LEFT WITHOUT THE HEFT TO FUND PROJECTS.

also from increasingly export-oriented Asian manufacturers and Bombardier, which had become the largest western train-maker following the 2001 purchase of Daimler AG’s Germanybased Adtranz arm.

The critical move in propelling Alstom toward a tieup with Siemens came with the sale of the French group’s conglomerate, with almost 80 billion euros in revenue and a product range spanning power grids and building controls to medical scanners, washing machines and wind turbines.

Yet Siemens, too, had seen the writing on the wall as overcapacity in Europe ate into rail margins, accentuated by the entry of Shinkansen Train-makers Alstom of France and Siemens of Germany are set to join forces in a business with 15 billion euros (US$18 billion) in combined sales. partner Hitachi, which established its global headquarters and a major factory in the U.K. after winning a 5.7-billion-pound (US$7.7 billion) express-train contract there. The Tokyo-based group followed up by purchasing the signalling business of Italy’s Finmeccanica SpA in its largest-ever overseas deal.

All the while, European train-makers were facing growing competition from China, where train output began to eclipse Bombardier, Alstom and Siemens from 2011. The threat was ratcheted up in 2015 when a government-led merger of China CNR Corp. and CSR Corp. — formerly competing groups based in the north and south of the country — created a new global No. 1 in CRRC.

The Chinese giant has yet to penetrate the most lucrative Western markets, but already dominates sales to cost-sensitive economies in Africa, Eastern Europe, Latin America and Southeast Asia. CRRC can build a highspeed train for about 20 million euros, half the price of a European model.

Siemens had sought to head off the GE-Alstom deal in 2014 with a proposal that would have handed its rail operations to the French company in exchange for the power business.

The failed intervention created resentment between Siemens CEO Joe Kaeser and his then-opposite number Patrick Kron, with the German company turning to Bombardier in its bid to stem the Asian tide through proposed joint ventures in train manufacturing and signalling. While that plan, which until this month seemed set to go ahead, would have helped to restructure rail capacity in Germany, it would have fallen short of creating a European champion capable of assuming a “quality-leadership role” in the global market, Leenen said.

The surprise Alstom transaction will do just that, though a test will come when the new company has to rationalize its lineup and production base for the next generation of rolling stock, she said. For now the overlapping ranges of subway trains, trams and commuter and express models is likely to survive, with the TGV and Velaro making the unlikeliest of stablemates.