Re: A buyer for GE?
Author: SP5103
Date: 04-22-2018 - 09:11
I doubt Wabtec would reverse GE's decision to substantially limit production at Erie. My guess is that the new Texas plant is more efficient as it was designed specifically to utilize GE's modern locomotive building methods. Texas is possibly more "friendly" towards businesses and likely gave GE some serious tax breaks or incentives to relocate there. There is a good possibility that the labor costs and union contract is more favorable.
It was suggested in the Bloomberg story that GE may retain an initial stock interest as part of the sale, suggesting that it may initially operate as a separate public company controlled by Wabtec and GE.
It will be interesting to see what parts of GE are included in the sale, and how that affects Wabtec's other locomotive operations such as MPI, Q-Tron, Graham-White Salem, etc. Besides the locomotives themselves, GE has other business lines that could be included in the sale such as:
Mining - GE builds traction equipment for electric drive heavy quarry trucks using technology adapted from locomotives. I believe part of the Texas plant actually builds this line.
GE-Harris - GE owns Harris, best known for Locotrol. Today's DPU system is actually the latest generation of the Locotrol system.
Railroad electronics - IIRC GE sold of signal division US&S years ago (to Ansaldo?), but don't they own some kind of signal electronics and maybe PTC system still?
The basic issue with American industry is simple - The compensation for upper management, in proportion to its blue collar workers, has increased beyond belief. Is upper management really that more valuable to where they demand compensation packages of 10 times, 20 times or more of their average employee? And why is upper management rewarded for selling/closing divisions and cutting employees? Too much emphasis is put on satisfying the unreasonable expectations of investors/stock holders today versus the long term future of the company.