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GE anticipates double-digit growth for transportation unit

By Zheng Lifei (China Daily)
Updated: 2008-11-25 18:33

General Electric (GE) expects its transportation business to achieve double-digit growth during the next few years in China, cashing in on the nation's massive investment in the railway system, a senior company official said.

And the US giant predicts China will need 250 mainline diesel-electric, heavy-haul locomotives annually in the coming years to replace the aging locomotives currently in use or to be used on new railways, said Tim Schweikert, president and CEO of GE Transportation China.

GE will produce 5 to 10 locomotive units this year in China and is targeting 150 units or more next year. "This is an indication of how fast we are going to grow," said Schweikert. "We would expect to grow at the similar rate we have seen in the last few years," continuing "a high-growth trajectory".

GE Transportation, which includes locomotive, signaling and communication, in addition to other business, has maintained double-digit growth over the past six years in China. Schweikert declined to reveal the specific sales figure GE Transportation generated in China, citing company policy. But for the whole company, GE is expected to chalk up $5 billion in sales revenue in China this year, up from $4.2 billion last year, said Schweikert.

China recently announced a 4 trillion yuan economic stimulus package, a significant portion of that will go towards upgrades of the railway system.

"The massive railway infrastructure needs present huge opportunities," Schweikert said.

The company delivered its locally assembled engine to China on Tuesday, the first of a 300 locomotive order GE was awarded in 2005 by the Ministry of Railways, which is valued at $450 million. GE expects to have all the remaining locomotives delivered to China by June 2010.

The heavy-haul locomotive cuts key emissions by up to 50 percent and achieves greater fuel efficiency by up to 10 percent compared with locomotives currently in use in China.

According to the deal, GE will manufacture and ship the remaining locomotives in kits from its US plants to Qishuyan Locomotive Co in Changzhou, where all the assembly work will take place. Qishuyan Locomotives is a subsidiary of China Southern Locomotive and Rolling Stock Co, a leading railway system provider in China.

The US company, the CEO said, is also planning to beef up its business in China's rapidly growing metro and light rail market. "The metro and rail sector is a high-growth market, which we are going to devote more resources," Schweikert said.

Globally, GE Transportation recorded $4.5 billion revenue last year.