GE Transportation plans to take over two underground mining-equipment manufacturers in its ongoing effort to grow in that market segment, which has posted consistent growth worldwide over the past decade. The Erie, Penn.-based GE subsidiary said it would acquire 100% of Australia’s Industrea Ltd. for an estimated $695-million. In a separate transaction, it plans to buy Fairchild International, Glen Lyn, Va., for an unreported price.
The manufacturer noted that mining equipment is a $61-billion global industry, driven by global infrastructure growth and several structural factors, namely increasing automation, and heightened safety and environmental requirements. Late last year it started a $38-million project to increase capacity and modernize machining capability at a Pennsylvania plant that produces mining equipment; and a $95-million expansion of a Texas plant that produces AC motorized wheels for mining equipment.
Industrea has seven plants in Australia where it produces flame- and explosion-proof underground mining vehicles and equipment; drill guidance systems and collision avoidance systems; specialty underground in-seam drilling and gas drainage systems; and integrated contract mining systems.
GE said Industrea would extend its manufacturing footprint into Australia, expand its product portfolio to include underground mining equipment, and increase its presence in the Australian and Chinese mining sectors. Industrea shareholders will take up the proposal later this year, and GE indicated the purchase would be completed by year’s end.
Lorenzo Simonelli, president and CEO of GE Transportation said: “Industrea has built an attractive business supplying major mining companies in growth regions. The company has developed a solid record of helping customers increase production while continually implementing safety improvements.
“We believe that Industrea’s business can grow more rapidly by expanding its product suite and geographic reach combined with GE’s technical expertise and global customer relationships,” explained GE Transportation president and CEO Lorenzo Simonelli. “GE’s equipment experience, battery and hybridization technologies, propulsion system offering and global distribution capability will help us expand the Industrea business."
Fairchild International has approximately 150 people and manufactures diesel and battery-powered scoops, continuous miners, haulage systems, shield haulers, and maintenance vehicles, all for underground mining. With its letter of intent to buy and operate the company, GE said it will expand its own product offerings to underground mining and increase Fairchild’s customer base beyond the U.S. market. It said its electric propulsion and energy-storage systems will help Fairchild deliver higher efficiency and productivity to mining customers worldwide, with lower fuel use, emissions, and life-cycle cost.
“With the acquisition of Fairchild International we will combine nearly 50 years of leading industry knowledge and expertise in designing, building and servicing underground mining equipment with GE’s global reach, technology leadership in clean propulsion and energy storage systems, and world-class system integration capabilities,” Simonelli said.
The Fairchild transaction is expected to close in 3Q 2012.
GE said adding these two companies would expand its product portfolio to cover approximately 35% of the underground mining equipment market, including Australia, China (Industrea), and the U.S. (Fairchild). GE said its ownership would enable the two regional companies to reach a global customer base while improving their product lines with GE’s “clean propulsion systems, energy storage offering, and world-class system integration capabilities.”
GE also predicted Industrea and Fairchild would benefit from its lean manufacturing strategies and global supply-chain management.