Global company General Electric (GE) (NYSE:GE) is leading the rat race in providing railroad locomotives that comply with the tougher US emission standards to the mining industry. The company’s early success is giving equipment manufacturer Caterpillar (NYSE:CAT) a run for its money.
GE is taking the first step in designing new trains with sustainability in mind. The company is currently testing freight trains which adhere to new diesel-engine exhaust regulations which will go into effect on January 1., including adding a pollution-reduction system to its existing locomotive engine.
"We've got units operating so we can demonstrate performance," Tina Donikowski, vice president of GE's locomotive business, said.
General Electric’s early development of sustainable locomotive will give it a major edge against chief rival Caterpillar, whose efforts in the area have been subpar.
Caterpillar, which is gearing up to launch its own sustainable locomotive unit called Electro-Motive Diesel, has been a little sluggish out of the gate. The company has fallen far behind GE in its race to offer a railroad locomotive and could lose market shares if it doesn’t speed up production. The company’s late release of an emissions compliant mining engine could cost the company dearly.
Caterpillar is "definitely going to lose market share for the years that GE will have something ready to sell," said Lawrence De Maria, an analyst for William Blair & Co. Caterpillar expects to launch its Electro-Motive Diesel unit by 2017.
"History indicates that the railroads are slow to adopt new technology until it is fully proven in the field," a Caterpillar spokeswoman said.
General Electric currently owns 60 percent of the U.S. locomotive market.
Locomotive sales are expects to surge to as much as $6 billion in 2014, with rail companies expanding their fleets due to the imminent emission requirements.