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If I get the bread crumb trail in the article -- the unit has a paper value of $20 billion but only makes $4 billion per year out of $123B for them. So sell it off, make a $20 B return upfront and ... you know, waste invest it on some other new ideas... is the thinking.
One potential buyer would be Alstom transport. When Alstom power was sold to GE they got the trackside signal business in return as part of the package. They should still be flush with cash. Honestly, if the numbers above are correct, then a sale doesn’t make sense. Most businesses would be happy to make 20% annually. What also has me puzzled is that two years ago, when GE bought Alstom power, the stated focus was to concentrate on manufacturing and get away from the financial and credit markets. They did divest the financial stuff but their current activities don’t make much sense from the outside. Just mho.
Different guy at the top with different ideas plus he probably thinks the $20 billion should make $8 billion a year. A different market today-slow domestic market and they have satellite plants all over the world now.
As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
superwarp1 posted:Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
Apparently, those in charge, very much like the Boston Metro Area. I got to admit with the existing transit system, The big dig, and all other big city values, May be one of the best east coast metro living areas. Some serious history, built into Boston, I wish them well.
One of the Northeastern metro values, that is often overlooked is the colleges and universities. A supply of young high tech-savey engineers that may not necessarily be available along the gulf coast. I could be wrong and often. Mike CT.
Mike CT posted:superwarp1 posted:Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
Apparently, those in charge, very much like the Boston Metro Area. I got to admit with the existing transit system, The big dig, and all other big city values, May be one of the best east coast metro living areas. Some serious history, built into Boston, I wish them well.
One of the Northeastern metro values, that is often overlooked is the colleges and universities. A supply of young high tech-savey engineers that may not necessarily be available along the gulf coast. I could be wrong and often. Mike CT.
GE is under pressure from activist investors (read: hedge funds) to increase their share price, and manufacturing train engines might not have enough ROI for them. As far as moving their headquarters to Boston, there are a lot of reasons (where they were in Connecticut was not exactly cheap, either), the Boston area has a lot of high tech research universities (ya know, places like MIT, Harvard, Northeastern, and a ton of other places), and it is also the kind of place that can attract the kind of talented people they want, they aren't moving manufacturing there or the like, this is white collar corporate offices. There are places down south that would be attractive, but it isn't going to be the really cheap rural areas or the like, it is going to be places like the research triangle in North Carolina, Atlanta , or Austin, thanks to the research university(s) nearby, and Atlanta especially has gotten a lot more expensive and also is a commuting nightmare, and Austin is not particularly cheap any more either, and the research triangle has other problems these days I won't go into. GE is pushing themselves these days as a "digital company", with the ads with the dorky programmer who admits he works for ge and the other hipsters are aghast, etc, and those kind of companies want to be around where this kind of talent comes out of and wants to work.
Maybe EMD will buy them. 
EMD doesn't exist any more...
EMD, owned by Progress Rail, owned by CAT... That said, I haven't kept up with current happenings. You have my curiosity up now.
Dennis Holler posted:EMD, owned by Progress Rail, owned by CAT... That said, I haven't kept up with current happenings. You have my curiosity up now.
To be accurate, when General Motors Corporation sold EMD to Berkshire Partners, quite some years ago, the "EMD" ceased to stand for "Electro-Motive Division", of General Motors Corporation. The new name became "Electro-Motive Diesel", which it technically still is, as it is owned by Progress Rail (which is a wholly owned subsidiary of Caterpillar Inc.). All the "old" logos and names have been removed from the McCook plant, and the sign "out front" on 55th Street, reflects Progress Rail.
Yes, that is true, Thanks for reminding me.
Bottom line here is that this is a very cyclical market. Eight or ten years ago, railroads were still buying hundreds of new units and GE was king. Now that coal traffic is way down, and there is an oil glut (not so many tank cars moving US oil, more imports when it's cheap), railroads are parking hundreds of units, and new orders are in the tank.
EMD couldn't even field a Type 4 compatible loco for several years and missed the market (Type 4 is lower emissions, a 2 cycle diesel can't meet the standards, GE has had a 4 cycle diesel for many years - they have a product now).
The market will be back, but will GE wait it out? Not sure there will be a buyer at the price GE wants - at least, not now.
Might be a culture thing. Boston and Ft. Worth are in states that arex180 degrees apart in that department.
