Reason(s) for Demise of ALCO

Discussion of products from the American Locomotive Company. A web site with current Alco 251 information can be found here: Fairbanks-Morse/Alco 251.

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Reason(s) for Demise of ALCO

Postby XC Tower » Sun Jan 10, 2016 7:43 pm

ALCO's were my favorite diesel locomotives growing up. I always found their styling so appealing from Nickel Plate Road and Pennsylvania RS-3's to the variety of Lehigh Valley ALCO's that were on the front of the "Apollo's" as run thru power in the N&W years of the NKP's West 19th Street 15mph parade of "street running in Erie, PA......Even in the Penn Central years, their ALCO's, often just filthy, were awesome to behold... Many times it has been told to me that ALCO had a superior product. I have heard many statements as to why ALCO withdrew from the locomotive manufacturing market, but would like to hear more o the subject.
Thank you for any more insight.




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Re: Reason(s) for Demise of ALCO

Postby NorthWest » Sun Jan 10, 2016 8:55 pm

This subject is a rather complex one and I have limited time, so I will only hit on the major topics.

ALCOs were superior to EMDs in some regards but not others. They are more fuel efficient, but require 1.2-1.5 times the maintenance of EMDs. The 244 prime mover had reliability problems with the crankcase and (initially) the turbocharger. Problems led some railroads to stop ordering ALCOs after the first generation of units (MP being one prominent example). By the time that the 251 was on the market, most railroads had standardized on EMDs and ALCO had lost its chance to be the largest builder. ALCOs were to be 'other' to the standard EMDs and suffered as a result.

After ALCO refused to bid on a complete contract for South African Railways (that GE won) GE dissolved the partnership and went out on their own. While the first generation of GEs was worse than the concurrent ALCOs GE could offer a better financing package as they were larger and had more clout. This was a big consideration with the railroads at the time. Plus, ALCO retained GE electrical gear to the end.
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Re: Reason(s) for Demise of ALCO

Postby Pneudyne » Mon Jan 11, 2016 12:45 am

In respect of the chronology, my understanding is that the Alco-GE partnership was dissolved in 1953, following GE’s dissatisfaction with the in-service performance of the Alco 244 powerplant.

The South African event happened in 1958. Late that year South African Railways (SAR) placed an order for 115 GE U18C1 export models, basically the standard export U18C (as announced early in 1956) modified by the use of GSC 1-C trucks in place of the standard GE floating bolster C trucks. For its South West Africa (now Namibia) lines, SAR required locomotives with relatively light axle loading, namely 28 000 lb whereas the standard U18C had an axle loading of around 33 500 lb. Hence the need for 1-C-C-1 running gear.

SAR was already a GE customer, then operating a fleet of 45 of the U12B export model. It was evidently happy with the GE product, and went on to acquire a large fleet of GE locomotives through the 1960s and beyond. Its satisfactory experience evidently influenced some of the neighbouring territory roads to also buy GE locomotives. It was not until the late 1960s that EMD got a foot in the door with SAR, with its then-new GL26C model, which was a slimmer, trimmer derivative of its G16 predecessor and of which [the GL26c] one might say it was in many ways a dead ringer for GE’s successful U20C model. I think that the SAR GL26C fleet also had GE-style trucks, which anecdotal evidence suggests were easier on the track than EMD’s own flexicoil design.

Anyway, the available evidence suggests that GE, as an existing and satisfactory supplier, was in the cat-bird seat when it came to gaining the big SAR order. But the urban legend has it that Alco could have had the order had it not refused to use apply the GSC 1-C truck (evidently available to it) to a 12-cylinder export model, presumably what became the DL541, although I don’t think that that had been announced at the time of the SAR bid. Apparently Alco did bid on the alternative tender option, which was for twice as many “half-power” locomotives. One assumes that the DL531 was offered. I have never seen any “hard” evidence to support the urban legend, which also included the notion that gaining the SAR order would somehow have “saved” Alco.

