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Posts Tagged ‘FTA’

How NOT to Build a Train

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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Page 18 of ‘SMART’ staff recommendation on DMU vehicle procurement gives further proof that the only US jobs preserved through Buy-America are those of idiot FTA bureaucrats:

As part of the contract, two pilot cars will be built. These cars will be fully assembled and tested in Japan and, to meet Buy America requirements, will be disassembled and shipped to Rochelle for re-assembly and limited retesting.

Here we have a make-work program to build, disassemble, and then re-assemble train cars. Remember when the Soviets used to be ridiculed for this? Why would SMART go to all the trouble?

The reason might be the ill-fated Metro project in Houston, where two prototype cars were to be assembled in Spain. As reported in the Houston Chronicle:

A year-old voicemail retained by one of the Metropolitan Transit Authority’s outside attorneys may hold the key to preserving the first federal light-rail funds in Houston history. The April 17, 2009, message from Scott Biehl, then the Federal Transit Administration’s acting chief counsel, to Metro attorney Ed Gill responded to Gill’s inquiry about whether “Buy America” rules would permit the assembly of two prototype rail cars in Spain if the cars were purchased with local, not federal, funds.

“Ed, you nailed it,” Biehl said in the message, which was included in Metro’s formal response Friday to the FTA’s Buy America investigation. “The answer is we don’t care.”

Based on this message and the advice of its lawyers, Metro believed the arrangement would pass muster under Buy America rules, which require that assembly of all rolling stock for federally funded projects take place in the United States, Metro chief counsel Paula Alexander said in the response letter. Metro sent the eight-page letter, along with a binder containing 32 supporting exhibits, to the FTA on Friday.

In the end, Metro lost its appeal — even though the regular fleet would have been assembled in the US. With the vehicle procurement scrapped, the project got delayed. All because of two test vehicles!

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