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Posts Tagged ‘Buy America’

The NEC is a legacy 100 year-old infrastructure, whereas the Calfornia high-speed rail project is clean-sheet design. There was never a rational explanation as to why California should use NEC-compatible equipment when the corridors are so completely different. And now, thankfully, sanity has prevailed:

It became clear in meetings with manufacturers during the last few weeks that the requirements were too different to incorporate into one set of trains, said Lisa-Marie Alley, a spokeswoman for high-speed rail.

“The feedback that we got from the industry was that Amtrak and high-speed rail need such different things, it was almost impossible for them to build a train that meets both our needs,” she said. “We’d hoped that the industry had evolved to where they can accommodate both.”

The agencies concluded that too many compromises would need to be made to meet both their needs, which would “move us away from a service-proven design and create significant risks as to schedule and costs,” Amtrak spokesman Craig Schulz said in an email.

One of the puzzling things about the CHSRA has been its inability to work with its California partners (Caltrain, Metrolink) on really basic things, like compatible platform heights and signal systems — while at the same time design its high-speed trains to be compatible with a rail line 3000 miles away. The NEC requires high-platform trains, which precludes Caltrain and CHSRA from sharing platforms. Hopefully, with this decision, Caltrain and CHSRA can at least use trains with the same platform height.

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Buy-America (Solar Panel Edition)

When the US government subsidizes green technology, that is considered a good thing for the environment. But when a foreign government does it, that is considered anti-competitive:

The Commerce Department on Tuesday imposed steep duties on importers of Chinese solar panels made from certain components, asserting that the manufacturers had benefited from unfair subsidies.

The duties will range from 18.56 to 35.21 percent, the department said.

The decision, in a long-simmering trade dispute, addresses one of the main charges in a petition brought by the manufacturer SolarWorld Industries America. While it is preliminary, the ruling means that the United States will begin collecting the tariffs in advance of the final decision, expected later this year.

It is hard to see how this tariff will save jobs. Solar panel installations had been one of the bright spots of the economy — particularly in places like California’s Central Valley where there is high unemployment and high electricity bills.

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Frankenelevator

Is there anything Buy-America can’t screw up? An Italian company won the bid for its diagonal elevators, but the “performance specifications” were written to favor American subcontractors:

Project administrators preferred that the software and other components come from American companies with whom they were more familiar. (The authority said its contractors, not the agency itself, made these decisions after being presented with performance specifications.)

The controller was made on Long Island. The speed governors, or limiters, came from Ohio. Other pieces, like buttons and speakers, were manufactured in Queens. “It’s like if Ferrari would be instructed to put in a Chevy engine and a Ford transmission,” said Charley Hart, the project manager for Kone, the company overseeing the elevator and escalator installation. “Yes, it can be done. But it’s a challenge.”

The elevator and its assorted pieces passed tests separately, and other construction appeared to be moving apace. Publicly, officials said they remained on track for a Bloomberg-era start date. But when the parts were integrated for the July test, the system failed. Mr. Horodniceanu has taken to calling the elevator his “mutt,” for its hodgepodge pedigree.

Even if they get the elevator working, I wouldn’t feel safe riding it.

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Here is one group of economists that understands the problem with Buy-America policies. In their paper The Political Economy of Public Bus Procurement: The Role of Regulation, Energy Prices and Federal Subsidies, Professors Li, Kahn, and Nickelsburg report that the American bus fleet is more expensive and more polluting than that of other countries:

This absence of international trade has multiple implications. First, the absence of international competition likely leads to high prices. This could result in fewer buses due to capital constraint and hinder the economics of scale that is vital for public transit (Morhing 1972; Parry and Small 2009). While it is difficult to construct a hedonic bus price regression where we control for key metro bus characteristics, our research suggests that measured in comparable units, buses in Tokyo and Seoul are half the price of U.S. buses and buses produced in China are even cheaper. While cynics might question the quality of China’s buses, it is notable that wealthy and well governed Singapore is importing buses from China.

In the absence of international competition, U.S. tax payers face a higher price for subsidizing urban bus services and U.S owners of the domestic firms that produce the buses gain some monopoly rents. There is a fundamental asymmetry in that a small group of domestic producers benefit from the absence of imports while the costs borne by tax payers are broadly spread out (Stigler 1971, Becker 1985). Based on data from 1997 to 2011, the average price for a U.S metro bus (in year 2011 dollars) was $309,000 with the 10th percentile of the empirical distribution being $104,000 and the 90th percentile at $497,000.

A second implication of the absence of bus imports is extra energy consumption and hence greenhouse gas emissions. The bus fleets in Seoul and Tokyo are both more fuel efficient than in the U.S. The fleet fuel economy of buses in the U.S. was 3.54 miles per gallon (of gasoline-equivalent fuel) in 2011, compared with 4.74 in Tokyo which also operates a diesel-dominated fleet of about 1500 buses. In Seoul, the average fuel economy of 61 diesel buses was 5.05 and that of 7,469 CNG buses was 4.04 in 2011.

Chinese electric bus, being tested for use in Los Angeles. A rare example of a foreign bus manufacturer selling to the US market.

