Industrial conglomerate Barloworld and Electro-Motive Diesel (EMD) on Monday launched a joint venture to service sub-Saharan railway markets.
EMD is a subsidiary of US-based Progress Rail Services, which is part of the Caterpillar group of companies. The new venture, Electro-Motive Diesel Africa, will provide locomotives and railway products and services, with access to advanced diesel and emissions technology. It will be run by Sibani Mngomezulu, who was most recently executive director responsible for risk and strategy at Barloworld’s equipment division. The deal comes as Transnet and the Passenger Rail Agency of South Africa are to spend hundreds of billions of rand in upgrades of rail stock, and ahead of this week’s Africa Rail conference in Johannesburg, sponsored by EMD. “We like Africa and think there are lots of opportunities,” said William Ainsworth, CEO of Progress Rail Services, on Monday. With business confidence returning to South Africa and stellar growth rates elsewhere on the continent, Caterpillar will try to “aggressively” grow its markets in power systems, railway products and services and mining equipment”, he said. Caterpillar bought Progress Rail Services in 2006, and four years later acquired EMD. “These are key investment sectors for Cat long-term,” Mr Ainsworth said. “The most efficient way to move commodities is by rail.” He also said Electro-Motive Diesel Africa would invest significantly in South Africa, driving local content and skills and creating jobs. It would leverage Barloworld’s existing resources in the region, and those of EMD, which had “the largest installed base of locomotives worldwide”.
“We are proud to partner with EMD, the global leader in diesel-electric locomotives,” said Clive Thomson, CEO of Barloworld.
“We have every confidence that under Sibani’s leadership the Electro-Motive Diesel Africa team will realise their vision of becoming the rail solutions provider of choice in South Africa and the region,” he said. Mr Thomson said the venture into rail was consistent with Barloworld’s strategy to invest in growth sectors and develop new relationships in the region. Barloworld is the official Caterpillar dealer in Southern Africa, providing sales, service and support for the company’s heavy earthmoving equipment. It has also bought the rights to sell and service former Bucyrus mining vehicle and handling products in the region, after Caterpillar bought US-based Bucyrus in July last year for about $8,8bn, rebranding its product range. EMD had built 50 locomotives for Transnet Rail Engineering between 2009 and 2010, and retained an office in South Africa. It already had about 800 locomotives running in the country, part of a legacy build programme that took place in Port Elizabeth before then owner General Motors divested from the country during the apartheid era. “Africa is an important market for us and the joint venture with an established company, like Barloworld in Southern Africa, will position us well to support the needs of existing and new customers in South Africa and the region,” Mr Ainsworth said. Source: http://www.businessday.co.za
