Baldwin Locomotive Works - Decline

Decline

After World War I, Baldwin's business would decline as the diesel engine became the standard on American railways. By the 1920s the major locomotive manufacturers had strong incentives to maintain the dominance of the steam engine. Nevertheless, Alco, while remaining committed to steam production, pursued R&D strategies in the 1920s and '30s that would ensure its competitiveness in the event that diesel locomotives would predominate. In contrast, Baldwin opposed any development of diesel locomotive technology in the 1930s. In 1930 Samuel Vauclain, Chairman of the Board, stated in a speech that advances in steam technology would ensure the dominance of the steam engine until at least 1980. Baldwin’s Vice President and Director of Sales stated in December 1937 that “Some time in the future, when all this is reviewed, it will be found that our railroads are no more dieselized than they electrified.” Baldwin had deep roots in the steam locomotive industry, and may have been influenced by heavy investment in its Eddystone plant. In 1928, the owners of the Geo D. Whitcomb Company, a small manufacturer of gasoline and diesel industrial locomotives in Rochelle Illinois approached Baldwin with an invitation to participate in a recapitalization program. Baldwin accepted and purchased about half of the issued stock. In return, Baldwin assisted the company but by March of 1931 the small firm was in financial trouble and Baldwin filed a voluntary bankruptcy for Whitcomb. This action would lead to an ugly court battle between Baldwin and William Whitcomb, the former owner of the company. Baldwin began an attempt to diversify its product line in 1929, but the Great Depression thwarted these efforts and Baldwin declared bankruptcy in 1935.

When Baldwin emerged from bankruptcy in 1938 it underwent a drastic change in management. The new management was dedicated to diesel power but the company was already too far behind. Business declined drastically in the postwar years as EMD and Alco seized the bulk of the diesel market from Baldwin, Lima-Hamilton and Fairbanks-Morse.

In 1939 Baldwin offered its first standard line of diesel locomotives, all designed for yard service. By this time, General Motors had already marketed its first diesel road freight locomotive.