GE also had a slight power advantage. The 1980/1800 hp of its U18C was a 5000 ft altitude and 113 degrees F ambient rating, quite useful in South West Africa, where the railway climbs to somewhere near 6000 ft and crosses the Namib desert, where it does get quite hot. The UIC rating of the GE model was as 2150/2000 hp. Alco’s DL541 had a UIC rating of 1950/1800 hp, and Alco did not move up to 2150/1800 hp until the DL543 model of 1961.

Whether the wet-block nature of the Alco 251 engine, as compared with the dry-block C-B/GE design was a factor I don’t know. In general it does not seem to have deterred foreign buyers, although that said, about a decade or so ago I had a conversation with an Australian railroad maintenance engineer who had previously spent some time on the Pilbara iron ore roads, for many years an Alco stronghold, during which he mentioned that the final version of the Alco 244 engine had its advantages, including its dry-block design.

On another forum way back when, I saw a comment from someone who had spent time on the UP in the 1960s that it was the wet-block nature of the Alco 251 engine, and its effect on repair times, that was the major reason the UP did not buy any more of the Alco C855 model. The conventional wisdom is that the C855 suffered from multiple unspecified problems. That the 251 engine might have been, in some situations, a core problem for Alco, seems to be the unseen elephant in the room.

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Re: Reason(s) for Demise of ALCO

Postby Allen Hazen » Mon Jan 11, 2016 10:44 pm

Thanks, Pneudyne, for the very informative and judicious essay!
On the matter of the South African U18C1 order and its effect on Alco… There's an indirect way in which it -- not so much Alco's losing the order as GE's landing it -- might be "responsible" for Alco's demise. GE (not the locomotive builder, the big conglomerate corporation) has never wanted to be a "bit player." In the late 1950s, the diesel locomotive business wasn't really an attractive market for a big corporation to go after: North American railroads were almost finished their dieselization and it looked like the total demand for new locomotives in North America would be low for several years, and, though the potential export market was large, many potential customers in the Third World were financially strapped, and some (the British Empire/Commonwealth in particular) might well want to buy from non-U.S. builders.
As a result, I think there was a real possibility that GE would get out of the locomotive business! I have read (though not with sources and documentation to support the claim) that GE was seriously considering cancelling its locomotive projects, and that it was the profitable South African order that saved GETS!

Now, it seems to me that Alco was doomed if GE stayed in the locomotive business. Not just the problem of trying to compete against the supplier of one third (by value) of the product. (I don't know how much of a difficulty the reliance on GE for the electrical part of the locomotive was for Alco. I suspect that GE's legal department, with an eye over their shoulders for the U.S. Department of Justice's anti-trust division, would have kept GE from grossly overcharging Alco! (Though that is JUST a suspicion on my part.)) But also GE was a much larger corporation, and could afford to support its locomotive division in ways Alco couldn't: if a technological advance was in the works, GE could afford to throw engineering talent at it. So perhaps the only thing that could have kept Alco in the locomotive market after 1969 would have been GE's exit from it, and the South African over may have been what prevented that.

Which is surely a convoluted enough argument for any discussion of alternative histories!

---

I think Alco may have been week in customer service and after-sale support. Alco did have a training program for railroad locomotive maintenance people (discussed in Steinbrenner's book), but many writers have said it was not as comprehensive as EMD's efforts in that area. And GE in the 1960s also seems to have been better than Alco in this regard. The New Haven bought both U25B and C425 in 1964, and then went for an exclusive U25B order in 1965. One explanation I have seen for this is that, although the U25B was no better (and maybe a bit worse) "out of the box," team Erie was a lot more responsive than team Schenectady when the New Have reported problems.
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Re: Reason(s) for Demise of ALCO

Postby XC Tower » Tue Jan 12, 2016 11:03 am

To All,

Thank you so much for the information!....Fascinating!




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Re: Reason(s) for Demise of ALCO

Postby NorthWest » Wed Jan 13, 2016 12:08 am

Thanks, guys, I should know by now how dangerous it is to post solely from memory.

