Downer will continue to sell EMD locomotives within Australia and concentrate on sales, repairs and maintenance.
During a transition to the new arrangement, which is expected to take one-to-two years to complete, Downer will continue to manufacture locomotives in Australia. It currently produces two standard designs, the 3.21MW standard gauge GT46C-ACe model in Newcastle, New South Wales, and the 2.26MW 1067mm- gauge GT42CU-AC model at Maryborough in Queensland.
Downer says that with the growth in mining and the ageing Australian fleet, 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.
"As we exit high-cost manufacturing, Downer and EMD have taken action to ensure that Downer will be better positioned to meet our customers' demands for better value and shorter lead times," says Downer CEO Mr Grant Fenn.
The agreement brings to an end more than a century of locomotive building in Australia by Downer and its precedents, stretching back to the first steam locomotive built by Clyde Engineering for New South Wales Government Railways in 1907. From the early-1950s until the mid-1990s, Clyde Engineering was the dominant provider of diesel traction to the various government railways in Australia.
The move will leave UGL as Australia's only established locomotive manufacturer.