EMD is now owned by CAT. Yep. Through the subsidiary outfit Progress Rail Services, and $820-million... EMD is once again somewhat publicly traded on the BIG BOARD.
CAT is one of the steadiest, most reliable pieces in the Dow-Jones 30 industrials. In my opinion... This ought be a pretty good fit for CAT.
I may hafta get in on this...for the future... In my Roth IRA.
Maybe 200 shares of CAT ta start? Yeah... Maybe. But I gotta do a bit more research just in case...
Thanks for the heads up Snippy!
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Caterpillar Inc. is pushing further into the rail business by buying a maker of locomotives, and taking on General Electric Co. in the process.
On Tuesday, the heavy-equipment maker said it would pay $820 million for Electro-Motive Diesel, in a bet that freight transport will grow as the economy strengthens. Experience WSJ professional Editors' Deep Dive: Rail Chugs Toward Recovery
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Caterpillar, which with this deal has invested $2 billion since 2006 in the rail and transit sector, said its acquisition of Electro-Motive Diesel will make it the second largest locomotive and rail services provider in the U.S. behind GE. The investment adds a production component to Caterpillar's existing rail repair and service business.
"This acquisition represents the latest step in our strategic plan to aggressively grow our presence in the global rail industry," said Caterpillar Vice Chairman Doug Oberhelman, who takes over as chief executive of Caterpillar in July.
Electro-Motive, which was owned by Berkshire Partners LLC and Greenbriar Equity Group LLC, had sales of $1.8 billion in 2009. Berkshire and Greenbriar bought Electro-Motive Diesel from General Motors Corp. in 2005, paying $201 million.
In 2006, Caterpillar spent $800 million in cash and stock to buy Progress Rail Services, a railcar maintenance and repair business. Electro-Motive will become a unit of Progress Rail.
For the last couple years, Caterpillar has been looking to expand into manufacturing-related services to help offset the cyclical demand in capital goods. Often during recessions, companies invest less in new equipment than in servicing existing machines. Providing aftermarket services allows Caterpillar to tap into a stream of revenue when original equipment sales slow.
The rail business has been under pressure as the recession put the brakes on demand for diesel trains to transport goods across the country. But government spending on stimulus projects is expected to spur rail projects, as will demand for consumer goods as the economy recovers.
"What this does is position them as one of the top two players in the U.S., along with GE," says Lawrence De Maria, industrial analyst for Sterne Agee.
Once the Electro-Motive Diesel acquisition is completed, expected by year end, Caterpillar, along with its subsidiary Progress Rail Services, will have the biggest locomotive customer fleet on the rails, he said. Electro-Motive Diesel has an installed base of 33,000 locomotives, and an expanding presence in China and India.
GE has 15,000 locomotives operating world-wide.
The deal combines two Illinois companies: Caterpillar is based in Peoria and Electro-Motive is in LaGrange.
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Caterpillar came close to bankruptcy in the early 1980s, at one point losing almost $1 million per day due to a sharp downturn in product demand as competition with Japanese rival Komatsu (who at the time used the internal slogan "encircle Caterpillar"[57]) heated up. The company also suffered when the United States declared an embargo against the Soviet Union after they invaded Afghanistan, causing the company to be unable to sell millions of dollars worth of pipelaying equipment it had already built. The impact of the embargo on the company was about $400 million.[58]
The results were layoffs and massive labor union strikes, primarily by the United Auto Workers against plants in Illinois and Pennsylvania. Several news reports at the time indicated that products were piling up so high in facilities that temporary workers hired to work the lines could barely make their way to their work stations.
In 1992, Caterpillar fought the United Auto Workers in a five-month strike, threatening to replace its entire unionized work force. Caterpillar had offered a contract that would have raised the salary of top workers to $39,000 in 1994 from $35,000. But the union was seeking the same top wage of $40,000 that was paid workers at Deere & Company in 1994.[59]
Caterpillar's response to these labor conflicts was to "farm out" much of its parts production and warehouse work to outside firms: Rather than fighting the union, Caterpillar has made itself less vulnerable to the tools traditionally available to organized workers. Caterpillar also made effective use of office staff during the disputes, suspending research and development work to send thousands of engineers and others into their factories to fill in for striking or locked out union members.
Caterpillar also embarked on its "southern strategy," opening new small plants, termed "focus facilities", in right to work states such as North Carolina (Clayton and Sanford), South Carolina (Greenville), Mississippi (Corinth), Tennessee (Dyersburg), Georgia (Griffin LaGrange), Texas (Seguin), and Arkansas (North Little Rock), where labor laws provide more protection for workers not wanting to join unions.
Apparently...CAT is not a Union Company. In fact, they hate unions. Yet the 'ethics' statements sound an awful lot like their internal politics have indeed been affected by the strikes they've gone through.
EMD's Canadian workers are organized under the Canadian UAW. I'm wondering...will they fire everybody working at EMD?
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The one thing that pleases me over this 'buyout' of EMD, is that GE didn't. Otherwise we'd have another Anheuser-Busch death of a good brewer ta mourn.
Uke remembers the killing of Rolling Rock by A-B.
If GE had bought EMD...there'd be NO competition, nothing but GE power in your consist. Calvin would be hosting the next BJ Summit. And a rain of frogs, Bubonic Plague, gnashing of mandibles...
...and worse!
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Cat being in the position to take over EMD should be a warning signal rather than a chance for great profits. Everybody is entitled to enterpret the daily news the way the media presents it. I still can't figure "what" needs to happen for the nations railroads to rebound to previous "high water marks". Those "high water marks" are history not to be repeated again. New loco orders whether it be GE or EMD/Cat are going to be sparse in the future. The railroads see the handwriting on the wall.
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If you are in a horror movie, you make bad decisions, its what you do.
The SD40-2 was first introduced in January 1972 to combat the increasingly popular GE U30C and the MLW M630 at the time. Although it was not a high-horsepower locomotive, its 3,000 HP (2,240 kW) EMD 16-645-E3 engine made it very reliable and economical, which proved itself during the 1973-1980 oil crisis as where most high-horsepower locomotives over-consumed diesel fuel.
The SD40-2 was a technological improvement from the SD40 or any model before it. Using easily exchangeable, modular electronic control systems similar to those of the experimental DDA40X, the SD40-2 now featured a control cabinet that improved availability, efficiency, and ease of maintenance.
Until 1979 or 1980, the SD40-2 was found everywhere. From coal trains to piggybacks to mining trains and regular general freight trains, the SD40-2 served its purpose. The sales of the SD40-2 began to diminish after 1981 due to the oil crisis resolution, a return of higher-horsepower locomotives, the rise in AC-powered locomotives, and General Electric's first introduction of a microprocessor-equipped locomotive, the B36-8, in 1982. The last SD40-2 constructed to a United States railroad was in August 1984, Canada in July 1985, Mexico in February 1986, and Brazil in October 1989.
United States was not the only place where an SD40-2 could be found. The SD40-2 saw itself in service in Canada, México, Brazil, and Guinea. To suit export country specifications, General Motors designed the JT26CW-SS (British Rail Class 59) for Great Britain, the GT26CW-2 for Yugoslavia, Korea, Iran, Morocco, Peru, and Pakistan, while the GT26CU-2 went to Zimbabwe and Brazil. Various customizations led Algeria to receive their version of a SD40-2, known as GT26HCW-2.
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