Eastside Streetcar delays and Buy America requirements

Its not often that two bloggers here happen to write an article on roughly the same subject on the same night, but that has happened tonight. (I call your attention to Chris’s article below). The Oregonian reported that the Eastside Streetcar line will be opening five months behind schedule–in November 2012–and with five vehicles rather than six (due to cost overruns on the vehicle). The apparent reason? Production problems at United Streetcar, the Clackamas County subsidiary of Oregon Iron Works who is tasked with supplying the project with rolling stock.

To those who followed the saga of WES, where TriMet expended quite a bit of money keeping Colorado Railcar in business long enough to deliver the DMUs (Diesel Multiple Units) for the project, this sounds like the second verse of a very bad tune. While OIW isn’t in any danger of going out of business, from outward appearances the Portland transit user is being made to suffer delays and cost overruns due to federal procurement policy–a characterization that Chris appears to dispute.

The policy in question, of course, is Buy America.
The Buy America Act

The Buy America Act is part of the 1982 Surface Transportation Assistance Act, a 1982 law which requires that US suppliers be given preference in federally-funded transit projects. Exemptions to the requirements are often granted (all of the MAX vehicles in operation are built by either Bombardier or Siemens, both foreign corporations), and BAA doesn’t apply to projects which do not receive federal funding. The original Streetcar line was not federally-funded, and thus was free to choose vehicles from Škoda, a Czech company, but the current project is required to purchase vehicles made in Clackamas.

The trouble is–until recently, there were zero domestic producers of self-propelled rail transit vehicles including streetcars and DMUs/EMUs. (There are domestic suppliers of standalone locomotives and unpowered coaches, but not of the vehicles typically found in mass transit applications). The US DOT considers jumpstarting a domestic streetcar manufacturing industry to be a priority, and thus is encouraging the development of domestically-produced streetcars, and United Streetcar is the domestic supplier of note.

Despite Oregon Iron Works experience building complex equipment, it is new to the streetcar business, and streetcars are complicated machines. And despite receiving the plans for the Škoda 10T, the vehicle presently used by Portland Streetcar, the vehicle’s propulsion system has been a source of headaches–the original design from Škoda was found to be unsuitable, so a new system is being procured. Getting this all up and running is proving to be a challenge. At present time, one other US transit project, the Tuscon Modern Streetcar, is slated to use United Streetcar vehicles; construction on that line begins soon, and it is slated to open in 2013.

As noted in the introduction, Buy America requirements previously ensnared the WES project. Colorado Railcar was the only domestic company capable of (or interested in) supplying FRA-compliant DMUs, and so it was the vendor of choice. And we all know what happened there. US Railcar eventually bought out what was left of Colorado Railcar and continues to make similar DMUs available.

Is this a good idea?

Many transit advocates–particular those focused on transit outcomes, and less concerned with industrial policy, strongly dislike BAA. Foreign suppliers make perfectly good vehicles, after all–why should tax dollars be spent trying to rebuild a domestic streetcar industry? Other critics of BAA, not necessarily transit supporters, make accusations of protectionism (which BAA undoubtedly is) and political favoritism. Thus, a few questions for discussion:

  • Is BAA itself a good idea? If so, should its scope be expanded to public works projects beyond transit?
  • Should development of a domestic transit railcar industry be a priority for the United States?
  • If using domestic suppliers causes cost overruns (or additional operating costs due to poor quality products, as WES often experiences), should the transit agency be required to “eat” these costs to receive Federal funding (effectively lessening Uncle Sam’s contribution), or should the US pay for any cost increases which result from its industrial policy demands?
  • Do you consider it likely that United Streetcar will someday become a key local manufacturer (and when), or is it likely to remain a niche supplier, one that only receives orders when the Feds twist someone’s arm?
  • Should light-rail vehicles be next?

The floor is open. To manage the twin articles, I am suggesting that comments on the Portland Streetcar itself be posted on Chris’s article, and that this article’s comments focus on the more general questions of Buy America posed above.

7 Comments

7 Responses to Eastside Streetcar delays and Buy America requirements

  1. Bob R.
    July 20, 2011 at 11:20 pm Link

    Should light-rail vehicles be next?

    Can you expand on that? I don’t know the particulars, but I’ve been operating under the impression that Siemens constructs LRVs at a plant in Sacramento in large part to conform to “Buy America” requirements. Should the question be rephrased “First LRVs, now Streetcars?”.

    (And Siemens got the streetcar contract for Atlanta.)

  2. zefwagner
    July 20, 2011 at 11:23 pm Link

    I absolutely think Buy America is bad policy. It is clearly protectionism, but it is even worse than most examples because it isn’t even protecting an established industry! If the government wants to promote a domestic transit vehicle industry, the government can do that through the normal means: provide low-interest loans, r&d credits, etc. There are lots of ways to promote local industry that do not involve such clear market distortion as this. They are essentially providing a single choice of manufacturer, and an unproven one at that. This is ridiculous!

  3. zefwagner
    July 20, 2011 at 11:25 pm Link

    Another noteworthy addendum: because of Buy America, lots of transit vehicles are purchased from European companies where they are disassembled, shipped over to the US, then reassembled over here, just to satisfy Buy America requirements. This is like digging a hole, then filling it back in. Pointless and expensive political theater.

  4. EngineerScotty
    July 20, 2011 at 11:31 pm Link

    I wasn’t aware that Siemens produced in California–and was assuming that TriMet procured MAX vehicles under a no-domestic-supplier waiver. At any rate–how much production goes on there–just final assembly, or are components manufactured there as well?

    One way to bootstrap a domestic industry IS to have a foreign manufacturer outsource locally. The reverse has been done, after all, to many things formerly manufactured here. (And while I don’t agree with this policy, it seems that the long-term economic plan preferred by conservatives is to drive labor and regulatory costs down low enough that domestic production becomes viable again–and in some industries we may be reaching that point already…)

  5. Bob R.
    July 20, 2011 at 11:43 pm Link

    FWIW, here is Siemens’ own promotional video on YouTube for their Sacramento plant.

    Note the frequent US-centric references in the script… to the uninitiated, you might not notice that their a largely non-US-centered conglomerate.

    The video claims that over 1,000 LRVs have been made at the plant over a 30-year period. The exact definition of “made” (manufactured vs. assembled domestically) isn’t specified.

    They also claim to be expanding to construct DMU (Diesel multiple unit) and EMU (electrical multiple unit) trains and HSR (high speed rail).

    Notably, Portland and MAX feature in a few of Siemens’ national ad campaigns, including this “Somewhere in America” spot. (As to the veracity of the “train that got a whole city moving again” claim, I don’t recall Portland being at a standstill prior to the construction of the Green Line (perhaps during?), but who am I to stand in the way of a pretty PR picture? :-) )

  6. Bob R.
    July 20, 2011 at 11:51 pm Link

    Siemens Mobility (formerly Siemens Transportation Systems) also has an office in Beaverton specializing on electrical systems, which currently has 9 job openings.

    And, apparently, there’s been a letter or two at the FTA over the years disputing Siemens’ claims of meeting Buy America requirements, but that may just be par for the course between contractors who did and did not receive awards.

  7. Chris I
    July 21, 2011 at 7:50 am Link

    Scotty,

    Siemens has produced most of the MAX cars in Portland. I had an opportunity to visit the Sacramento facility about 10 years ago, and it was a pretty cool experience. I wasn’t aware that they were offering a streetcar. I know they are hoping to land the CA HSR contract and produce their Valero trains in Sacramento.

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