Guest Comment: The Rail Resurgence - An American Growth Engine, by EMD's John Hamilton

Last month, President Obama named Ron Bloom as his senior counselor for manufacturing policy. Bloom's mandate is to "craft the policies that will create the next generation of great manufacturing jobs and ensure American competitiveness in the 21st century." While a large swathe of the U.S. manufacturing sector has witnessed an unfortunate degeneration over the past several decades, there are some bright spots that can serve as fundamental building blocks to achieving the Administration's important goals. The rail sector is one interesting example.

In 1862, President Lincoln signed the Pacific Railway Act, a monumental undertaking and one of the most important government projects of the Industrial Revolution. It created the nation's first transcontinental railroad. This new, robust transportation system unified the American economy and catalyzed the remarkable growth that marked the era. It also led to a prolific period in American innovation, and firmly established the United States as a global economic power.

Nostalgia aside, the rail sector can once again serve as the engine for growth and innovation in America.

A High-Speed Opportunity

The past century has presented various challenges to our U.S. manufacturing sector, but one thing remains constant — the nation continues to be the leading manufacturer and exporter of diesel-electric locomotives around the world.

In an interesting twist of fate, EMD, which was acquired by General Motors from my distant ancestor, H.L. Hamilton, in 1930, was sold back to private investors in 2005. Whereas GM viewed the sell-off of EMD as a survival measure, the remarkable story unknown to most is that the sale resulted in EMD's survival. In the four ensuing years, EMD has increased investment in R&D, nearly tripled our capital expenditures, doubled revenues, increased exports five-fold and grown our U.S. labor force and supplier base significantly. And, I should note, this has all been accomplished in the absence of any federal cash bail-outs.

I see great prospects for the future of rail. Developments in the locomotive sector support a variety of President Obama's goals, including: facilitating more efficient travel, increasing jobs, reducing emissions, increasing economic competitiveness and decreasing the U.S. dependence on foreign oil.

As the U.S. considers implementing a high-speed rail program, this would be an excellent opportunity to support President Obama's manufacturing revitalization vision. There is a widespread misperception that high-speed locomotives must be sourced from manufacturers in Europe or Japan. I would like to correct this notion.

The United States has existing manufacturing capabilities and a high-skilled labor force to meet the anticipated locomotive requirements for high-speed rail. In fact, America was at the forefront of high-speed train travel back in 1934, when an EMD-powered locomotive, the Pioneer Zephyr, traveled from Denver to Chicago achieving a top speed of 112 mph. That breakthrough formed the foundations of EMD's diesel-electric passenger locomotive technology, and this commitment to revolutionizing locomotive technology continues.

A Lot to Leverage Here

Today, our locomotives are tailored to the current U.S. rail infrastructure, which allows top speeds of 125 mph. Through innovation and possible partnerships, we can expand our highly qualified U.S. workforce and manufacturing base to meet the proposed 150+ mph high-speed rail requirements.

And now, with cleaner fuel, more efficient engines and improved emissions control technology, petroleum consumption and greenhouse gas emissions are greatly reduced, resulting in lower transport costs. Such efforts are typified by EMD's repowering program, in which 30- to 40-year-old locomotives are upgraded to the latest diesel engine technology while re-using most of the original components.

This is a critical time in the locomotive industry. Although the United States continues to be the market leader in diesel locomotive production, we see new competition springing up internationally that will soon challenge this position. In addition, due to the economic slowdown, domestic demand for new diesel locomotives has declined dramatically this year, with further deterioration expected next year. This makes the attention to new high-speed rail investments that much more important.

As Mr. Bloom and the Administration consider America's industrial strategy, investments in new technologies, the promotion of manufacturing-driven exports and leveraging America's existing, talented workforce and manufacturing capabilities to support our domestic requirements will greatly improve our industry's ability to prosper in these new and challenging market conditions.

John Hamilton is president and chief executive officer of La Grange, Ill.-based Electro-Motive Diesel Inc.