GE
Transportation
Transportation
CAGR
($ in billions)
$5.1
Orders
Backlog
$2.4
Revenue
$2.5
29%
Business imperatives
• Expand profitability of core N.A. businesses
with technology & operating excellence
$4.2
18%
• Extend business reach to global markets
• Build strong adjacencies with technology &
market synergies
– Propulsion systems
– Signaling & “Avionics”
– Power storage
Segment
Profit
2003
2006
$0.5
$0.8
20%
Global demand & technology fueling growth
2
Environment
Global trade … Commodities, coal & finished good
flows driving growth on land & sea
Emerging markets growth … GDP growth gated by
rail & mining infrastructure
North America market growth … industry strong,
investment focused on productivity, fuel, service, &
emissions … backlog growing
Capacity challenges & fuel cost … Driving advanced
technologies
Highway congestion & labor… Challenging truck
capacity
Aging fleets … Being upgraded for fuel, emissions &
reliability
Strong fundamentals
3
Global growth
Global backlog (locos)
Age of fleet (years)
25
25
26
760
27
640
17
30
Approx.
Fleet
Size
N. Am
China
Russia/CIS
India
L. Am
27,700
11,400
13,600
4,900
3,600
•
RR’s critical in developing countries
•
Coal & commodity growth
•
Freight corridors, land bridges & mining
•
Emphasis on reliability, life cycle, &
emissions
2003
110
120
2004
2005
2006
2007e
Key Wins:
• Kaz/Russia/CIS (Loco’s, Mods, OHV)
• China (Locos, Signaling, OHV, O&G, M&S)
• Middle East/Africa (Loco’s, M&S, Parts)
• SEA/ANZ (Loco’s, M&S)
• Europe (Loco’s, Mods, Signaling, M&S)
• S. America (Loco’s, OH’s)
Global expansion driven by emerging
mkts, commodities growth
4
Hybrid technology, fuel & emissions
N.A. Class 1 RR Op Ex
(annualized est, $B)
Product Enhancements
C&B
40%
Other
Op Ex
40%
Transportation Fuel MGPP
•Combustion optimization (’08)
•Trip Optimizer (’09)
•Common rail fuel injection (’10)
~15% benefit
Alternative Fuels
•Locomotives
Low sulfur, Bio-diesel
•Stationary power gen
Palm oil
•Marine engines
Marine diesel oil
Fuel
20%
Hybrid Locomotive
• Fuel ~20% of class 1 Op Expense annually
• 2% fuel savings yields ~$200MM annual
benefits
•May ’07 demo in California
•Prototype loco 2010
•Targeting 10%+ fuel & emissions benefits
Investing in leadership technologies
5
Propulsion adjacencies
Locomotive
Control & System Design
Marine Propulsion
OHV Propulsion
Drill Systems
Power Storage
• Our knitting … Engines, AC Propulsion, Generator, Wheel Motor, Control, Gears
… Batteries next
• Leverage system design/control … technology advantage
• Higher value add … compete as propulsion system vs. component supplier
Propulsion business generating
30%+ loco business & growing
6
Signaling & Rail ops revenue
($ in millions)
$550
Int'l
1996
Signaling
$310
2001
2006
“Avionics”
NA
Dispatching
Signaling, solutions & “avionics” in Rail
Leveraging technology to improve
global asset management
7
“Avionics”
Key deliverables
Fuel Savings
10% savings vs. operators
Train Coverage
All Cargo
(e.g. Coal, Inter-modal)
Network
System overview:
• GPS + Forecasting Tools
• Automatic Throttle Control
10+% Fuel
Savings!
RR Operators
Trip Optimizer
Coverage in All Territories
(e.g. Mountains, Undulations)
Training
< 2 hrs./Operator
% Trip in Auto
>60%
Fleet Coverage
10,000 NA units
PTC Interface
Common Components
(e.g. Wireless, Track DB)
Ton-Mile/Gallon
In-cab technology to drive fuel & RR
productivity
8
Transportation summary
Global transportation market … fundamentals are
strong
Strong backlogs … equipment & services
Expanding CM’s … in core business from technology
& ops excellence
Rapidly globalizing … successful N. America business
Building propulsion adjacencies … technology
synergies
Building an “Avionics” business … market synergies
9
GE
Infrastructure