RAILWAY AGE, SEPTEMBER 2021 ISSUE: We talk with Alstom Americas Region President Michael Keroullé on the Bombardier Transportation integration and the Western Hemisphere railway market.
Michael Keroullé is President of the Americas Region at Alstom and is based at its regional headquarters in Saint-Bruno, Quebec. He is part of the Alstom Leadership Team and reports to Henri Poupart-Lafarge, CEO. The Americas Region has 13,000 employees across North America and Latin America. Prior to assuming his position in 2021 following Alstom’s acquisition of Bombardier Transportation, Keroullé was President and CEO of GE (General Electric) Steam Power, a $4.5 billion business with 10,000 employees in 60 countries worldwide. During his 24-year career, he held a number of global leadership roles at GE, Alstom Power and Lurgi, and has worked on four continents. Keroullé holds a master’s degree in chemical engineering from the Université de Technologie de Compiègne (UTC) in France and is an INSEAD Executive Education alumnus. Keroullé, relatively new to the rail transport sector, spoke with Railway Age Editor-in-Chief William C. Vantuono about Alstom’s recently expanded role in the Americas, and opportunities for growing rail transportation both here and abroad.
RAILWAY AGE: What are the similarities between the power sector, where you’ve spent most of your career, and transportation?
MICHAEL KEROULLÉ: The two businesses are very similar in the way they operate, with large projects, services and infrastructure. The transportation business is growing very fast, and getting involved with the integration of two large companies after having lived the same kind of integration at GE a few years back was a natural move for me.
RA: Tell me about integrating Bombardier Transportation. What’s involved, on an organizational level?
KEROULLÉ: Alstom doubled in size after the acquisition of Bombardier Transportation. We decided to rationalize the structure and create fewer but bigger regions. That’s why we decided to merge the former North America and Latin America regions. When we say regional, for us, a region is everything. I have, under my responsibility, rolling stock, signaling, integrated projects, maintenance, operating and maintenance activity, so all of that is part of the region. We don’t do much in rolling stock for freight, but we do have a large activity in signaling for freight. Most of the freight companies, when they buy signaling equipment, they buy it from us. It’s the business we took over from GE in 2015.
RA: Can we expect additional consolidation? What do you see as the primary drivers behind it?
KEROULLÉ: I think the industry is going to go through more consolidation. That’s what we’re seeing, like the acquisition by Hitachi of Thales. I don’t know exactly whether we’ll see anything as big as what we did with Bombardier, but consolidations are part of this industry. It’s not specific to this business, but consolidations happen because you need scale to be able to rationalize your investments. The investments needed are heavy, and there are long cycles businesses. You need sufficient capital to be able to invest in research and development, to be able to develop the right products, but you also need quite a far reach in terms of where you can place these products if you want to have the right return on the investments. It’s clear that this is an industry that’s suffered because it’s very cyclical. If you’re only in one market, you see the highs and the lows, but it’s very difficult to balance. When you’re in more markets, when you have a better geographic reach, then you can balance investments better, and also execute better. The Bombardier acquisition is really about that. It’s many, many things, but it’s also about being stronger in places where we were not, which also helps us even out the cycles.
RA: Certainly, rolling stock is quite cyclical. Right now, the need for replacement equipment has really ramped up. With signaling and train control, that’s more evolutionary, moving to CBTC, PTC, automation technology. Cyclicality on one side can be offset by growth in another.
KEROULLÉ: The Americas and the U.S. in particular are going to face something that’s never been faced before in terms of development. We are much less concerned with cyclicality going forward as we used to be because of all the need for replacement, repairs for the infrastructure, and the growth of collective mobility as well. If we look at the market, we believe that it’s going to be much more dynamic than it was in the past few years. The potential for North America business is huge, and it was a big driver for the acquisition of Bombardier.
RA: A lot of it is going to hinge on government funding. There’s a lot of it on the table now, in various streams, some of which are still unclear, but the general consensus is that regardless of what amount is ultimately passed, there is going to be a lot more available funding than we’ve seen in a long time.
KEROULLÉ: There’s a real need. I’m European, so comparing the rail transportation in France, Germany, Switzerland, Italy, to what we see in the U.S., we see tremendous room for progress.
RA: There has been a lot of movement with commuter rail and Amtrak, and light rail has grown almost exponentially. And now, high speed rail, where we have an opportunity to actually get a true high speed system in place. Where do you see the most growth opportunities in passenger rail, regardless of mode?
KEROULLÉ: We’re very proud to be the supplier of high speed in the U.S., the new generation coming with the Avelia Liberty for the Northeast Corridor, which we’ll be delivering in 2022. We’re really happy about this contract. It’s a high speed train made in the U.S. Some people say there’s no high speed train or no way to build high speed trains in the U.S., but yes, there is. We have as a company developed high speed trains over many decades in France. We’re very happy to see some of that coming to the U.S. It would be a great thing to have a high speed train between LA and San Francisco, but it’s still a long shot. We hope it’s going to happen, but it’s been in the cards for a long time.
My hometown in France is about 300 miles from Paris. Today, it’s an hour and 40 minutes by high speed train. When I was younger, the line was not high speed all the way. It was taking three and a half hours. Nobody was taking the train because three and a half hours is too long. We were driving, which was four hours. Today, if I want to commute between my own place and Paris, I just hop on the train. It’s one and a half hours. No one drives anymore. If you want that to work—300 miles, one and a half, two hours max—that’s what you should target because then people will never try to do anything else. Flights are not going to be competitive anymore. Driving is not going to be competitive, so if you’re serious about that, you have to target 350 miles, 400 miles, in two hours or less, door to door. That would be a great game-changer. We’re watching very carefully all the high speed projects in the U.S. We would love to be part of more of those. We have the technology, we can build in the U.S., we can be 100% Buy America compliant. We have to see if the funds are going to be dedicated to that in this round. Probably a more pressing need is regional or commuter trains, bi-levels. Amtrak has a large number of bi-levels that need to be replaced as well. We hope that will be part of that.
RA: You seem to be very enthusiastic about your new role in Alstom’s rail business. What is it about rail that excites you?
KEROULLÉ: Trains are fantastic. When you take interest in them, you realize how great they are technologically speaking, but also for what they bring to communities. It’s incredible. For me, running our Americas business, every region is exciting. There’s growth in transportation equipment solutions, but in this region the need is big, and it’s across vehicles, signaling systems, airport systems. That’s also an area that came in through the Bombardier acquisition, the people-movers. These are great systems. We do everything. We supply the vehicles, the signaling; we operate and maintain; we have long-term agreements to do all that. I went to visit some of those during my first round of visits in the U.S. I went to Dallas, for example. It is a great system. We are really enthusiastic about the potential in that region.
RA: How about emerging technologies? For example, the Alstom Coradia iLint, the world’s first hydrogen-powered passenger train. There’s a lot of interest here in that technology. We now have a number of light rail and streetcar systems with hybrid vehicles that can run “off wire.” The freight railroads are looking at battery and hydrogen propulsion for main line locomotives.
KEROULLÉ: We are seeing a lot of interest on the development of new technologies related to rail. For example, we see a lot of traffic when we post things on our website or on social media around hydrogen trains, zero emissions. “Green traction” has the highest traffic on our internet posts. For a guy like me coming from the power industry, it’s a very much needed industry, but it’s an infamous industry at the moment. You don’t want to say that you are involved in operating a coal-fired power generation plant. So it’s very refreshing for me to be able to say, “Hey, I build trains.” There’s a kind of affection associated with them, for many people.