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A Class I needs another six-axle locomotive to keep up with escalating coal traffic. A regional wants another four-axle switcher to deal with growing yard congestion. It might take them a while to find the power.

With traffic at unprecedented levels — driven by coal and intermodal demand — there’s no excess power in the North American market. Railroads have been acquiring more locomotives than they’ve been retiring the past three years, and the power shopping likely will continue.

“Class Is aren’t in a position to retire locomotives en masse, and I don’t think locomotive demand will be dying off in 2007 and 2008,” says Jim Husband, president of rail equipment financing consultant RailSolutions Inc. “When the Class Is start to retire more six-axle locomotives, that will be an early indication that demand will change.”

Railroads also are seeking fuel-efficient, environmentally friendly locomotives to reduce operating costs driven up by high fuel prices and meet stricter U.S. Environmental Protection Agency (EPA) air emission standards. The agency might issue a rule in 2008 that essentially would require railroads to replace their four-axle switcher fleet, locomotive builders say. They’ll eventually have to anyway because those locomotives are aging, says Husband.

“Four-axle switchers that were built in the 1950s or 1960s are still in service and they can’t go on for forever,” he says.

Locomotive builders of the four- and six-axle variety have reaped the benefits of a strong North American power market, and expect orders and production to remain at high ebb. GE - Transportation and Electro-Motive Diesel Inc. (EMD) — the continent’s largest locomotive builders — will produce a combined 1,200 units this year compared with 1,100 units in 2005, and project a similar total in 2007.

After delivering 800 locomotives last year, GE will deliver more than 850 units and several hundred locomotive modernization kits by Dec. 31, making 2006 the company’s busiest-ever year, says Locomotive Product Manager Len Baran.

Because GE’s backlog totals more than 1,100 locomotives, orders will be flat next year — but another 800-plus units is hardly a booby prize, says Baran.

No reduction in production
To keep up with demand, GE plans to increase production output 15 percent in 2007 by improving manufacturing processes in all shops. For example, shop workers earlier this year began using air bearing transporters instead of overhead cranes to move locomotives from one work station to another on a cushion of air.

“Workers used to have to stop and wait for the crane to pass over,” says Baran. “Now, we don’t disrupt any work.”

GE officials expect the AC-traction, 4,400-horsepower Evolution Series^® locomotive to continue attracting orders.

Introduced in 2004, the model features GE’s GEVO-12™ 12-cylinder diesel engine and meets Tier 2 emission standards.

In addition, GE last year developed SmartBurn™ for the Evolution Series and other locomotives. Using Global Positioning System signals, SmartBurn creates a GeoZone in which a locomotive can be given different operating commands that control emission and performance levels.

“The Evolution Series offers the lowest burn of any heavy freight locomotive while meeting current EPA emission requirements,” says Baran. “The popularity of the Evolution Series and GEVO engine outside of the United States has been a surprise.”

Ace high
At EMD, the Tier 2-compliant, six-axle SD70ACe locomotive has been the company’s most popular model in North America. Introduced in mid-2003, the 4,300-horsepower, AC-traction unit has attracted about 70 percent of 2006 orders; the DC-traction SD70M-2 accounted for the remainder.

“Demand for Powder River Basin coal continues to be strong, driving demand for AC locomotives,” says EMD Manager of Locomotive Sales and Marketing John Cavanaugh, adding that a robust economy and the Class Is’ financial health helped generate orders overall.

Next year, orders will be similar to 2006, with the same 70 percent AC/30 percent DC split, he says.

Currently, EMD is making design and production changes to meet the FRA’s locomotive cab noise reduction rule, which will take effect in February 2007. The regulation mandates that noise-limiting features — such as improved insulation and vibration-reducing cab equipment — be integrated into locomotive design, manufacturing and maintenance.

“Isolated cabs will be a basic feature on our locomotives,” says Cavanaugh. “The SD70ACe already features an isolated cab.”

Brookville Equipment Corp. is making a few production changes, too. The company is expanding its Brookville, Pa., plant and ramping up production to begin building two new switchers next year and fill current orders, including contracts to supply 11 low-emission locomotives to MTA Metro-North Railroad and four locomotives to Staten Island Railroad.

Brookville plans to introduce a 2,350-horsepower, single-engine switcher and 2,100-horsepower CoGeneration switcher (soon to be trademarked) featuring three engines, batteries and overhead catenary designed to operate simultaneously or individually.

The CoGeneration switcher will meet “ultra-clean” or strict emission requirements, such as those mandated in the Los Angeles Basin area, says Vice President of Operations Larry Conrad, adding that Brookville also will offer after-treatment devices that “go beyond ultra-clean.”

The company expects to produce two of the new switchers per month beginning in second-half 2007 and four units per month sometime in 2008.

MotivePower Industries Inc. also plans to introduce a multi-engine, low-emission road switcher, which would offer reduced fuel consumption. The company will build a prototype in first-quarter 2007 and test the unit in the third quarter, says VP and General Manager Mark Warner.

On order
MotivePower also will be busy next year filling orders placed by freight and passenger railroads in 2005 and 2006. Orders include 13 MP20B-3 switchers powered by 2,000-horsepower Caterpillar engines for Union Pacific Railroad; 14 six-axle and two four-axle remanufactured locomotives equipped with new 2,000-horsepower, Tier 2-compliant engines for Pacific Harbor Line Inc.; five “clean diesel” Tier 2-compliant switchers for New Jersey Transit; and 27 commuter locomotives — which MotivePower will begin delivering in third-quarter 2007 — for GO Transit.

“We see the same order book next year, but the challenge really was this year, when out of 20 orders, 12 were in the start-up phase,” says Warner. “Because we’re on schedule, it makes us feel good going into next year.”

Officials at National Railway Equipment Co. (NREC) have reasons to feel good about the N-ViroMotive^™ Gen-Set locomotive heading into 2007. During an August test in the L.A. area, the 1,400-horsepower switcher matched the performance of a six-axle SD18 switch engine, which featured 400 more horsepower, and two more axles and traction motors. Both switchers pulled a 126-unit double-stack container train weighing 6,215 tons.

Next year, NREC will continue to deliver Gen-Sets to UP, which in February ordered 60 units for its L.A. Basin yards.

Positioning for a rebound
Meanwhile, RailPower Technologies Corp. officials are trying to regain momentum after a difficult third quarter. Producer of the Green Goat™ and Green Kid^™ hybrid switchers — which feature 130-horsepower diesel generators and recyclable batteries — RailPower last month reported that, as of Sept. 30, cash and cash equivalents totaled $9.1 million compared with $37.4 million on June 30 and $76.8 million on Dec. 31, 2005.

To improve liquidity, RailPower plans to implement a cost-reduction program, which includes job cuts. However, the company expects to land more orders in early 2007.

“Despite the financial situation, we are in discussions with several Class Is with respect to their low-horsepower locomotive fleets,” said RailPower President and Chief Executive Officer José Mathieu in a prepared statement. “We have submitted proposals for approximately 120 units to Class Is, and some potential industrial and overseas customers, and are hoping to generate new orders in the following two quarters.”

All North American locomotive builders expect orders to continue rolling in next year — and into 2008, as well. As long as railroads continue to post bulk commodity traffic gains despite a slightly softening economy, face high diesel expenses and address EPA emission requirements, they’ll keep purchasing locomotives that can address any or all of the issues, builders believe.

“Demand is so strong, we see no indications that there will be a market downturn, even in 2008,” says GE’s Baran. “And our international side is growing such that it would help offset any downturn in North America.”