WILMERDING, Pa. and CHICAGO — Wabtec and GE Transportation are combining, according to a statement released at 7 a.m. Eastern time today, creating what Wabtec says will be a “Fortune 500 company [and a] global leader in rail equipment, software and services, with operations in more than 50 countries” and approximately $8 billion in revenues.
GE had announced in November 2017 its desire to sell its transportation unit, the leader in locomotive production which is also involved in the marine, mining, stationary power, and drilling industries. Wabtec, which makes equipment and systems for passenger and freight railroads, had recently emerged as the most likely buyer.
Wabtec says the transaction is valued at approximately $10 billion, after adjusting for the tax benefits to the new company. While Wabtec is calling the transaction a merger, GE will receive a $2.9 billion up-front cash payment, and GE and its shareholders will receive 50.1 percent interest in the new company.
Wabtec Chariman Albert J. Neupaver will be executive chairman of the new company. Rafael Santana, president and CEO of GE transportation, becomes president of Wabtec’s freight segment. Wilmerding, near Pittsburgh, will remain corporate headquarters, with the freight segment based in Chicago.
Trains News Wire will have more on this developing story as it becomes available.
Its time for the United States Department of Justice to step in & put a stop to this.This is not great news for all the locomotive business being built in this nation as it was said below.Because it all is being funneled to one company & that is not Electro Motive Diesel.one company has a monopoly on diesel locomotives which is why I live near a NS line that is drunk with these overrated D9-44CWs.Of the hundreds of new locomotives ordered in this country only a handful of these are ordered from Electro Motove Diesel while the rest of them go to their monopolistic competitor
I disagree with Mr. Jeffries notion that locomotive production will move off-shore. GE already sources engine and radiator cabs from Mexico. Traction motors come from Peterborough, Ontario; truck frames come from RSA (Republic of South Africa). A host of vendors make electronics and wheel-sets, etc. The auto industry model has been fully embraced. The company has made what seems to be a firm commitment to the Grove City engine plant for both new and rebuild orders. The engineering and plant capital costs of setting up off-shore are probably prohibitively expensive. Developing increasingly complex locos is both time and talent intensive. Aftermarket sales of spares, maintainance and repairs have for some years now exceeded new loco sales. I would not be surprised if an FL9 type of dual power unit will be required throughout much of California. Battery power is not yet, and quite possibly will not be for a number of years, mainline capable.
What we see here is the final act of the disaster sowed by the greed and short term business model of Jack Welch and his minions. From the head long dash into the financial world and stock manipulation and sub-prime mortgages, to the forced ranking of the salaried workforce and then firing the bottom 10% of your employees every year (do that and see how well your morale does!) GE has lurched from one disaster to another. Unlike Mr. Conaway’s mis-informed comments, unions and the workers who actually produced something had little to do with this disaster. I predict under Wabtec that locomotive production in Fort Worth will not last long as it will be quickly moved outside the U.S.
With the sale of GE Transportation to Wabtec we can expect to see far fewer new locomotives being built. Just like how General Motors rid themselves of EMD, they know when an industry is dying.
Next question will the Dept of Justice have anti trust concerns?
Agree Mr. Conaway. But while most unions if not all have made concessions to management over the past 30 years, Upper management have made record amounts of pay and bonuses for satisfying the investors while seemingly ignoring their products or services.
Nope, Erie fell victim to greed. Greed from the never satisfies Unions that make unreasonable demands that drive up labor costs to ridiculous levels, and greed from the Company that wants to pay it’s workers minimum wage.
The unaddressed question is “What becomes of the Erie, Pa plant of GE? How does it fit into GE’s past transfers of work to the non-union Fort Worth plant? Before the sale of TSBD was announced, GE had repeatedly said, and in fact did, transfer all new locomotive production to Fort Worth, inclusive of foreign orders that had initially been reserved for Erie. The Erie plant was to be used solely for engineering and prototype work. Removal of heavy production machinery and fixtures over the past year precludes, at least in the short term resumption of assembly work at Erie. The Erie area is anxiously waiting for answers. It’s ironic that the plant built to produce street and interurban cars, and later electrified major segments of the nation’s rail network, the builder of Milwaukee bi-polar electrics and GG1s and Pennsy E-44s should survive two world wars and the great depression and the 2009-2011 recession, would fall victim to bean counters. GE’s destructive venture into subprime lending and long term care insurance, brainchildren of neutron Jack Welch, have come home to roost. I guess that shows, once again, that even the smartest people, Welch among them, beguiled by prospects of quick wealth fall victim to inadequately evaluated ventures in which they have limited expertise.
Sounds like the kind of discount one gets at a “YARD SALE”
“FTA: “…Wabtec says the transaction is valued at approximately $10 billion, after adjusting for the tax benefits to the new company. While Wabtec is calling the transaction a merger, GE will receive a $2.9 billion up-front cash payment, and GE and its shareholders will receive 50.1 percent interest in the new company…”
The numbers seem to indicate that GE walks with $2.9 B in Cash? Not to mention GE gets 50.1 % of a greatly reduced valuation of their Locomotive Business. While WABTEC gets a ‘bargain’
Jack Welch was CEO of GE for 20 Years, and the value of that Corp rose on the order of something like 4,000%.
Since 2001 it has ‘dropped like a stone’. Once WABTEC is in, they have a whole lot of Corporate Culture to Change. Hopefully, they can manage their ‘Bargain’. If not, The whole operation will be in a vortex, down the drain!
Great news. Loco business firmly locked in North America.
Aww yeah, here comes Jerry waving the “Everything in life is the fault of the Unions” flag. Jerry, the railroad I work for, in 2016, had a poorer performance versus 2015 in terms of velocity, traffic levels, operating ratio, gross revenue and net income. But yet the executives managed to still reward themselves with bonuses and salary increases. Bonuses based on what? Reward for a sub par performance versus the previous year? And then they talk to us about winning as a team. But evidently we don’t lose as a team since the bosses still get the bonuses while the field people get told cuts and sacrifices must be made.
I will feel guilty about my pay raises (which trust me, aren’t as monsterous as you probably think not to mention give backs mentioned by Mr. Crowe) when management stops rewarding themselves for sub par performance and when a company goes belly up, the employees are let go while the bosses get golden parachutes.
I do not see this as being like General Motor’s sale to Berkshire. Berkshire was purely an investment firm, not a manufacturer like Wabtec and was simply out to sell the place at a profit. As a friend of mine who worked there told me, they swept the aisles, gave everything a coat of paint, and sold it as fast as they could. Wabtec is looking to the long term.