(The Erie Times-News posted the following article by Peter Panepento on its website on June 7.)
ERIE, Pa. — GE Transportation Systems Inc. is expected to meet its sales expectations for 2003 following a recent order by an unnamed company for 100 new locomotives.
The Lawrence Park company, Erie County’s largest employer, finalized a deal in late May to build 100 AC4400 locomotives for the customer, GE Transportation Systems spokesman Jeff DeMarrais said.
The deal, which had been factored into the company’s sales projections, means GE Transportation Systems likely will fill about 500 orders for new locomotives in 2003.
That’s good news for a company that has seen its locomotive production slide through an industry downturn that began in late 1999.
Since peaking at 911 orders in 1999, locomotive orders fell to about 750 in 2000 and 500 in 2001 before dipping again in 2002 to 470.
The latest round of orders could signal an end to that trend and offer more evidence the railroad industry is primed for a rebound.
Several major U.S. railroad carriers, including Burlington Northern, Norfolk Southern and Union Pacific, reported revenue growth during their most recent fiscal quarters.
For Burlington Northern, it was the first time it had reported year-over-year growth in revenue since the first quarter of 2001.
With improved operating conditions, some railroad companies may be more willing to invest upgrading their locomotive fleets.
Recent passage of the Safe and Flexible Transportation Efficiency Act, which offers federal incentives for transportation companies to upgrade their infrastructure, might also help fuel investment in new locomotives.
For workers at GE Transportation Systems, those investments could mean increased job security, as the company conducted several rounds of layoffs in 2000, 2001 and 2002 to meet the declining demand.
GE Transportation Systems managed to keep profits stable during the downswing, largely by expanding its service business, cutting costs and improving efficiency.