Allen, that is very interesting. I suppose it also explains why GE entered a partnership with ALCO at all (railroad experience in order to be well-received in the market). Westinghouse did a similar thing but essentially gave up on the diesel market when Baldwin did, and I hadn't considered that GE might have similarly been considering exiting the market.
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Re: Reason(s) for Demise of ALCO

Postby Pneudyne » Wed Jan 13, 2016 4:33 am

Allen, I too have seen it written that GE was on the point of abandoning its locomotive business, but changed its mind after it received the SAR U18C1 order. But I have not seen any hard evidence to support that notion. It was also said that GE was surprised to get the SAR order, something that does not make any sense at all considering that it was an existing supplier to SAR, and was reputed to have provided close-in product support. Extraordinary claims require extraordinary proof and all that....

Perhaps the comments made by Jim Rhoads in the old “FDL Origins” thread provide a more accurate view. From that it appears that in 1958-59, GE was holding off from making a commitment to entering the domestic locomotive field, and the gaining of the large and repeat SAR order was one of the factors that helped to obtain a “go” decision. The export locomotive business was in fact doing quite well, with orders somewhere around the 400 mark I think before the 115 U18C1 for SAR. It [the export business] had of course existed well before the Universal program was announced in 1956, essentially as an International GE (IGE) venture without Alco participation. Some of the pre-Universal exports had Alco engines, but these were Alco-engined IGE locomotives not Alco-GE locomotives. An exception was the DL-500, which was announced as an Alco-GE locomotive just before the split, but soon became an Alco locomotive.

Against this background, it would seem that a decision by GE not to enter the domestic market might not necessarily have caused cancellation of GE’s export program, whose economics did not appear to be predicated on its being an addendum to a large domestic program. In fact, GE had judged it very well in respect of its export Universal model range, particularly when it came to CMT gauge applications, and that may be seen by the subsequent changes that Alco and EMD made to their standard export ranges apparently in order to match GE, at least in a proximate sense.

The opportunities for American locomotive builders in WONA varied from place-to-place and from time-to-time. Often, it was not technical but financial factors that determined where a given order was placed, and in this regard, the US Export-Import bank was apparently an asset for Alco, EMD and GE. The “British preference” factor certainly existed to some extent in the British Commonwealth countries through the 1950s and into the 1960s at least, but when you look at what makes went where and in what numbers in that period, it was not overall a major inhibiting factor to the sale on non-British locomotives. Shortage of dollars may have been a bigger factor, in that many Commonwealth countries with currencies tied to Sterling effectively got their US dollars from the UK’s then very limited supply. In 1958-59, after about a decade in the line-service diesel-electric locomotive export business, GE may well have seen its opportunities as improving as “traditional” purchasing practices fell away and there was some realization of the promise of freer markets, developed in the immediate aftermath of WWII. Also then, many WONA roads had only just started, or had not yet started their dieselization programs.

On the service and support side, GE as a corporation seemed to be well aware of how important was that aspect. For example, that was a key element of its commercial jet engine program that dated back to the relatively unsuccessful (in sales terms) CJ805 program and was carried over to the CF6 program. The latter was also an example of GE’s determination to do what it took to enter a business segment notwithstanding an earlier setback.

Returning to Alco, I agree that the absence of GE was a prerequisite for its staying in the North American market. There was probably not room for three frontline players, and in terms of critical mass, that required to provide effective support and service nationwide could well have been higher than that required to sustain a competitive product range. Having GE as its electrical equipment supplier was probably not a critical factor working against Alco. As you say, the US DoJ would have been watchful. And from my own observations in a different industry, where a major US corporation had a division that supplied components to its major competitors in a significant way, great pains were taken to create and maintain appropriate firewalls and to treat supplied competitors as customers who were in no way to be disadvantaged as compared with the in-house divisions who were also being supplied.

In a general sense then, Alco was on a level playing field with GE when it came to the electrical equipment and the development thereof. But to gain an advantage over GE, Alco would have needed one or some of: a better engine and/or better mechanical design; better service and support; lower pricing and/or lower life-cycle costs. It is not clear that it had any of these to a material extent when GE entered the market.

