Posted in transit, tagged Buy America, FRA, FTA on December 26, 2010 |
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Railway Age has a recent article on the race to build America’s high-speed trains. Here is the key section, which goes into all the nonsense of a decidedly political process:
The Federal Railroad Administration’s HSR grant program, funded under ARRA (American Reinvestment and Recovery Act), contains a 100% Buy America requirement. That means everything—vehicles, train control, rail, crossties, track fasteners—must be sourced and manufactured in the U.S. The FRA is willing to grant waivers on a case-by-case basis, “but only as a last resort,” Deputy Administrator Karen Rae told a Railway Supply Institute audience in Washington. “Foreign companies have talked with us asking us to change the requirement, and we told them absolutely not,” House Railroad Subcommittee Majority Staff Director Jennifer Esposito (a former Teamsters official) told the same group.
For politicians who feel compelled to wax patriotic and talk about creating American jobs in a recessionary economy, this is perfect public prose. But is it plausible? “Buy America is an emotional and political issue,” says National Railroad Construction and Maintenance Association President Chuck Baker. “There is a greater short-term political risk in resisting it than a long-term manufacturing risk. Buy America is what works; it’s what creates political support. It’s too easy to kill high speed rail, so at least for now, there’s little choice but to agree.”
Privately, some carbuilders are shaking their heads. “We need a sustained capital market for high speed equipment,” says one. ”We’re already at 80% to 85% U.S. content, and moving our carbody manufacturing to the U.S. could bring us close to 100%. But it will drive up our manufacturing costs. We’ll have to create a new supply chain.” Says another, “From a manufacturing perspective, we are one industry, and transit cars are our biggest piece of business. Given the thousands of components that go into a passenger rail vehicle, creating requirements for only one mode, high speed, which represents a fraction of the market, does not provide the economies of scale we need to make a relatively small order viable.”
When DB or Renfe or even SNCF needs to buy a high-speed train, they simply call up Siemens (or Alstom or Talgo) and order some trains. Simple as that. Customization consists of painting a logo on the outside, and maybe choosing colors for the interior. It is no different than how United or Continental orders airplanes, or how Hertz orders automobiles.
Now consider the process for building trains in the USA. Under FTA rules, all train components must be 100% manufactured in the US. And to guarantee no foreign manufacturing takes place, regulators will devise enough oddball design specs that bidders have no choice but to custom design the rolling stock from scratch. Then, local municipalities compete to offer huge tax breaks to lure a manufacturer.
For transit agencies, this nonsense results in 100% higher costs for vehicle procurement. And even as a jobs program, the cost-effectiveness is abysmal.
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