GM made the momentous decision to basically reinvent the locomotive in 1935.
In February 1935 Richard Dilworth, EMCs chief engineer, proposed the idea of a joint factory for Electro Motive and Winton to a meeting of GMs top management.
From the article "Daybreak at La Grange" in the August 1976 issue of Trains magazine:
"Dilworth reportedly told the automotive –oriented crowd that "their cars and trucks were nothing but rubber-tired toys. I told 'em that if that filled the highways solid with these toys they wouldn't be able to do a quarter of the transportation business of the country" Dilworth spoke his beliefs minus any niceties of speech, he also doubted his one-million-dollar request would be approved. In a meeting afterward with GM executives, EMC founder and president H. L. Hamilton was told to proceed with plans to proceed with plans to build a factory. He informed Dilworth that the giant automotive firm was ready to invest
six million dollars in Dilworth's idea. The following month, on March 27, 1935, Hamilton and Dilworth broke ground for the plant…."
There are several things to note:
1. The locomotive market was virtually nonexistent except for diesel switchers. America's largest builder, Alco, did not produce any steam locomotives in 1934 and 35.
2. Even the diesel switcher market was minuscule. In 1930 Class 1 railroads rostered 74 diesels; in 1935 they had 113, an increase of only 29 over a period of 5 years. Sales of diesels locomotives at that time were not driven by operational efficiency but rather to meet city smoke ordinances.
Kaufman Act - Wikipedia. Diesel switchers were concentrated in New York and Chicago with the steel industry acquiring quite a few. Alco had developed the modern form of the switcher in the HH600 in 1931 but had only built 13 up to 1935.
3. At this time EMC did not build anything. Engines came from Winton, electrical equipment from GE, with final assembly by the car body supplier. GM was entering a whole new world. Building a 90 ton locomotive was nothing like anything GM had done before. In Feb 1935 EMC was in the process of delivering their first 3 switchers. The first of the 5 larger boxcabs for passenger road service would not be completed until August 1935. With the odd ball double end transfer unit for the IC, that was the entire EMC production of 9 locomotives for 1935, all assembled by GE, St Louis Car or Bethlehem Steel.
4. The Winton 201A was not in any sense proven. Only a single Winton 201A in the original Zephyr had any significant running experience. The second 201A powered train set Union Pacific's M-10001 had entered service in Oct 1934 but was soon withdrawn for rebuilding. Incidentally, none of the 201A powered USN submarines been launched. Over a year later La Grange completed its first locomotive, an SC, on May 20, 1936.
The Winton 201A cannot be considered to be a successful engine. EMC and Cleveland Diesel (as Winton became known) started on clean sheet replacements well before large numbers of the 201A were in service. It was a failure in its original application with the USN repowering their submarines in 1942. The 201A powered passenger boxcabs and Es were all out of service by 1953, most "rebuilt" into 567 powered models, a short life for a locomotive. The switchers did better but again of lot of them were reengined with 567s
5. As to a large order book, GM was actually building on spec. They reduced the price of the SC from $84,000 to $70,000 on the assumption that there would be a run of 50 locomotives of the same design. They actually completed 24 by the end of 1936
6. The Pennsylvania railroad was by far the biggest in the USA. the New York Central was easy the second biggest. The next three; the Union Pacific, Southern Pacific and Sante Fe were about equal in size. The UP and Santa Fe have a few passenger trains but that was the extent of their interest. Of the 175 201A engined switchers NYC bought 7, Santa Fe 7 and the Pennsy 1. UP and SP didn't buy any. It wasn't until the war started that Sante Fe began to buy diesel locomotives in earnest. The other 4, particularly the Pennsy and NYC resisted dieselization as long as they could. While the Sante Fe embraced dieselization whole heartedly the other 4 didn't start buying diesels in significant numbers until after WWII.
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