|Josef Hušek (center), founder and chairman of Inekon Group|
So why are we in the Czech Republic anyway? How did Portland come to source its streetcars here?
A little Cold War history is required. Under Comecon – the economic compact among the Warsaw Pact nations – different countries were assigned responsibility for manufactured goods. What was then Czechoslovakia was responsible for manufacturing streetcars for the whole Soviet block. “Under socialism” (as our host – a decidedly free marketeer – describes it) about 1,000 streetcar vehicles were produced per year, over 24,000 in total. This produced what in the U.S. we would call an industry cluster.
When the Soviet Union collapsed, taking the Warsaw Pact with it, this “guaranteed market” went away. At the same time, Czechoslovakia (which a few years later became the Czech Republic and Slovakia) started the transition to free market capitalism. With the captive market gone, entrepreneurs shifted their gaze west.
Which brings us to the first of the companies we are profiling. Inekon Group was started by and is essentially owned by Josef Hušek, a career foreign service officer under the communist regime. Starting with a $3,000 investment, Josef has built Inekon into a business valued at 194M Czech Crowns, or about $8M. Inekon focuses on exporting Czech engineering and industrial expertise, building streetcars, locomotives, power plants, cement plants and water treatment plants around the world.
An early Inekon partnership was with Skoda, a large Czech industrial firm that made streetcars among many other products (it is also a major auto producer in Eastern Europe). Inekon marketed Skoda’s streetcar expertise to the West (marketing was an unknown discipline in the communist planned economy). Portland’s first seven streetcars were all manufactured by Skoda under this partnership.
Since then, Skoda has been sold to a large multinational corporation and Inekon and Skoda have dissolved their relationship. Inekon is now in partnership with the transit agency in Ostrava, Dopravní Podnik Ostrava (literal translation Transportation Enterprise Ostrava) to build a streetcar vehicle with a similar design to the Skoda car. The new car is called the Trio car and represents an improvement on the Skoda vehicle based on Ostrava’s experience operating the vehicle on their streets (and like Prague, streetcars are everywhere in Ostrava).
Both Portland and Washington D.C. have Trio cars under construction. We learned this week that Inekon has bought out Ostrava’s share of the joint venture and it will now operate it under the name Inekom Tram. The new company will continue to lease space and employees from the transit agency to build the vehicles.
The next chapter in this story shifts to Oregon. As cities around the U.S. (including Portland) begin to apply for Federal transit dollars to help build streetcars, it will be necessary to meet “Buy America” requirements to qualify for this assistance. Under “Buy America”, 60% of the dollar value of the vehicles must be American, or from components that also qualify under the program. Inekon knows that it must have a U.S. partner to exploit the potentially large future U.S. market for streetcars (some 35 U.S. cities now have a streetcar project in some phase of planning or construction).
In the recently passed Federal Transportation bill, Congressman Defazio secured $4.5M of funding to build a prototype U.S. manufactured streetcar vehicle. This funding was partially in response to discussions between Portland Streetcar and Oregon Iron Works (located in Clackamas) about the possibility of local manufacture of streetcar vehicles.
The hoped for result is a partnership between Inekon and Oregon Iron Works, new jobs in the Portland regional economy and a domestic source for future Streetcar vehicle purchases.5 Comments