One would think that ALCO had it all over the competition. As noted, they had merged McIntosh-Seymour into their holdings early on. Next, they got the US rights to the Turbocharger (the Swiss Buch patent). They had a good solid engine in the 539 series (539 = may, 1939). They also had gotten in bed with GE for the electrics.
EMD predated ALCO and scooped the market, coming out with their 567 series engines and locomotives as early as 1938. Alco, Baldwin & Lima were entrenched as steam locomotive builders. The railroads had tremendous amounts of physical plant set up to handle steam locomotives. Coal was king, and a lot of the railroads' main revenue was hauling it. As far as most people could see in the 1930's, it looked like steam locomotives were going to be around for awhile.
World War II intervened. Diesel engine production was diverted for defense related applications. EMD's and O-P Fairbanks engines wound up in submarines, landing craft, and various other smaller vessels. The railroads were needed for the national defense, so mainly steam locomotives were kept in production. After WWII, ALCO, Baldwin and LIma were still mainly steam locomotive builders and EMD was all ready to start cranking out more diesel units.
ALCO had started building diesel locomotives using steam locomotive thinking. They were using castings. Castings for the blocks and castings for the frames on the S-1's and RS-1's. The 251 was a welded block, and it was a hell of an engine. I believe it appeared in February, 1951. Unfortunately, it was not on the scene when ALCO and EMD intially went head-to-head.
Along came EMD and used weldments. Lighter all around and less machine work. EMD also came in as a brand-new locomotive builder. thaey didn;t have the old heavy phsycial plants associated with steam locomotive production. The overhead of acres of foundries, forge shops, boiler shops and machine shops (mainly with manual machine tools) wasn;t there to slow EMD down.
ALCO came along with a quality steam locomotive builder's way of thinking. They were going to utilize their existing assets. I never really thought much of Baldwin. Having done engineering on a number of their locomotive boilers, I put them at the bottom of the "Big 3". On almost every baldwin boiler Ihave done engineering on, it seemed Baldwin figured things right to the hairy edge, putting in just enough steel for a new boiler to hold together. Get a boiler from Alco or Lima and you have a boiler with more steel, and more liberal staying and bracing. If that was Baldwin;s way with their boilers, it probably carried through to their diesel-electric locomotives. I worked on one Baldwin diesel on a stationary genset. It was an in-line 6 cylinder engine. I think it was Baldwin's answer to the ALCO 539. It was a similar engine, but it did have some differences.
In the end, I think EMD won out as they could furnish a lot of diesel electric locomotives and their prices were probably lower. With their method of changing out a "power pack" (cylinder/piston/rod assembly) they had it all over ALCO.
I went to school at Auburn, NY in the old ALCO plant for a five day course in the 251 series engine maintainence. The 251 was an incredibly well built engine. It was much better all around than the EMD 567's or 645's. ALCO called for "stretching" the various studbolts when putting their engines together. If I remember right, I think they had serrated rod caps. An EMD required only that you got a "torque multiplier" (made by Sweeney) and torque the various bolts and studs to spec. A sloppier and less consistent way of doing things on something like heavy diesel engine work.
I worked on a few of the Opposed-Piston Fairbanks Morse diesels in stationary generating set service. These ran smoothly, given their opposed-piston design. However, they looked to be a bear to do heavy repairs on. I think the cost in dollars per HP for an O-P Fairbanks was bound to be quite high. F-M never sold a lot of their locomotives to the railroads. I think they came late to the game, and EMD had pretty much sewed things up.
The other driving factors were that fuel oil costs were low back when EMD entered the market. A two stroke diesel does not have the low end lugging power or the overall feul economy of a four stroke diesel. EMD and F-M were two stroke engines. ALCO, Baldwin and Hamilton were all four stroke engines. Their first costs for the engines were higher for a number of basic reasons. EMD won out because they proliferated and were cheaper to by and to maintain. Now, facing rising fuel costs and emissions regulations, I believe General Electric is at least a very formidable challenger to EMD, if not taking the major share of the locomotive market. At long last, four stroke diesels in locomotives may have won out. Too late for ALCO, Baldwin or Lima.