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Re: Reason(s) for Demise of ALCO

Postby Allen Hazen » Thu Jan 14, 2016 12:27 am

Pneudyne--
Thanks for the follow-up!
No, I've never seen anything like a reference to actual documents to back up the story that GE was on the verge of dropping out of the locomotive business before the "pony truck affair."
--
I'm not sure how likely it would have been that GE would have stayed in the export locomotive business if they didn't have a large presence in the North American locomotive market. A few years later I saw a press story about GE's general management philosophy. Managerial talent (like many other resources!) was seen as in short supply, and GE had consciously decided that it was unwise to spread its managerial resources thinly over too many industries, and so was trying to get out of industries where it wasn't the world leader or runner-up in market share. (This was about the time that GE sold its electric clock lines to Timex.) … So if the U25B had been cancelled, GE by the end of the 1960s might have felt that building locomotives for export was too small a business for it to bother with, and sold it to some other company. Maybe … Alco? (But this is SHEER speculation, with NOTHING to support it!)
--
Thanks for the mention of another industry for comparison in your second-to-last paragraph: it makes me feel a little less foolish about posting my own speculations about Anti-trust enforcement!
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Re: Reason(s) for Demise of ALCO

Postby Pneudyne » Tue Jan 19, 2016 5:34 pm

I had another look at Steinbrenner’s commentary on the “Pony Truck Affair”, which he saw as an important contributor to the ultimate demise of Alco.

This included three statements that I think would require substantiation with hard evidence, without which they run counter to the general pattern of events.

These are:

SAR had "..a strong preference for ALCO’s Model 251 engine..”

“The South African’s preference for ALCO over the relatively unproven GE was well known.”

“..GE’s locomotive program had faltered to the point of potential termination..”

On the first two, if that [the alleged preferences] were the case, why had SAR already purchased a fleet of 45 GE U12B models? I guess that one might rationalize this by the fact that at the time the U12B order was placed, Alco did not offer a comparable export model, so that SAR might have felt forced to accept “second best”. But this rationalization, I think, would be something of a stretch.

In the export market, GE was not at all relatively unproven, and in fact had been supplying designed-for-export line-service diesel-electric locomotives for somewhat longer than Alco. Some of its larger export locomotives had been fitted with the earlier version of the C-B 12-cylinder engine, and some with the Alco 12-244. I suspect that the former would have been viewed by GE’s customers as at least as satisfactory as the latter. In 1957-58 the Alco 12-251 was only just going into service in export markets, so the available proof-of-performance probably would not have been materially different to that for the GE/C-B FVBL engine. Insofar as Alco had planned the 251 to overcome the problems with the 244, presumably it would have wanted potential customers to disregard the 244 experience, whereas GE could have used early C-B engine service histories to support its case.

And SAR, with its U12B fleet, had at least some “hands-on” experience with the GE product and GE support.

In terms of complete locomotives, in 1957-58 GE certainly had more experience with CMT gauge designs than Alco, and within that envelope, specific experience with eight-axle low-axle load designs.

That said, at least judging by my experiences on the forums since 1999, the GE pre-Universal exports seem to have been virtually unknown in North America, and even the export Universals were not well known. It is as if the “GE Era’ began with the U25B. Perhaps Steinbrenner was writing from this kind of perspective when he said that GE was relatively unproven.

On the third item, the GE export Universal program had steady sales from its inception in 1956, and at least from the available statistics, it does not look to have faltered by say 1958.

Another point too is that the U18C1 that SAR bought was a moderately modified version of the existing U18C, already in service in Latin America. The U18C also had a lot in common with the U12B. Had Alco bid on the SAR 1-C-C-1 option, it would have had to offer a significantly new model, rather than a modified existing model. Perhaps in 1958 Alco had realized that its DL540, whilst attracting a big Argentinean order, had generally missed the mark, and was already planning the lighter and lower-profile DL541. But the DL541 as eventually offered in 1960 turned out to be heavier than the U18C, and so would have had needed some trimming to meet the SAR requirements. Getting back to the gauge issue, Alco itself sold but one example of a 12-cylinder export model into the CMT gauge market, whereas the GE U18C, and more so its U20C successor, became something of a standard. Isolating cause and effect here is difficult; perhaps SAR’s choice influenced the others.

