Product Support Supplier Buys An OEM

Jun 10

In a twist to the normal M&A activity of the capital goods sector, a Product Support organization, Progress Rail Services (a Caterpillar subsidiary) is to acquire Electro-Motive Diesel (EMD), a locomotive OEM (formally owned by GM). This is a case where an independent Product Support organization became larger than the primary OEM in which its offerings were employed. This is a cautionary tale for OEMs who “don’t get” the importance of revenues and profits that can be generated from Product Support offerings; over time the OEM may end up missing out on where the “real” profits are found in Product Support.

The announcement can be found here.

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