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The Business and Politics of Passenger Rail; 2012-04-13

April 12th, 2012

Volume 2, Number 6

For those of us with something of a useful institutional memory, it’s like deja vu all over again, as a celebrated sports figure once said.

Remember the heartburn and ultimate heartache that went into the design and manufacture and subsequent legal battle over the Acela trainsets Amtrak uses on the Northeast Corridor? It’s back, in a 21st Century setting.

CAF-USA, an American fully owned subsidiary of Construcciones y Auxiliar de Ferrocarriles of Spain – a worldwide know manufacturer of passenger rail cars of all types – which is building nearly $300 million worth of new Viewliner-type cars for Amtrak in the form of sleepers, diners, and baggage cars has reportedly received a “stop work” letter from Amtrak.

Information provided to The Business and Politics of Passenger Rail indicates CAF-USA was sent a stop work letter on Friday, April 6, 2012. One of the reasons indicated was CAF-USA is far behind meeting an agreed upon production schedule.

CAF-USA has performed – and completed – other work in the United States for regional and local transit agencies such as the City of Pittsburgh, and is currently working on a contract for the Houston, Texas transit system. CAF-USA performs work at its facility in Elmira Heights, New York. CAF-USA has actively bid on other work in the United States, too, such as for New Jersey Transit.

This is not the first time a foreign-controlled passenger rail car manufacturer has run into problems fulfilling American contracts.

Here are some details:

  • Southeast Pennsylvania Commuter Rail Authority (SEPTA) – Silverliner V electrical multiple-unit commuter railcar purchase 2006-2010 – 120 units ordered from United Transit Systems, Masan, South Korea, in 2006. Three complete new railcars built in Masan delivered May 2010, along with shells for remaining order to be assembled in Philadelphia. Time elapsed from order to delivery: nearly 4 years. This was considered an on-time delivery. http://www.septa.org/media/short/2010/03-08.html
  • Connecticut Department of Transportation/Metro North Railroad – M8 electrical multiple-unit commuter car purchase 2005-2010 – CDOT/MNR specifications put out to bid December 2005. Contract for 300 cars plus option on 80 more awarded to Kawasaki, Inc., August 26, 2006. Manufacturer advised possible delays due to steel shortages. First 38 cars to be built in Japan, remainder in Lincoln, Nebraska. Eight car train for testing (without passengers) promised for late 2009, but did not arrive until 2010. An order of 100 production cars was delivered in April 2012, and the first cars now are undergoing testing.
  • Southern California Regional Rail Authority commuter car purchase 2007-2010 – SCRRA awarded the Korean/Japanese consortium Rotem an order for 54 trailer and 33 cab cars, plus two options, each for 10 additional cab cars, on February 24, 2007. The cab cars incorporated new Crash Energy Management features never before used on U.S. passenger railcars. The first cars were shipped at the end of January, 2010, but problems were discovered and the cars underwent refitting and testing before being allowed into service.
  • Minneapolis Metro light-railcar purchase 2001-2004 – In January 2001 Minneapolis Metro ordered 14 Bombardier Flexity light-rail cars for the opening of its Hiawatha Line in 2003. As Opening Day approached, Metro ordered six more of the same design. The first car sets arrived in June 2003, and were tested and accepted before the line opened in June 2004. The remaining cars were delivered on schedule.

And, then there was the front page of the Chicago Tribune of Thursday, April 12, 2012 (yesterday). Reporters Jon Hilkevitch and David Kidwell told the world the administration of Chicago Mayor Rahm Emanuel and the Chicago Transit Authority engaged in private discussions for a $300 million no-bid contract with Bombardier Transportation – which is manufacturing the CTA’s new railcars – to build and operate a rail car overhaul facility on vacant city and CTA land.

The Tribune reports the talks went on for 10 months to create a public-private partnership, but ended when the Tribune disclosed Bombardier has defective-part problems with the ongoing production of 706 new rail cars under a contract for taxpayer monies of $1.14 billion. Bombardier was forced to recall 54 rail cars it had already built and delivered to the CTA and stop production on about 650 other cars because CTA inspectors determined Bombardier was installing defective rail car wheel assembly parts made in China.

The defective parts installation and recall were reported exclusively by the Tribune on March 8, 2012.

These episodes together point to a difficulty state or regional or local passenger rail agencies – indeed, Amtrak, too – have in securing high performing contracts for the procurement of new rolling stock. This is a problem which besets both public and private operators.

Perhaps the unpleasant part is America continues to lead the world in technology and industrial know-how for manufacturing freight cars – what’s the problem with passenger rail cars? We saw the failure of Colorado Railcar, but that was mostly a self-inflicted management problem.

We saw Amerail, which manufactured the original Amtrak Viewliner order, but they disappeared into foreign-owned and controlled Alstom. Pullman Standard’s last hurrah was the Amtrak Superliner I equipment, decades ago. Bombardier built the Superliner II equipment. The Budd Company, builder of the Sherman Tanks that masquerade as passenger cars for VIA Rail Canada and some for Amtrak that have lasted in continuous service for over half a century and are still going strong, now is out of the passenger rail car business, and builds parts for automobile bodies.

Where is the next generation of American passenger car builders? Where are the small builders which can grow to handle the coming orders, and meet contract specifications and on-time delivery? It’s not just a matter of technology – it’s a matter of pride, work ethic, and desire to create a lasting product which will proudly carry a builder plate with a name which will last for decades.

Where are these people? If the new surge of passenger rail in America is going to get running, it’s going to be up to an American manufacturer – with American interests – to make it happen.

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