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Western Railroad Discussion > GE settlement with Deutz
Date: 04/21/03 19:57
GE settlement with Deutz
Don Park had posted a link to this earlier but it was difficult to get at. My question on
all of this is, is GE out of the 6000 HP locomotive business? Anyway the following is
the text of the message:
A $35 million settlement to a locomotive engine dispute has put General
Electric Transportation Systems and one of its on opposite tracks.
AG will pay GE $20 million in two $10 million wire between now and May 12,
under the terms of a breach of contract settlement reached Wednesday in A $35
million settlement to resolve a locomotive engine dispute has put General
Electric Transportation Systems and one of its suppliers on opposite tracks.
Deutz AG will pay GE $20 million in two $10 million wire transfers between now
and May 12, under the terms of a breach of contract settlement reached
Wednesday in U.S. District Court in Erie. Deutz must also pay GE $15 million
for orders for 7HDL locomotive engines or parts.
It's possible GE could receive an additional $13 million. Deutz agreed to
pursue an insurance claim for that amount.
The parties reached the settlement after a two-day conference before
U.S. District Judge Sean J. McLaughlin.
The settlement amount represented substantially less than the $80 million GE
initially estimated it suffered in damages.
GE spokesman Jeff Demarrais said the settlement will have no impact on local
operations. He declined to discuss why GE agreed to settle the case.
"We settled a longstanding dispute with a supplier," he said.
The companies struck a much-lauded agreement in June 1993 to develop
lightweight diesel engines known as the "632 engine family." The engines were
built in Germany and at GE's Grove City plant and installed in locomotives in
GE's Lawrence Park plant.
GE said at the time that the engines represented the "next generation" of
locomotives for the industry and "the future of GE in Erie."
The new engine, the 7HDL, was expected to bring the locomotive industry the
highest available horsepower.
The deal lost steam five years later, however, when GE sued Deutz in December
1998 saying that it violated the 45-page contract.
GE claimed Deutz did not spend enough money on the project, leading Deutz's
subsidiary, MWM, also in Germany, to design engines that initially failed to
meet the contract specifications.
GE later fixed all but minor design problems and continued to install the engines
in its locomotives.
It has since ceased to manufacture the engine.
The suit sought to recover damages for the additional money GE said it had to
put into the project because of the problems with Deutz.
Date: 04/21/03 21:09
Re: GE settlement with Deutz
> Don Park had posted a link to this earlier but it was
> difficult to get at. My question on
> all of this is, is GE out of the 6000 HP locomotive
For the time being, I would say that yes GE is out of the 6000hp business. However, that is only due to the fact that there wasn't a strong demand for them, there still isn't a demand and the HDL prime mover has been undergoing an extensive redesign. Right now the concentration is on the 12 cylinder version, which is in the new Evolution series locomotives. The problems that the current generation HDL powered AC6000CW's have been well documented, particularly the CSX fleet. If this redesigned HDL is unsuccessful, GE is screwed because the FDL prime mover is not Tier II compliant and may not be able to be made compliant. But until there is a reliable prime mover and there is a demand, don't expect to see GE cranking out any 6000hp units.