I am not saying that Steinbrennner’s comments cannot be substantiated, but if so, zero has come to light to date. This topic came up on a South African forum quite a few years ago, with a zero return when it came to any substantiation of the “Alco was preferred” theory. Thus, evidentially it remains unproven, and circumstantially not likely.

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Re: Reason(s) for Demise of ALCO

Postby Pneudyne » Tue Jan 19, 2016 6:42 pm

Here’s a curious thing, though. The book “Alco Official Color Photography” (*) has a very small section (disproportionately small in my view) section devoted to export locomotives. The second example shown was the DL541, of which it was said: “This model was offered from meter gauge up with a choice of two three-axle, three-motor trucks or a 1 C-C 1 four axle arrangement for light rail”.

That is the only mention I have ever seen of a four axle option for the DL541. Nothing similar was mentioned in respect of the DL543, but in that case the commentary was specific to the PER example shown. The DL541 picture was of one for Chile, but part of the associated commentary was general in nature.

Given that this book was based essentially upon Alco original materials, there would seem to be little doubt about the veracity of the statement about the 1-C-C-1 option for the DL541. It was almost certainly drawn from an Alco document or drawing. So the inference is that following “The Pony Truck” affair, someone in Alco decided that there ought to be a 1-C-C-1 option for the DL541 (released in 1960), which was Alco’s nearest match to the GE U18C. I’d guess too that Alco specified the GSC 1-C truck. But in the event, nonesuch were built.

The market for CM gauge diesel-electric locomotives with the 1-C-C-1 wheel arrangement turned out to be an entirely African one, sub-Saharan at that, and spanning the period 1955 through 1978. Of the total of 334, English Electric built 95, GE built 125 (all for SAR), Hitachi built 12 and MLW built 104 (all in the 1970s, and including the last of the kind).

Alco probably did bid – unsuccessfully - on subsequent SAR business. SAR started building up a large fleet of the GE U20C model, with standard C-C running gear, from 1965. At this site: http://alcoworld.railfan.net/export.htm, the “DL543SA” is mentioned as a proposed modified DL543 for SAR, presumably somewhat lighter than standard to meet the SAR axle-loading requirement (around 34 000 lb) for operation on the Eastern Cape lines, which is where the early U20C fleet was used.

Cheers,



(*) Walter A. Appel, “Alco Official Color Photography”, Morning Sun; 1998; ISBN 1-58248-006-0.
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Re: Reason(s) for Demise of ALCO

Postby Pneudyne » Tue Jan 19, 2016 7:27 pm

Getting back to Alco’s demise, I’d say that the seeds were sown by the poor initial performance of its 244 engine. As an example, here is the commentary on UP’s experience as provided by Stagner (*):

“The 1953 plan for new diesels was surprising, considering the October power shortage. On October 13, Stoddard asked for eight A and 14 B 2,250 h.p. E -8 passenger units, 10 1,500 h.p. GP-7 road switchers and 22 1,200 h.p. yard units, at a total of $9,568,000.
“Following announcement of the order, Herman Press of the American Locomotive Company asked to see Harriman concerning the fact that the order did not include any Alco units. Harriman in turn questioned Stoddard in October about the order.
“In his letter of November 4 to Harriman, Stoddard noted that the 22 new passenger units would replace 35 EMD freight units that had been used as passenger power. He further stated that he had talked to Alco representatives about difficulties with their engines. "We have proven beyond doubt that the Alco diesel will not hold up in through freight or passenger service in our desert territory, principally due to the fact the turbo supercharger will not supply sufficient air to keep exhaust manifolds from burning up," he wrote. A third new design had been placed on 15 units in August and September, and up to November 1, five had failed.
“Stoddard wrote that to get the best service out of the Alco units, they would have to be transferred to the Eastern District, and plans were being made to put them in service from Laramie through Denver to Kansas City via North Platte and Salina. The only Alco locomotives that were performing satisfactorily were the yard switch engines, which were working on the Eastern District and were not subject to desert heat.”


