Dan,
Actually, when the EMD trade in program was developed, there was no such thing as a "used" diesel locomotive market. At that time in the late 1950s, most RRs had just completed dieselization. The only fleet of used locomotives were steam locomotives, some quite new having been built in the mid to late 1940s, which the RRs couldn't wait to get to send to scrap. (Some sat in dead lines, waiting to be paid for or for their leases to expire, before they could be scrapped!). The period of 1957 - 1958 was a recession so orders were down and most RRs were satisfied with their first generation diesel fleets as is. EMD and the other builders were looking for ways to entice customers back into the market place. One way, of course, was via technology with product improvements, mainly in the horsepower and performance areas. That wasn't generally enough because the RRs didn't see a significant financial benefit to replace perfectly good mainline locomotives even though the 2000 hp GP20 was advertised as three units being capable of replacing four older FT units (6000 hp in three GP20s as compared to 5400 hp for four FTs).
To convince customers to buy new locomotives and to reduce the first cost, the trade in program was developed. With the maximum number of salvageable components, the price reduction was in the range of 25%. Initially, only EMD locomotives were eligible, but as pools of usable parts were accumulated, non EMD locomotives were accepted. A new locomotive and one built with trade in parts looked identical. The only way to tell the difference was by the order number. New locomotives were in the 5000 series and remanufactured locomotives were in the 7000 series. The customers flocked to the program in droves. In the days before computers, EMD had a relatively large department within the Sales Dept. that did nothing but compare old locomotives with new locomotives based on actual train data from the customer's operation. My lather father worked for that department for more than 30 years. Their studies included maintenance savings, fuel savings, performance improvement savings and investment savings that all resulted in a bottom line improvement for the RR. In some cases, they even made recommendations on operational changes that would enhance return on investment. Like many RRs, the Q was almost immediately in line. The remanufacture program enticed them, like many other RRs, to trade in locomotives that were only 15 - 17 years old. In most cases, among other savings, they ran the last miles out and avoided one more overhaul. Some locomotives pulled a train into Clyde yard in Cicero, were shut down and drained and shipped off to La Grange.
One of the things that is seldom credited which I think helped make the program work was that, in some areas, those older locomotives were over designed. As an example, the crankshaft in an FT, which was designed for 1350 hp, could ultimately have been rebuilt for service in a GP40, rated at 3000 hp! The other builders, for the most part, didn't or couldn't follow EMD's lead and never really developed a trade in program until GE came along. GE didn't have an older installed fleet to draw from, but offered trade in value for older non GE locomotives just the same. The Q, of course, also participated in their program. Among locomotives traded in to them were the Baldwin switchers and, I believe, some of the E5s. BTW, by government accounting rules, the trade in locomotives were supposed to be scrapped, not sold as used. For the most part, that did happen.
Bill Barber Gravois Mills, MO
Tue Jan 3, 2012 4:19 pm (PST)
Would this have been a good way to keep the amount of used locomotives on the market lower? If there aren't enough used engines available you can kind of force companies to go new.
Dan
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