Western Railroad Discussion > EMD derails about 600 jobs - Thank you BNSF

Thank you BNSF!

LONDON (Ont.) FREE PRESS January 31, 2009

EMD derails about 600 jobs
By JONATHAN SHER
Electro-Motive Diesel in London will cut about two-thirds of its workforce in the next three months, shedding about 600 jobs, a toll worse than expected just weeks ago.
A Canadian Auto Workers union official confirmed yesterday there'll be three major rounds of job cuts at the locomotive-making factory in February, March and April.
While perhaps 90 or so employees may chose an incentive package for early retirement, the rest will be laid off or terminated.
"It's obviously another piece of bad news as we go through this economic crisis," CAW Local 27 president Tim Carrie said.
The job losses at Electro-Motive Diesel, one of London's largest industrial employers, are a casualty of the global economic meltdown that's hit especially hard in the United States, which has been a major market for trains.
The pain may not stop at the Dundas Street plant that's still known to many Londoners by the name of former owner, General Motors Diesel. Part suppliers will also suffer, said London Deputy Mayor Tom Gosnell. "It's very bad for the city of London . . . It has a huge ripple effect. It's very sad news for the employees and their families."
An hour after lfpress.com reported the job cuts early yesterday, Electro-Motive Diesel issued a media release.
"It's fair to say it's a significant reduction," said Walter Hannan, the company's vice president of human resources.
"Layoffs were a last resort."
Management jobs also will be lost, plus jobs at a smaller company plant in LaGrange, Ill., that makes engines and alternators, Hannan said.
The London plant is expected to recall some workers in late July or early August to fill orders for locomotives, but Hannan wouldn't say how many -- only that they'd be back on the job through the end of the company's fiscal year, March 31, 2010.
The union had been told earlier this year to expect job losses to total between 350 and 400 of its 900 workers.
It's clear the global recession has taken a bigger bite out of the business of selling locomotives, Carrie said.
The fallout can be seen in the latest figures on freight traffic both in Canada and the U.S., said Tom White, a spokesperson for the Association of American Railroads.
Freight volume has dropped significantly since November, and for the first three weeks of 2009, U.S. railroads reported cumulative volume of 806,168 carloads, down 16.8 per cent from 2008.
Drops in Canada have been similar.
"We are a creature of the economy," White said. "If the economy doesn't produce it, we don't move it."
Even before the sharp economic downturn, a contraction in production seemed certain, he said.
In recent years the industry built between 900 and 1,000 locomotives a year, far above production levels in the 1980s and '90s.
"Some contraction was inevitable," White said.
That trend was evident at Electro-Motive Diesel, which recently had back-to-back record sales years as hourly employment grew by 42 per cent in the U.S. and 35 per cent in Canada.
The swings between banner years and more challenging ones is partly a reflection of an industry where employment is based on a relatively few number of big contracts.
"This business is one of cycles," said Peter White, chief executive of the London Economic Development Corp.
London is the only Electro-Motive plant in the U.S. and Canada that builds complete locomotives. Its Illinois plant builds engines and alternators, while a plant in Mexico does assembly when there's too much capacity for London.

What, Is BNSF the only railroad buying EMD? Or should it read not buying? With cutting that much of the workforce it sounds like there aren't many orders from anyone in the books.

BNSFCSX

...it won't take too long before we hear the figures from GE as to how the economy is going to effect them, with all those units we've seen pictures of here on TO sitting idle, you can bet the bean counters are taking serious second looks at future acquisitions of brand new equipment. I think you may see some of the old stuff around for a while yet, if you can get more miles out of the older stuff without putting a lot of dollars into them, it's a lot cheaper than brand new Gevo's or Ace's, I know they may be better for the environment, but right now all eyes are on the economic situations, will get things back on track (pun intended) and then we can take further looks at the environmental concerns...
...just my thoughts on the issue...

cheers,

Lorne Miller

These are economic rough times for all railroads and related industries--BNSF is being prudent in their decisions and are accepting the orders they have placed even with 750 locomotives parked--reason for accepting orders are two fold better fuel mileage and meeting enviromental standards.

Thank you BNSF should be in reference to them not cancelling orders not resulting in EMD decision to layoff additional employees.