That was not a happy position for Alco to find itself in not long before the split with GE, and only a few years before the US domestic railroads completed dieselization. Recovery from that point would not have been easy. The 251 engine probably solved some of the immediate problems with the 244, but its fundamental design, as a wet block engine was potentially limiting.

Stagner went on to record that UP had also ordered additional GTELs for 1953-54 delivery. Presumably it had full confidence in GE’s ability to develop and improve GTEL performance, as well as troubleshoot and solve any problems in this relatively new and untried kind of locomotive. In contrast it evidently had little hope that Alco would solve its engine problems. So one could say that already GE was being seen as a better supplier than Alco.

Cheers,


(*) Lloyd E. Stagner; “Union Pacific Motive Power In Transition: 1936-1960”; South Platte Press; 1993; ISBN 0-942035-24-0.
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Re: Reason(s) for Demise of ALCO

Postby mandealco » Wed Jan 20, 2016 3:47 am

That's great information, thanks for the effort you all put into your posts. As a builder of Alco-MLW locomotives (in N-Scale) I find this topic quite enlightening and sad in a way. Time to dig out my Alco books and read them again. Also due to plan our next visit to Upstate NY (WNYP), and our beloved M&E.
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Re: Reason(s) for Demise of ALCO

Postby CREEPING DEATH » Tue Feb 02, 2016 9:49 am

I've gotten the impression, from a lot of reading on the topic, that the (GE) electrical systems and (GE) turbochargers on the 244-powered locomotives were much more problematic than the 244 engine. You can still find the 244 in service today, but none that I know of have the GE turbocharger (those built were retrofitted with the later Alco design) and it's widely known that one of the issues that killed the PA was electrical issues - SP and ATSF rebuilt theirs, and replaced most if not all of the electrical cabinet. I have gotten the impression that Alco wouldn't (or couldn't) repair the issues quickly, leading to a bad reputation in the industry.
That's not to say that the 244 isn't flawed, the 251 is a superior engine to the point that it is still in production 65 years after its debut!

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Re: Reason(s) for Demise of ALCO

Postby Engineer Spike » Mon Apr 04, 2016 4:25 pm

One major point is financing. I have a Diesel Era with the article about PR Seashore GP38s. It said that the C415 was what was first in mind. GM was able to provide a better price. EMD may have had a better handle on mass production. The core automobile industry would have taught them this trick well. This may have lead to being able to sell the units cheaper. Selling on a Walmart low margin, high volume is another GM plus. GM, and GE also control financial institutions (GMAC, for example), which could give rock bottom financing.

By the end, who knows if Alcos were really that poor. Some roads, like UP (C630), N&W, and C&O were just buying token orders. This may have lead to parts supply not being readily available in especially smaller shops, where EMD parts were most common. The mechanics may have not been as familiar, so work was shoddy. The big Alco roads certainly ran them to old age, so they couldn't be that bad. Look at L&N, D&H, CP, CN, GBW, CNW.
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Re: Reason(s) for Demise of ALCO

Postby swissrailfan » Mon Nov 13, 2017 3:38 pm

In my opinion what helped Alco to be noncompetitive in the market was their late start by the interuption of wwII. EMC/EMD already had the box cab road loco market after WWII. Alco had the switcher market but lost it when EMD went to 1200 hp for switchers and Alco did not follow. You can see totals of box cab locos built by EMD in classic trains vol 16 no 1 and in see totals of Alcos box cabs in diesel builders vol 2 along with the roadswitcher totals..Alco had lost the switcher market and road loco market by 1955.GE was just getting started with road loco development and prototypes in the US market.GE was a non factor in Alcos demise.
All the steam loco builders prejudged EMC/EMD as a flash in the pan. But were utimately proven wrong. When General motors bought EMC and it became EMD. With lots of development money EMD became force to deal with in the loco arena.
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