Both UP and BNSF have over 8000 locos each. CN, CSX, and NS have smaller but still significant rosters. If the past is any indication, a number of stored locos will never run again due to cost to overhaul, cannibalization, and high cost to operate, along with reduced reliability. If the economic life of a loco is about 15 years, and the economic life due to lower miles, etc. increases to 20 years, that says that BNSF and UP each should require about 400 locomotives per year to keep the roster costs under control. So when the market comes back, it should come back suddenly and in significant numbers. I think the idea of selling Transportation is premature at best. Not to be overlooked is the "Predix" style monitoring used by GE on new locomotives. If CEO of GE Flannery wants to grow this computer type activity, he has to have that equipment out there or Predix won't grow, his stated goal.
From a business perspective, downsizing and cuts will only go so far in improving results. At some point, you have to grow the purchaser base both wider and deeper. That is the top line....... Is a much smaller GE with a much more concentrated set of product offerings and customers a good thing for stockholders? I don't think so....... How many purchasers are there for jet engines, for example? Three counting the Dept. of Defense?
bigkid posted:Mike CT posted:superwarp1 posted:Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
Apparently, those in charge, very much like the Boston Metro Area. I got to admit with the existing transit system, The big dig, and all other big city values, May be one of the best east coast metro living areas. Some serious history, built into Boston, I wish them well.
One of the Northeastern metro values, that is often overlooked is the colleges and universities. A supply of young high tech-savey engineers that may not necessarily be available along the gulf coast. I could be wrong and often. Mike CT.
GE is under pressure from activist investors (read: hedge funds) to increase their share price, and manufacturing train engines might not have enough ROI for them. As far as moving their headquarters to Boston, there are a lot of reasons (where they were in Connecticut was not exactly cheap, either), the Boston area has a lot of high tech research universities (ya know, places like MIT, Harvard, Northeastern, and a ton of other places), and it is also the kind of place that can attract the kind of talented people they want, they aren't moving manufacturing there or the like, this is white collar corporate offices. There are places down south that would be attractive, but it isn't going to be the really cheap rural areas or the like, it is going to be places like the research triangle in North Carolina, Atlanta , or Austin, thanks to the research university(s) nearby, and Atlanta especially has gotten a lot more expensive and also is a commuting nightmare, and Austin is not particularly cheap any more either, and the research triangle has other problems these days I won't go into. GE is pushing themselves these days as a "digital company", with the ads with the dorky programmer who admits he works for ge and the other hipsters are aghast, etc, and those kind of companies want to be around where this kind of talent comes out of and wants to work.
You are forgetting something which I also forgot. The huge tax breaks the state gave GE.
The $20 Billion "paper value", maybe not be the capital investment. The 20 billion represents what they think they can sell the business for. Or it might be what is paid off vs what is still being paid for with loans. Usually when a business is sold, the buyer takes over the outstanding loans to the business.
Their investment in capital equipment (plant, tooling etc) may be much more than that perhaps 100 billion, then 4 billion ROI is pretty slim.
This is just a thought, not facts.
Only the inner financial circle knows-if they do. The board didn't even know the old CEO had an empty company airplane following him around. The Erie plant is so old it has to be paid off unless they borrowed off it.
Farmer_Bill posted:Maybe EMD will buy them.
How about Tata motors?
I have trouble saying Knorr instead of New York Air Brake, and it won't be any easier to say Alsthom instead of GE. I have always viewed foreign railroads and their equipment as lightweight, when compared to North American railroads and equipment, and it does not please me that they have been gradually taking over our railway supply business for a few decades. GE saw the future, and put a lot of work into making better locomotives from the mid-1980's on, when they first got maintenance contracts and saw what railroads had been putting up with. Today, they have a very good locomotive, and foreigners have not had great success with the gritty, round-the clock, minimal maintenance world of North American freight railroad locomotives. Their diesel engines have generally not been able to be left alone between 30-day inspections. Commuter railroads do not count -- their locomotives can be tinkered with every day if needed.
Besides, the sarcastic toaster references will not be meaningful when applied to some French locomotive.
Oh . . . and French locomotives are ugly. So there.
GE Manufacturing Solutions • Fort Worth, Texas. More than 10,000 jobs.
Source: Associated Press Archives 2013
Will this plant be under the chopping block?
Gary
Attachments
Ask the Erie folks.
jim pastorius posted:Massachusetts along with several other states are on my "do not go" list plus quite a few "I would never live there" list.
I have never been to Massachusetts but I do want to visit the Boston area someday just because so much American history was made there. I also want to visit the USS Constitution. It is the most famous ship in the American Navy. Friends tell me that the Boston history walk is inspiring.