Dale Smith

No doubt spending is down, as it should be. Aye, a shot was fired across BNSF's plow for the 350 unit GE order. The trade press railway want two builders to avoid being the victums of a monopoly. But when the smoke clears, GE could very well be the only left standing. But again, NS may be hedging its bets by supporting Prgressive aka CAT in its rebuilding bid.

Time will tell...

CP9122

Interesting, during the earnings call BNSF said they were not cutting capital expenditures for locomotives this year. Mainly because they had contracted for this years purchases and could not get out of them. I would assume that most of the other big roads would have similar deals, which would mean that EMD must not have had much business to begin with to be laying off people so early into the downturn.

GE might see layoffs about the time things turn around if purchases down the road aren't made now.

I've killed more than one CAT with a hydraulic drive and they need to address some
durability issues in their larger motors but that being said they do a hell of a job in
emissions controls.The CAT guys at the dealer level will tell you that the demand for
Tier III motors is such that it's the bulk of their engine only business. Considering all
that and with some decent electrical upgrades one can build a nice compliant
locomotive out of a GP40 frame and metal, NS is on the right track and that piece
will make a lot more sense than the current multi engine "things".

CN has 40 SD70M-2s on order for 2010 in addition to the 40 new ones for 2009.

There was a news item somewhere on this screen recently, quoting a piece in one of the two Pittsburgh papers, that told of layoffs announced at the GE Erie plant due to a reduced level of loco orders. To put this in some sort of perspective, in 1933 only 1 new steam loco was delivered to a major road by ALCO, Baldwin and Lima together, a 2-10-0 from Baldwin for the Durham and Southern.

Yes, GE Transportation has laid off 230 employees
at their Erie locomotive plant. GE expects a 44%
downturn in sales this year although they have a
1,500 locomotive backlog. Customers are, however,
delaying delivery of these orders.

> "Thank you BNSF"

Perhaps if EMD built better locomotives they would have a larger share of the market. Is BNSF supposed to buy locomotives it does not need during a down market? EMD had big problems even before the current economic downturn.

Buffet owns part of EMD and BNSF, so I don't think EMD will go in the tank. And talking to Motive power on a tour, CAT won't back their engine, or improve it for locomotives. So they quit using them. That was last year, so maybe Cat has or will pull their head out of the hole and step up.

mearsksealand Wrote:
-------------------------------------------------------
> These are economic rough times for all railroads
> and related industries- . . .

> Dale Smith


Has no one seen the financials for the railroads of late? They are the darlings of Wall St. Didn't most, if not all of the Big 6 report higher earnings for 2008, perhaps even all-time record earnings? It's rough times for the railroads' customers, owing to unprecedented rate hikes by the railroads and their rebasing of fuel prices in their contracts. What's bad for the customers, in this case, is what's good for the railroads.

Unfortunately, railroad employment is beginning to fall. This will hurt the employees, but I can't agree that the railroads, as entities, are having it so "rough", right now anyway.

qnyla Wrote:
-------------------------------------------------------
> > "Thank you BNSF"
>
> Perhaps if EMD built better locomotives they would
> have a larger share of the market. Is BNSF
> supposed to buy locomotives it does not need
> during a down market? EMD had big problems even
> before the current economic downturn.

EMD and GE are victims of their own success. When the ACes and Dash 9s replace 2.5 SD40-2s that means there are fewer locomotives needed to operate the trains on the RRs. The newer locomotives are also more reliable with lower amounts of downtime so there are fewer units needed for back up. This is what the railroads want and this is what the manufacturers are providing. The loco building industry has been feast or famine from the days of the steam locomotives and anyone who did not see this coming has not lived for more than 30 years or just has not paid attention.

usa4624 Wrote:
-------------------------------------------------------
> CN has 40 SD70M-2s on order for 2010 in addition
> to the 40 new ones for 2009.

No new CN orders in 2009. That order is for 2010 with 50 options in 2010. it is likely that construction of the CN order will begin in 2009. The 25 units recently/currently delivered is a 2008 order.

rehunn Wrote:
-------------------------------------------------------
but that
> being said they do a hell of a job in
> emissions controls.The CAT guys at the dealer
> level will tell you that the demand for
> Tier III motors is such that it's the bulk of
> their engine only business.


Really? The fact of the mater is they made such a mess of the emission technology in the truck engine business that they choose to exit the market rather than try to fix the problems. Their 2007 compliant truck engines were so bad that they were under 10% of the market PRIOR to announcing that they were going to leave the business at the end of 2009!