This Chinese electric bus, being tested for use in Los Angeles, is a rare example of a foreign bus manufacturer selling to the US market.

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Economists For Protectionism

jeanetteProfessional economists generally look for ways of improving labor productivity. And most economists would take a dim view of protectionism (and other market barriers). So you would think that the US transit industry, with its dismal labor productivity, is fertile ground for research, right?

Apparently not. Consider this “Research Brief” written by Dr. Jeanette Wicks-Lim  at the UMass Political Economy Research Institute. Called How “Buying American” Can Raise the Job-Creation, the report argues in favor of greater Buy-America requirements for transit vehicles purchases:

How many jobs does the U.S. economy gain when manufacturers raise the domestic content of their products? This research brief presents estimates which show that, on average, when manufacturers fully source the components and subcomponents of their vehicles domestically they create at least 26 percent more jobs than manufacturers that only meet the 60 percent Buy America requirement.

What she fails to consider is that the 100% Buy-America vehicle will be as much as 2x more expensive. It will also be much less reliable, and take years to custom-design.

That extra expense is an opportunity cost. Billions of dollars is being wasted that could go towards expanding the transit network, or running more transit service. Those things provide jobs too. As well, the overall economy would see benefits from have more extensive and frequent transit service.

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MBTA’s Buggy Railcars

Here is a textbook example of all the problems Buy-America causes for new railcar orders:

A long-awaited fleet of MBTA commuter rail cars, delivered 2½ years late by the South Korean manufacturer, is now so plagued by mechanical, engineering, and software problems that it has to be shipped to a facility in Rhode Island to be fitted with new parts.

Even as a T spokesman described the problems with the cars as “standard operating procedure,” rail workers and their union representatives said the situation is unprecedented, and federal officials acknowledged they are “monitor[ing] the situation closely.”

“In my 40-some years of railroad experience, we’ve never seen problems like this,” said Tom Murray, president of the local chapter of the Transport Workers Union of America.

But Massachusetts Bay Transportation Authority officials say the problems — including issues with doors, air-conditioning, brakes, and signal software — are a normal part of introducing new, more technologically advanced train cars into a transit system.

“Railroad coaches are not like new autos that a buyer drives off the lot,” MBTA spokesman Joe Pesaturo said. “Modifications are made as necessary. . . . This is standard operating procedure throughout the transit industry.”

First, you have to marvel at the MBTA blaming the problems on a more “technologically advanced” train car. For God’s sake, these are primitive commuter coaches. To think that toilets, air-conditioning, and doors are some bleeding edge technology!

But Pesaturo is technically correct that all this debugging is “standard operating procedure” for the US transit industry. That is because railcars have to be custom-designed — in order to comply with the Buy-America rules, and the FRA nonsense.

There is a better way. Let’s do what every other transit agency in the world does: use off-the-shelf trains, follow the global standards. Why shouldn’t the MBTA buy railcars just like the new auto buyer?

So it was inevitable that MBTA’s special-snowflake trains would go through a considerable amount of debugging. This will go on for years. It is not only expensive, but dangerous:

Some of the problems center on the control cars, which are designed to be driven by engineers at the front of the train. The cars cannot be used on rail lines owned by Amtrak, which run south of Boston, because the car’s software is incompatible with the signal system. In some instances, signals inside the train indicate that the engineer has the OK to proceed when outside signals indicate that the train must wait. In those cases, engineers noticed that the signals did not match up and reported the problem.

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Recent changes in MAP-21 have made Buy-America rules more strict. It will now apply to all contracts associated with a project, even ones that aren’t paid out of Federal dollars. This caught highway planners by surprise, and nearly halted a $1.3 billion expansion of CA highway 91 in the Inland Empire:

Inland officials are sounding alarm bells about a new twist on an old federal policy they say threatens big transportation projects set to launch in a few months. Going to bat for those officials are local members of Congress, who are urging the U.S. transportation secretary to be flexible in enforcing a provision concerning the use of domestic materials on roads and bridges, plus utility lines that have to moved. Hanging in the balance, officials say, is the massive makeover of Highway 91 between Interstate 15 and the Riverside County-Orange County line due to start by year’s end. The $1.3 billion project entails building four toll lanes, two general-purpose lanes and a connector ramp, and aims to deliver relief to tens of thousands of weary commuters who drive to jobs near the coast.

The projects could be postponed for months, if not years, officials said.

“We’ve always had Buy America on our contracts that use federal funds,” said Garry Cohoe, director of project delivery for San Bernardino Associated Governments.

What’s different, officials say, is federal lawmakers have extended the “Buy America” requirement to every contract associated with a project. That includes contracts signed to move gas pipelines, electrical wires and phone lines that are in the path of construction — though utility relocation typically isn’t paid for by federal dollars.

This is nothing new for transit agencies. They’ve always had to deal with this nonsense. This was the stated reason for rejecting the XPressWest HSR loan application. And Houston’s LRT project was severely delayed because two test vehicles were assembled in Spain (even though no Federal funds were involved).

Oh, and as for that Hwy 91 project….the DOT immediately granted an exemption.

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