DOW
26/06/2012 11:11
GENERAL
REL: 1111 HRS Downer EDI Limited
GENERAL: DOW: Downer and Electro-Motive Diesel sign new agreement
Media/ASX and NZX Release
26 June 2012
DOWNER AND ELECTRO-MOTIVE DIESEL SIGN NEW AGREEMENT
Downer EDI Limited (Downer) announced today that it had signed a new five
year agreement with Electro-Motive Diesel (EMD).
Downer and EMD, which is owned by Progress Rail, a Caterpillar company, have
worked together for more than six decades supplying and maintaining
locomotives in Australia.
Downer uses locomotive components manufactured by EMD (including diesel
engines, traction motors, turbo chargers, generators and related software) to
manufacture Downer designed locomotives for sale to customers in Australia.
Downer also purchases locomotives manufactured offshore by EMD for sale in
Australia.
As a result of the growth in mining and the ageing Australian fleet, the long
term demand for new locomotives in Australia will remain strong. The market,
however, is changing with increased offshore competition, customer
requirements for lower capital costs and shorter lead times for delivery.
The Chief Executive Officer of Downer, Grant Fenn, said that under the new
agreement, Downer and EMD would transition to a competitive locomotive supply
model that will provide significant benefits for its customers.
"Downer and EMD have taken action to ensure we have a sustainable business
model that will give our customers an advantage," Mr Fenn said.
The CEO of Electro-Motive Diesel, Billy Ainsworth, said: "This agreement is
yet another example of our continued responsiveness to rail customers
globally. We are proud to work with Downer on delivering the highest quality
products and services, with the best life cycle cost, to our customers in
Australia."
Under the new agreement, EMD will manufacture all locomotives for the
Australian market with Downer continuing to sell EMD locomotives and
after-market products, including spare parts. EMD will manufacture the
locomotives at one of its new low cost overseas facilities.
During the transition period, which is expected to take between 12 months and
two years, Downer will continue to manufacture locomotives in Australia.
"The demand for locomotives in Australia remains strong and this new
agreement with EMD means Downer will be better positioned to meet our
customers' demands for better value and shorter lead times," Mr Fenn said.
"We will have a sustainable locomotive business as we exit high cost
manufacturing and concentrate on sales, repairs and maintenance and whole of
life asset management."
Downer is the largest provider of outsourced freight maintenance services in
Australia, with a national network of over 20 maintenance centres. Downer
provides customers with frontline maintenance, locomotive overhauls, remote
help desks and derailment recovery and repair.
As a consequence of the new agreement, a number of Downer Rail employees
working on locomotive projects will be transferred over time to other rail
projects while it is expected there will be a small number of redundancies.
For further information please contact:
Michael Sharp, Group Head of Corporate Affairs and Investor Relations +61
439 470145
Luke Thrum, Manager Investor Relations +61 459 828720
Downer EDI Limited (www.downergroup.com) provides comprehensive engineering
and infrastructure management services to the public and private Minerals &
Metals, Oil & Gas, Power, Transport Infrastructure, Telecommunications, Water
and Property sectors across Australia, New Zealand and the Asia Pacific
region
End CA:00224280 For:DOW Type:GENERAL Time:2012-06-26 11:11:04
(20min delay)