There are plenty of states where I would not want to live mostly because they either have too much snow in the winter or are too hot and humid in the summer. I will say that every state has attractive elements and I have enjoyed every one that I have toured or visited.
I would hope that the government would look at the anti-trust aspects of any buyer that seeks to buy the GE locomotive business. I think it is important to keep some heavy manufacturing in American ownership and not to concentrate the industry into a few hands.
NH Joe
Odd as GE is building a locomotive plant in India to fulfill a 2 billion $$$ order placed earlier this year.
If GE stays in the locomotive business, then it's fine with me.
The article I read said that GE and the Indian govt. had a disagreement about the types of engines being built -like diesel vs. electric. Also read that some of the GE engines haven't been the best built. So we will see what happens.
My area is too hot and humid in the summer, and sometimes we get bad winters. Allentown, PA. Why have summers been more hot and humid lately and heat and humidity extending into September and even October?
GE may spin off business that builds locomotives in Fort Worth
Source: Star -Telegraim STEVE KASKOVICH and New locomotives lined up outside the General Electric Manufacturing Solutions plant in far north Fort Worth. Paul Moseley pmoseley@star-telegram.com
skaskovich@star-telegram.com OCTOBER 31, 2017
General Electric recently celebrated the fifth anniversary of making locomotives in North Fort Worth, but now the company is reportedly considering jettisoning the operation.
Last week, The Wall Street Journal reported that Boston-based GE is exploring options to divest GE Transportation including bringing in a partner, spinning off the division or selling it. The move comes as GE’s new CEO, John Flannery, looks to streamline the manufacturing conglomerate and sell more than $20 billion in assets over the next two years.
GE is also considering the divestiture of its health-care information technology business, Reuters reported.
GE opened its plant in far north Fort Worth, north of Texas 114 and west of the Texas Motor Speedway, in late 2012. The GE Manufacturing Solutions facility, which builds locomotives and railroad kits.
To read more: Click here
I went to this local newspaper to see if they had any new information. the news source was very similar to the original article in The Wall Street Journal, but they have a photo of CN locomotives waiting to be moved out. I also wanted to read the letters to the editor see to see if any of the employees at GE Manufacturing Solutions, made comments.
Gary
Attachments
Just as an update, GE had a dog and pony show today, and apparently they are planning to sell/spin off the locomotive business, as well as other divisions they describe as 'functional', like lighting and making solar wind turbines. They also are shutting down R and D labs (not a brilliant move IMO), and looking to pare down the 'GE Digital initiative' where GE had a goal to be the top notch provider of industrial software (those annoying commercials with the geeky guy saying "I work for GE" and saying "we do software, too"...guess not so much any more). Actually, it is kind of funny, on its commercials the one with the young girl saying "my mom works for GE" and the diesel locomotive had a steam whistle (!) sound), they prominently featured trains, wind turbines, energy monitoring systems, industrial software, and those are going away while it retains its core businesses in things like appliances, medical imaging, jet engines and power plant turbines, the things they kind of made fun of in their commercials.
https://www.nytimes.com/2017/1...;pgtype=sectionfront
The last I read they were getting out of the RR business. The question is: who would want the loco business with such a soft market?? My thought is they will put together a deal to let someone take it off their hands and their books. Has happened before. Will really be interesting to see what happens.
Number 90 posted:I have trouble saying Knorr instead of New York Air Brake, and it won't be any easier to say Alsthom instead of GE. I have always viewed foreign railroads and their equipment as lightweight, when compared to North American railroads and equipment, and it does not please me that they have been gradually taking over our railway supply business for a few decades. GE saw the future, and put a lot of work into making better locomotives from the mid-1980's on, when they first got maintenance contracts and saw what railroads had been putting up with. Today, they have a very good locomotive, and foreigners have not had great success with the gritty, round-the clock, minimal maintenance world of North American freight railroad locomotives. Their diesel engines have generally not been able to be left alone between 30-day inspections. Commuter railroads do not count -- their locomotives can be tinkered with every day if needed.
Besides, the sarcastic toaster references will not be meaningful when applied to some French locomotive.
Oh . . . and French locomotives are ugly. So there.
Tom,
I understand that you don’t believe that Alstom could make heavy diesel-electric locomotives for the North American market but have you considered the possibility of such a buyer, gaining the expertise to build such heavy locomotives, by acquiring GE’s locomotive business?
I used to work for Caterpillar & when Caterpillar acquired EMD, Caterpillar started announcing something like “with this most recent acquisition, we now have the world’s largest population of diesel-electric locomotives”, even though, I believe, that most of the locomotives were built before EMD became Caterpillar’s.
