Eastern Railroad Discussion > GE's export locomotive business in jeopardy

Reuters has a short piece today about General Electric's planned contract to export locomotives to Angola. The thrust of the article is the company needs support from the export import bank, a federal agency,  to compete in the world market. Opponents argue the company doesn't need "corporate welfare" and can do just fine seeking credit terms in the private market.

The company argues that it can't get terms as good as those available from Ex-Im from the private sector.  And that 1,800 US jobs in GE and suppliers in 12 states would be at risk.

GE and the Ex-Im

There's a parallel argument going on among Democrats over the Pacific Trade Treaty, which is favored by the Administration and many Republicans. In some views, the US labor laws would be superceded by the international treaties and resolution processes. Today's rulings by the World Trade Organization throwing out US meat labeling rules are a warning of what might happen.

It's hard for me to break out my crying towel for GE.  How "American" is a locomotive from Erie (or Ft. Worth) anyway?  Sure, the final assembly labor component is, but how many upstream (supplier/fabricator/vendor) jobs have they outsourced?  What really did it for me was seeing foreign made (I think they were Chinese and not the usual South African castings) trucks being TRUCKED to Erie.  By very definition a locomotive assembly plant has rail access, as does just about any port I can think of.  They've off shored so much that my sympathy for them is nil.

Agreed, but GE is an international conglomerate and they've done this for years with manaufacuring overseas.

Glad they like the Free Market. We know all their huge business in Wnd Turbines is Free Market derived. 

Interesting how they can finance Wind Turbines?

http://www.ge.com/in/wind-energy/business-financing
http://www.ge.com/in/wind-energy/business-financing

Bob

SCL1517 Wrote:
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> It's hard for me to break out my crying towel for
> GE.  How "American" is a locomotive from Erie (or
> Ft. Worth) anyway?  Sure, the final assembly
> labor component is, but how many upstream
> (supplier/fabricator/vendor) jobs have they
> outsourced?  What really did it for me was seeing
> foreign made (I think they were Chinese and not
> the usual South African castings) trucks being
> TRUCKED to Erie.  By very definition a locomotive
> assembly plant has rail access, as does just about
> any port I can think of.  They've off shored so
> much that my sympathy for them is nil.

The former GMD plant in London Ontario during the latter years;
everything inbound to the plant came by truck, only the finished product left by rail.

GE is also effectively a bank, recognized as such by the Federal Government's list of fiancial institutions that are too big to fail.  So why can't they borrow from themselves?

The Ex-Im bank is precisely the sort of export subsidy that we all whine about when other countries engage in it.

march_hare Wrote:
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> GE is also effectively a bank, recognized as such
> by the Federal Government's list of fiancial
> institutions that are too big to fail.  So why
> can't they borrow from themselves?

GE has already sold off its bank, and much of the company's credit finance business. Specifically so they can get the goverment off their backs.

Ironically, the government has let the "too big too fail" banks grow even larger since 2008.  Amazing what a river of campaign contributions will do for them.
>
> The Ex-Im bank is precisely the sort of export
> subsidy that we all whine about when other
> countries engage in it.

Yup!

Sir, I believe that if the facts were public we would know that GE maxed out all of the domestic casting manufacturers (all of one or two of them) and had to reach out to imports in order to keep up with the pace of demand from the North American railroads for GE's products.  As for using rail for movement of the castings, I am pretty sure that GE did their homework on which mode met all of their requirements (price, delivery, consistency, shipment size, etc.) and made the best choice.

Nothing is ever as simple as it seems, or as we would like it to be.

I suspect the reason they want the backing of the Import-Export bank because the credit or default risk of Angola is high. GE wants to have its cake and eat it too:   reap all of the benefits of the sale, while assuming as little risk as possible.   Its good knowing we have been propping-up the profits of companies for years under this scheme.   So much for the free market economy. 

march_hare Wrote:
-------------------------------------------------------
> GE is also effectively a bank, recognized as such
> by the Federal Government's list of financial
> institutions that are too big to fail.  So why
> can't they borrow from themselves?
>
> The Ex-Im bank is precisely the sort of export
> subsidy that we all whine about when other
> countries engage in it.

Several news outlets are reporting there's a deal on the Pacific Trade Partnership agreement, and on renewing the Export-Import Bank.  As with most Congressional agreements, the details are secret, and will be known AFTER the vote is taken. One major sticking point was how the PTP protocols would affect US disputes over labor protections, subsidies like the Ex-Im bank, etc.

Probably be a net plus for the railroads, gaining more import flow, losing some domestic shipments, etc

(It's not a  Democrat versus Republican issue.  Many rust belt Democrats oppose the bill, while northeast democrats generally favor it, along with the President.  The Candidate has not expressed her position on this sensitive issue)