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Siemens AG recently secured a $225 million contract to build 32 diesel-electric locomotives for the Multi-State passenger rail locomotive procurement by the Illinois Department of Transportation (IDOT.) For Siemens, this order marks its entry into the US diesel-electric locomotive market.

On behalf of IDOT, the procurement is being done from 5 states with a purchase option of 225 additional locomotives. The new locomotives will achieve a maximum speed of 125 mph well equipped with the Cummins QSK95 diesel engines and will be in compliance with the Federal Environmental Protection Agency Tier 4 emissions standards. The first delivery of locomotives is expected in 2016.
Siemens Rail System has over 30 years of experience in rail services. These energy efficient locomotives will be built in Siemens rail facility in California and all the main components of the new locomotive will be produced and manufactured in the United States. The strategic move is aimed to provide a cleaner, safer and faster means of transportation for its rail passengers. The manufacturing of these high performance diesel-electric locomotives will also create job opportunities, improve California’s transportation infrastructure, strengthen the local economy and reduce greenhouse gas emissions.

This new rail equipment can help operators to reduce costs and operate the locomotives at higher speed at a comparatively less maintenance schedule. At the same time, this new equipment will accelerate and brake more quickly, reducing trip times for passengers and is much more fuel efficient.

Siemens provides medical equipment, power generation, transportation systems, automotive electronics, lighting, and other similar facilities. Given its product breadth and geographic diversity, the company is a major beneficiary of increased spending as developing nations build up their infrastructure.

Siemens currently has a Zacks Rank #2 (Buy). Other stocks that look promising and are worth a look are AZZ inc. (AZZ - Snapshot Report), Garmin Ltd. (GRMN - Analyst Report) and Universal Electronics Inc. (UEIC - Snapshot Report), each carrying a Zacks Rank #2 (Buy).

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