I also noticed that the internal digital photo archive that I used to get Caterpillar images for work presentations began to be loaded with EMD images, many from the decades before I was born.
So, if Alstom, Stadler or CRRC (China National Railway Locomotive & Rolling Stock Industry Corporation) were to acquire GE Transportation’s locomotive business, they could not only sell freight locomotives, to North American Railroads but also in other parts of the world where they haven’t been successful in beating GE & EMD, like freight locomotives for Saudi Arabia, United Arab Emirates, Mauritania & Western Australia.
These are just my opinion,
Thanks,
Naveen
From painful personal experience and observing many business take-overs, the new owners can't leave well enough alone and start making changes. Usually the first order of business is suck up the cash, then cut costs to pay for the new toy, dump employees who might question your moves and wonder why it isn't working. Been there several times. The Asians and Europeans have a superiority attitude about the US anyhow. Why? Beats me.
As of Sept. 27 the India diesel locomotive deal is back on with the first ones already being delivered.
Part of a Railway Age recent article...
" Hey GE, You want to be part of this industry? You have to be willing to work at it. To tough out the tough times. To roll with the cycles. To be focused on long-term value and growth, not short-term gains.
Just ask Warren Buffett. He knows. It’s why he bought BNSF.
Hey Mr. Buffett! I know a great locomotive builder you can buy if you’re interested. Lots of history. Good people. Great products. Innovative technology. Global reach. Talk to this Flannery character, when he isn’t watching his back. He’s looking to get out of a business he doesn’t understand or really care about."
What you see is GE shedding businesses they feel aren't going to be 'fast growers' along with general cost cutting (IE shedding jobs)...the reason is simple, GE's stock is around 18 bucks these days, and they are looking for ways to please stock analysts, and "mature" industries like the rail locomotive business are not going to grow at a stellar rate, not unless they come up with some incredible revolution in technology that literally is a game changer...which going forward, given GE is in cost cutting mode, isn't very likely, it is pretty clear the head honcho is slashing R and D expenditures among other things. The things GE is keeping, like aircraft engines, medical equipment and the like have large growth potential, they are markets where GE both has a large share, and also is growing between defense expenditures and the civilian aircraft market, and medical equipment is a huge, growing market, both domestic and international.
Will it work? Not sure, was watching one of the financial blah blah blah channels in our break room, and the stock is getting hammered, apparently even analysts don't believe this guy knows what he is doing. One guy they had on was openly contemptuous when the CEO said "we are getting expertise on the board", he said they suddently discovered know one on the board knew the businesses they were in?
As far as whoever buys the company, it likely is a combination of they feel like with economies of scale , things like HQ staff, IT, that are duplicated get whacked, and the marketing channel that company has and its technology will work with what they already do, and allow them to penetrate markets they haven't been in before.
From Progress rail this morning:
As part of a broad strategy to streamline the company, General Electric plans to shed its Chicago-based transportation division.
At an investor conference in New York City yesterday, GE Chairman and Chief Executive Officer John Flannery delivered the news that the company will divest GE Transportation from its portfolio.
"The company is in the early stages of this process and exploring a multitude of possibilities that may include, among several options, creative approaches used to transition GE's Consumer Finance business into Synchrony Financial or models like the Baker Hughes and GE Oil and Gas merger," GE officials said in a prepared statement issued after Flannery's presentation. "This move is in line with GE's broader efforts to divest $20 billion in assets over the next few years."
The statement continued: "The Transportation business remains committed to building on its strong culture of innovation, deep domain, world-class technology and digital solutions in a way that best positions the business for growth."
GE Transportation has been a leader in building passenger and freight locomotives for more than 100 years.
Flannery, who's been with GE for 30 years and formerly ran GE Healthcare, said the future for transportation is less promising than other businesses owned by the company, according to a Chicago Tribune report of his remarks.
"We foresee a protracted slowdown," said Flannery. "We think it's going to be an extended slow period in North America."
Maybe the issue with GE that they have so many product lines which to me have very little relation with each other.
CSX FAN posted:From Progress rail this morning:
As part of a broad strategy to streamline the company, General Electric plans to shed its Chicago-based transportation division.
At an investor conference in New York City yesterday, GE Chairman and Chief Executive Officer John Flannery delivered the news that the company will divest GE Transportation from its portfolio.
