Baldwin's ultimate failure as a company is usually attributed to their slow adaptation to the diesel locomotive post-World War II. But the end of Baldwin actually dates much earlier than that. In 1925, Baldwin actually built what is attributed as the first diesel locomotive for US rails in 1925, an odd-looking boxcab with an even odder Knudsen inverted-V V12, but after a short test period determined that the design had issues and scrapped it, and pretty much abandoned any further development and testing. Meanwhile, Alco would continue tinkering through the '20s and '30s with various boxcabs built in conjunction with GE and Ingersoll-Rand.
Baldwin's true mistake was Eddystone. Baldwin started out based out of Philadelphia in the 1830s, and operated there until 1927. In the early 1900s, as the steam locomotive manufacturing business was in full swing, Baldwin needed to expand, but the city of Philadelphia was also growing and encroaching on the factory grounds. Starting in 1906, Baldwin began buying up land in Eddystone, PA and moving production over there bit by bit, while constructing a massive factory. In 1928, Baldwin closed the doors at Philadelphia and opened the unmatched Eddystone complex. The timing couldn't have been worse. Baldwin financially overextended themselves with the construction of the facilities, and then the Great Depression hit and sales slumped. In 1930, the only new locomotives that Baldwin delivered were the big 4200-series Mikados for Frisco, and if construction hadn't already been started, Frisco would have canceled that order too. The workforce was slashed from 5500 people to just 610 by 1932. Westinghouse, who had worked with Baldwin since 1904 constructing electric locomotives, had to step in and buy a large part of Baldwin to keep them afloat. And even when the economy bounced back in the mid- to late-'30s, the diesel locomotive had arrived and steam locomotive sales were never what they once were. The Eddystone factory never once operated anywhere near full capacity, and when they moved into the diesel era, it was incorrectly configured for assembly of diesel locomotives.
There was also just an arrogant mentality at Baldwin that they were the biggest and oldest steam locomotive manufacturer and if they said steam was king, then so be it. In a speech titled "Muzzle Not The Ox That Treadeth The Corn" that was delivered in 1935, vice president Robert S Binkerd proclaimed that the diesel locomotive was much ado about nothing. It was a novelty, and while there might be flashy diesel trainsets like the Zephyr taking over top passenger trains, the steam locomotive would coexist and handle the bulk of the work. From the speech “Today we are having quite a ballyhoo about streamlined lightweight trains and diesel locomotives, and it is no wonder if the public feels that the steam locomotive is about to lay down and play dead,” he said. He predicted that the future “will not find our railroads any more dieselized than they are electrified.” A bit of a naive sentiment, considering that the horse and the canal didn't continue to coexist alongside the railroad, they were almost fully replaced. Also, around the same time, Samuel Vauclain, the company president, proclaimed that the steam locomotive wasn't on the verge of being replaced, but that it would most certainly exist until the 1980s at least.
You have to wonder how much conviction was behind those words though, since Baldwin had acquired De La Vergne Engine Company 4 years earlier and would construct a 660hp diesel switcher for ATSF a year later. Also, in 1929, Vauclain had been nominated to the board of directors at Fisher Auto Body for reasons that were never really made known. The theory is though, that General Motors was looking at getting into the railroad market and was looking at a partnership with Baldwin-Westinghouse, where General Motors would provide the engines and bodies, Baldwin would cast the frames and trucks, and Westinghouse would provide the electrical gear. For whatever reason, this never progressed any further (perhaps it was that mentality that the diesel was a novelty, or maybe it was that Baldwin was too proud to partner with anyone) and instead in 1930 GM purchased Electro-Motive Corporation and renamed it to Electro-Motive Division. Judging by Baldwin's construction methods in the diesel era, GM was much better off that way. Had the GM-Baldwin partnership gone forward and Baldwin had retained any semblance of control, things probably would have ended like the Alco-GE partnership; GM would have gotten mad at Baldwin's poor market performance and split off.
Baldwin started to get a bit more serious about the diesel in 1940, when they finally cataloged the VO-660 and VO-1000 switchers, but they still viewed steam as the future. During WWII, Baldwin and Alco's fledgling diesel development programs were put on hold, while EMD continued to crank out FT sets, allowing EMD to both iron out bugs and to establish it's reputation as the premier diesel locomotive constructor. Baldwin's early road units were the disastrous DR-12-8-1500/2 "Centipedes" which were essentially taking the running gear of a big electric freight motor and setting a pair of diesel engines on it. Baldwin continued to build their diesels like steam locomotives, each one was slightly different and tailored to the owners demands, meaning every locomotive was wired differently, all the fluid lines and air lines were routed uniquely, components were in different locations, there was custom bodywork and truck configurations. Baldwin used a unique air throttle that made their locomotives not M.U.-capable with other diesel, and frequently didn't offer dynamic braking on their offerings. The De La Vergne engines were also obsolete, heavy, relatively underpowered (they maxed out at 1600hp for the turbo I-8 version), and they were known leakers.
Baldwin's engine program also was inadvertently sabotaged by Pennsylvania Railroad. PRR was an early buyer of Fairbanks-Morse locomotives, and would ultimately own more F-M products than any other railroad, and was initially very impressed by the smoothness of the F-M opposed-piston 38D8 1/8 engine. Since Baldwin was an on-line customer of the PRR, and Baldwin had constructed a huge portion of PRR's steam locomotives, there was a pretty good rapport there, and PRR asked Baldwin to develop an opposed-piston engine of their own. Baldwin was already in the process of developing a new engine, the 2000-series engine, which was to be available in a 700 hp normally aspirated V-8, a 1000 hp turbocharged V-8, a 1500 hp turbocharged V-12, and a 2000 hp turbocharged V-16, but, expecting big business from PRR, dumped all development of the 2000-series engine. Baldwin then began work on the 547-series opposed-piston, 2-cycle engine with a 6 1/2" bore x 8 1/4" stroke. There was to be a 6-cylinder, 12-piston 1175hp version and a 9 cylinder, 18-piston, 1750 horsepower version. After three years of testing and development, Baldwin was still struggling with getting the 547-series engine to work, and by that point PRR had learned of the maintenance woes associated with the opposed-piston design and lost interest. By that point they had now spent four years developing two different engines and had nothing to show for it, and was still stuck with the old 608/808 engines.
Despite the old outdated engine, 1950s Baldwin actually showed signs of promise. They finally pared down their model range, stopped offering so many different configurations, added an electric throttle as an option that made them compatible with other locomotives, and added dynamic brakes as an option. Sales of the late RF-16s and AS16s were actually higher than the earlier DR-4-4-1500s and DRS-4-4-1500s. Granted, that was a low bar and Baldwin was still a very distant third to Alco. But by that point, Westinghouse got tired of being paired up with the two manufacturers in last place (Baldwin and F-M) and decided to leave the locomotive market. In the case of F-M, they were independent and went to buying GE electrical gear, but Westinghouse still controlled Baldwin after bailing them out during the Great Depression, and so they also took Baldwin out of the railroad market.
