The Herald, Sharon, Pa.

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September 3, 2009

Locomotive orders plunge, leading to layoffs, GE says

GROVE CITY — Here’s a brutal figure: General Electric Co. hasn’t received a single locomotive order from any North American business this year.

That’s why the head of the company’s transportation GE division is calling for a “very tough’’ and “bleak’’ railroad market through 2010.

In an interview with Dow Jones Newswires, Lorenzo Simonelli said the economic downturn has bitten a large chunk out of the company’s sales. Simonelli took over GE’s Erie-based transportation unit in July 2008. The division includes its Grove City engine plant which employs more than 900 compared to 4,000 at the Erie plant which assembles locomotives.

Earlier this year Simonelli forecast locomotive production would fall 44 percent. But that prediction looks rosy compared to his latest assessment that production could fall another 50 percent from this year’s level as the company works on filling its backlog of previous orders.

Based on those figures, locomotive production in Erie would be slashed from 861 to around 240 in 2010. Simonelli said there’s the possibility of more permanent layoffs in Erie. A manager at GE’s Grove City plant said it was “highly likely’’ layoffs are looming there for what has become one of Mercer County’s largest industrial employers.

Stephan Koller, a spokesman for the transportation division, confirmed Simonelli’s comments.

“It’s not a very pleasant picture,’’ Kollar said.

Although GE landed a contract earlier this year to build 20 locomotive kits for Indonesia, that isn’t nearly enough to offset the sharp downturn in orders.

Since the Grove City plant also serves the marine and stationary power markets it has fared better — so far — than its sister plant in Erie. In February GE announced 350 permanent job cuts and placed another 1,200 workers on temporary, lack-of-work layoffs. By contrast only a dozen or so workers were laid off in Grove City.

Kollar said in the short term there is a “high likelihood’’ of more permanent layoffs within the company but declined to say how many or where they would come.

There are signs layoffs could be announced within weeks. A couple weeks before the last round of layoffs were announced top GE executives sounded similar public warning whistles that a steep downturn in orders might result in employment rolls getting cut sharply.

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