"The company is in the early stages of this process and exploring a multitude of possibilities that may include, among several options, creative approaches used to transition GE's Consumer Finance business into Synchrony Financial or models like the Baker Hughes and GE Oil and Gas merger," GE officials said in a prepared statement issued after Flannery's presentation. "This move is in line with GE's broader efforts to divest $20 billion in assets over the next few years."
The statement continued: "The Transportation business remains committed to building on its strong culture of innovation, deep domain, world-class technology and digital solutions in a way that best positions the business for growth."
GE Transportation has been a leader in building passenger and freight locomotives for more than 100 years.
Flannery, who's been with GE for 30 years and formerly ran GE Healthcare, said the future for transportation is less promising than other businesses owned by the company, according to a Chicago Tribune report of his remarks.
"We foresee a protracted slowdown," said Flannery. "We think it's going to be an extended slow period in North America."
How about saying: The transportation divisions are not giving us the rate of return we would like, and would like to sell to another concern at the best possible price. PLAIN ENGLISH!
Casey Jones2 posted:As of Sept. 27 the India diesel locomotive deal is back on with the first ones already being delivered.
Part of a Railway Age recent article...
" Hey GE, You want to be part of this industry? You have to be willing to work at it. To tough out the tough times. To roll with the cycles. To be focused on long-term value and growth, not short-term gains.
Just ask Warren Buffett. He knows. It’s why he bought BNSF.
Hey Mr. Buffett! I know a great locomotive builder you can buy if you’re interested. Lots of history. Good people. Great products. Innovative technology. Global reach. Talk to this Flannery character, when he isn’t watching his back. He’s looking to get out of a business he doesn’t understand or really care about."
GE has a plant and BNSF have a HQ in Ft. Worth.
At one time in the business world, diversified product lines were a good thing so when the TV and loco businesses would decline, the washer-dryer and refigerater market would be strong. So now the pendulum swings the other way. Gives the profs at business schools to talk about.
For the record, GE Appliances was sold off a year ago and is now owned by Haier, a Chinese conglomerate. Thus began a new “spin cycle”.
https://en.m.wikipedia.org/wiki/GE_Appliances
In the 1960's the stocks were in the 700-900 range. Not even a thousand. Good jobs around. Now it is smoke and mirrors. No wonder the circus quit. Just turn on the news every day for your fix.
Not surprised GE sold off their appliance division, I hadn't heard about that, but not surprised. For Haier it allows them to grab the "GE" brand, for what it is worth and be able to sell appliances under the GE name but made (likely) more cheaply in China. The stock market is not driven any more by solidly dependable companies turning in their "pokey" 6 or 7% on profits, and things like appliances and trains and the like are not going to give you that kinda "Zip", companies especially want things that are at least part nebulous, like that company making that hot new App that has never made money going public and zooming up, the investors, which today is very much driven by hedge funds and others that cater to the very well off whose mantra is double digit growth. "Value" investors, long term, things like Pension funds and the like, don't generally operate like that, they like things like dividends and reliability over the long term, but they aren't what drives the urge for rapid stock price appreciation.
It looks like analysts weren't convinced, GE has been getting slammed all over the place.
My source at GE Transportation (Ft. Worth) told me that Siemens and Bombardier are being mentioned as serious buyers.
Farmer_Bill posted:For the record, GE Appliances was sold off a year ago and is now owned by Haier, a Chinese conglomerate. Thus began a new “spin cycle”.
https://en.m.wikipedia.org/wiki/GE_Appliances
Haier has a facility in Camden, SC. I was recently in Camden for a week, on training, with my new employer & Haier had a facility in the same industrial park. They even had a Haier Blvd in that industrial park. According to locals, Haier had a presence in Camden at least since the 2000’s. There were a lot of trucks entering & leaving, which led me to believe that business must have been thriving. Good for Haier for creating / preserving jobs in America. The facility seemed to have GE Appliance branding at the entrance.
These are just my opinion,
Thanks,
Naveen
No matter what happens to the GE loco business they are out of Erie. Old plant, sky high wages and benefits. Ship the engines to the fab plant.
Maybe Norfolk Southern should buy GE's locomotive division. They already are experts on rebuilding locomotives, so why not make them new as well?
Stuart
Some years ago, I remember US Steel closing a plant and it sat unused for quite awhile-that is, until the union contract expired then Allegheny Ludlum bought it and spent many $$ modernizing the facility. So we will see.
Just playing devil's advocate with no research to back it up whatsoever, but I wonder if Bombardier would get into the game again? If they were somehow able to buy out the GE locomotive arm, then tracing the companies back several decades would be GE > Bombardier > Montreal Locomotive Works > Alco-GE 
