 2 in 1983. Even the SD50s were built in 1984. If we will keep the SD45s, we probably should look at rebuilding them to 3000HP and/or adding wheel slip control to them. Given the fact that they will probably be pulling heavy trains at low speeds most of the time, the current configuration will probably waste fuel.
The actual dispostion of the locomotives should gives us a clue about their condition. SP had got rid of most, or all, of the GP30s and GP35s before UP bought them out. I think most of the GP40s are off the UP roster, I am guessing they were rebuilt. Some of the SD40T-2s are in UP’s regular fleet, some in the surge fleet, and some have been sold. I know some of the sold locomotives are now on shortlines, I do not know if any have been scrapped. I think SP started retiring the SD45s.
Given the fact that in this exercise DRGW is not part of a large railroad, and does not have a good route, we will probably lose a considerable part of the regular freight traffic that DRGW had in 1990. Of course something else to consider is that SP owned DRGW by this time, so DRGW locomotives were probably common on SP rails and SP locomotives common on DRGW rails. However most of the locomotives were bought before Rio Grande Industries bought SP, therefore, I would guess that this is about the amount of locomotives DRGW needed before RGI bought SP.
This brings up a question. Will SP still be an independant company in this exercise? If they are, SP will probably send some freight our way, if not, it will probably all go UP. Either way, with traffic shifting to the Sunset Route, I am guessing we can co