High Speed Locomotive Contract for Five States Awarded to Siemans AG

A $226 million contract to build 32 higher speed diesel locomotives, capable of reaching 125 mph, was awarded to the team of the German conglomerate, Siemens AG and Indiana-based engine maker Cummins, Inc over Peoria, Ill. based Caterpillar, Inc.
March 4, 2014, 5am PST | Irvin Dawid
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What made the award to Siemens AG (teamed with Cummins) particularly remarkable was that it was done by the Illinois Department of Transportation on behalf of all five states that are developing high-speed intercity rail routes with Amtrak: California, Washington, Michigan and Missouri, and Illinois.

"Caterpillar's bid featured a locomotive with a 20-cylinder engine, but was priced higher at about $8.1 million per unit, or $260 million," writes Bob Tita. Caterpillar had protested that the $7 million Siemens locomotive "which would be powered with a 16-cylinder diesel engine, couldn't meet the 125 mph requirement, unless it was traveling downhill," adds Tita. IDOT didn't agree.

The locomotives will be purchased with federal stimulus funds provided by the 2009 Recovery Act for the the five states that are developing high-speed intercity rail routes with Amtrak. 

As the winning bidder, Siemens also received the right to supply up to 225 additional locomotives, provided state or federal funding is available in the coming years. The additional orders could be worth at least $1.5 billion for Siemens, based on its initial price of $7 million per locomotive.

While Tita and IDOT refer to the 125 MPH, diesel-powered service as high speed rail, it is also termed "higher" speed to distinguish it from 150+ MPH electric service provided by Acela Express on the Northeast Corridor as well as in nations throughout Europe and Asia.

The contract is in addition to the "$500 million on new (electric) locomotives for the Northeast Corridor" awarded to Siemens that we posted last July. 

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Published on Friday, February 28, 2014 in The Wall Street Journal - Business
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