When Brazilian rail operator MRS ordered 115 of GE’s locomotives in September — with an option to buy an additional 100 — it was more than just the largest locomotive purchase in Brazil’s history. It was a symbol of the fundamental changes happening in the country’s rail industry as a whole.
As Brazilian magazine Isto É Dinheiro observed recently, major deals like this are a far cry from the state of affairs that existed before Brazil’s rail industry was privatized in the late 1990s. The industry itself was in decay and GE’s now busy plant, which opened in 1967, “almost passed away…. With no orders for new machines in Brazil or from any other country in the region, the Company survived just refurbishing and overhauling locomotives for its customers.”
Rail and logistics expert Paulo Fleury explained in the story that railroads under the old state monopoly did not buy any new locomotives for decades. When they were finally privatized, the new companies thought it would be a waste to use new, high-tech machines on outdated infrastructure. That also translated into low freight speeds, with Brazil’s trains running at about 20 km/h compared to 40 km/h in the U.S.
“However, this has changed,” the magazine optimistically reports. Speeds are up, and plans to build new rails call for the current Brazilian rail network of 28,476 km to nearly double by 2023. It’s part of Brazil’s move to increase it’s use of freight rail, which now accounts for about 25 percent of freight traffic. (By comparison, China’s rails carry about 37 percent of the country’s freight and U.S. rails carry 43 percent.)
In the giant MRS deal, the locomotives themselves will be manufactured in GE’s plant in Contagem, Brazil,while the12-cylinder engines and key components will be made in GE’s Grove City, Pennsylvania plant — typefying the way in which global growth is creating manufacturing jobs in the U.S. as well as local markets.
Room to grow: According to Isto É Dinheiro, “Of the 2,857 locomotives operating in Brazil; 80% of them are devoted to minerals transportation. Out of these, 1,145 are of made by GE.”
* Read “In Good R&D Company: Brazil Joins U.S., India, China & Germany” on GE Reports
* Read “Five Reasons Brazil Is Set to Become a Major World Power” on GE Reports
* Read more Brazil stories on GE Reports