Friday, September 04, 2009

GE Transportation sees tough year in 2010

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GE Transportation forecasts a "very tough and bleak" market for new railroad locomotives through 2010, since "[t]here are no (U.S.) customers who are actively purchasing right now," company President and CEO Lorenzo Simonelli says, adding, "North America, from the standpoint of purchasing locomotives, is not moving." 

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Simonelli (pictured at left) previously has estimated that locomotive production from Erie, Pa.-based GE Transportation would decline roughly 44% in 2009, to 485 locomotives, and possibly by 50% in 2010 from a base of previous estimates.

GE Transportation, a subsidiary of Fairfield, Conn.-based General Electric Co., relied on locomotive manufacturing and related service for more than 70% of its 2008 revenue of $5 billion. But the company has been affected as Class I railroads have sidelined much of their locomotive and rail car fleet, though carriers such as Norfolk Southern and Union Pacific began redeploying some of their sidelined fleet as August drew to a close.

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Simonelli, acknowledging the moves by NS and UP, cautioned that it doesn’t offer the hope for significant new orders.  “Freight volumes going from negative20% to negative 16% don't do much for a manufacturer," he said.  Simonelli said GE has some alternative plans in motion to generate revenue, including an effort to bid to supply versions of its fuel-efficient locomotives for planned U.S. high-speed passenger rail service. GE Transportation already provides passenger locomotives for conventional rail passenger services, including Amtrak.

GE and other suppliers also are talking to government officials about a possible effort to replicate a federal “cash for clunkers” effort to upgrade the nation’s freight locomotive fleet with more fuel-efficient engines.