Industryweek 1422 Iw0611rail

High-Speed Rail: Mixed Signals

June 14, 2011
Is America ready for high-speed rail? Siemens and other rail manufacturers would love to know.

In February 2010, Siemens announced that it bought 20 acres of land in Sacramento, Calif., to meet future demand for high-speed trains in the United States.

The land, which sits adjacent to the company's 34-acre light-rail manufacturing site in Sacramento, has yet to be developed. But if Congress ever reaches consensus in support of high-speed rail, the company says it will build a factory on the new site, producing Siemens' 220-mile-per-hour Velaro trains.

"We're ready to bring high-speed rail to the United States," declares Oliver Hauck, president, Mobility Division, Siemens Industry Inc.

It's not just the trains that Siemens want to bring here. It's the electrification, safety and communication systems. It's the rail automation, the signaling and the interlocking. It's the technology.

"What would happen is we would transfer all the knowledge in a first set of trains, where we would literally exchange teams of people between our core factory in Krefeld [Germany] and here in Sacramento," Hauck explains.

Siemens isn't sure how many people a new U.S. factory would employ, but Hauck notes that the company once estimated that the plant would require approximately 1,000 people to meet the needs of California's proposed high-speed-rail system alone, based on original plans that called for 100 train sets.

However, before the plant's first beam goes up, Siemens needs to see evidence that the United States is committed to high-speed rail.

Ideally, Hauck says, that would take the form of a federal transportation bill that includes "clearly defined" funding for the next six years to support construction of a high-speed rail system.

"If a system like this gets kicked off and [receives] a continuous funding stream," says Hauck, "then we -- and I think many others on the supply side -- would be willing, ready and committed to put those jobs in this country."

A Political Train Wreck

It's unlikely that federal and state lawmakers will send the kind of signal that Siemens is looking for anytime soon.

In February, the Obama administration called on Congress to back a six-year, $53 billion investment in high-speed intercity rail, as part of Obama's plan to give 80% of Americans access to high-speed rail within 25 years.

Soon after, the federal budget crisis dealt a major blow to Obama's plan. In April, under the specter of a possible government shutdown, Obama and Republicans in Congress agreed to a six-month continuing resolution that rescinded $400 million in high-speed-rail funding from the fiscal year 2010 budget and eliminated all federal high-speed-rail funding for fiscal year 2011.

Meanwhile, newly elected Republican governors in Ohio, Florida and Wisconsin wasted little time in rejecting federal funds allocated for high-speed-rail projects in their respective states, expressing concern that the projects would leave their taxpayers on the hook for cost overruns and continuing subsidies.

Ohio Gov. John Kasich was so dead-set against a proposed passenger-rail corridor between Cleveland and Cincinnati that just one day after winning the election this past November, Kasich declared, "That train is dead."

Florida Gov. Rick Scott's rejection of $2.4 billion in federal high-speed-rail funds was a particularly painful blow to the high-speed-rail movement. The Tampa-to-Orlando line was eyed as the first high-speed-rail system in the United States, and the Obama administration had hoped it would sell the rest of the nation on the concept.

As did Andy Kunz, president and CEO of the U.S. High Speed Rail Association.

"[Scott] was the only one in the entire state who didn't see the need to build that," asserts Kunz. " ... That would've been our showcase system, and I think that's why he killed it."

Kunz, though, rejects the notion that Obama's high-speed-rail plan is caught in the crossfire of partisan politics. Scott's predecessor, Republican-turned-independent Charlie Crist, had embraced high-speed rail and had sought the federal high-speed-rail funds that Scott rebuffed. And Kunz notes that John Mica, a Florida Republican who chairs the House Transportation and Infrastructure Committee, is a "huge supporter of high-speed rail."

"It's not partisan, because there are a lot of Republicans who support this, and there are some Democrats who are against it," Kunz says. "If you really dig deep and you look at who the most outspoken people against high-speed rail are, look at where they get their campaign contributions. They're the ones who get the biggest contributions from the oil industry."

Kunz argues that the No. 1 benefit of building a network of high-speed electric trains in the United States is that it will help reduce the nation's dependence on foreign oil. His theory on the oil industry's lobbying influence aside, Kunz isn't optimistic about high-speed rail getting funded in the next federal budget.

"You have a lot of freshmen members of Congress in there trying to flex their muscles and act like tough guys, [saying] 'We're not spending anything on this, that and the other,'" he says. "I think it's going to be a bit of time before we get past high-speed rail being funded with stimulus money, and a couple bucks here and there, to the point where it is permanently funded."

Will 'Buy America' Derail the Plan?

As the political and public debate over high-speed rail rages on, author and professor Anthony Perl believes the push for "Buy America" provisions in high-speed-rail procurement is only muddling the process.

"To me that is the biggest self-inflicted wound that the United States is struggling with," says Perl, who is director of the Urban Studies Program at Simon Fraser University in Vancouver. "It's like stepping on the brake and putting on the gas at the same time."

Americans, understandably, want to see their tax dollars directed toward American manufacturers for public projects such as high-speed rail. But there are no U.S.-based manufacturers of high-speed trains.

And therein lies the conundrum.

"I'm American. I grew up here. I care about my country. And I don't want to see all of our jobs exported all over the world," Kunz says. "But if we want true high-speed rail, we're going to have to buy the trains from the people who are making them,because we don't make them."

Perl is convinced that the lack of domestic manufacturing capacity is the biggest obstacle to high-speed rail gaining traction in the United States. Without the technological knowhow and institutional knowledge, it's difficult "to move [high-speed rail] forward in a way that inspires confidence across political lines," he says.

"When President Kennedy stood up and said we're going to send a man to the moon, NASA existed, and there were scientists and engineers and all these people [to support the effort]," Perl says. "It was a big leap for them to take, but there was a diving board to leap from. We don't have a diving board."

Consequently, insisting on a strict "Buy America" approach to U.S. high-speed rail "is the equivalent of Bangladesh saying we're going to develop a space program with entirely indigenous experience and technology," Perl says.

Kunz notes that most of the major players in high-speed rail -- including Munich-based Siemens, Paris-based Alstom and Montreal-based Bombardier -- already have light-rail manufacturing facilities in the United States.

Siemens' Hauck estimates that his company has 1,200 employees supporting rail manufacturing in the United States. Siemens plans to hire an additional 250 people at its U.S. rail facilities over the next year or so, to build 70 electric locomotives for Amtrak as part of a $466 million light-rail contract awarded in October.

The Amtrak contract includes a "Buy America" clause mandating 50% U.S. content, "but that content is measured all the way down to the subcomponent level," Hauck points out, "so two levels down the bill of materials."

"If you take the current "Buy America" requirement that is being talked about in Congress for [high-speed rail] projects because they have stimulus money or federal money in them, that would be 100% Buy America, but only to the first level of the bill of materials. So that means some subcomponents could then be imported."

Regardless of whether a high-speed-rail plan requires 50% U.S. content or 100% U.S. content, Siemens is "rather confident that we would be able to fulfill either requirement," Hauck adds.

Until a majority of U.S. lawmakers hop on board the high-speed-rail movement, though, it's a moot point.

"All of these companies have said they will scale up and start producing [high-speed trains] here in America once they see a bunch of orders," Kunz says. "But they're not going to spend millions of dollars opening a factory for two train sets or four train sets and then the orders stop. Until this thing becomes a permanent, consistent program with money every year, none of these companies are going to invest a dime here."

See Also:
Making the Case For High-Speed Rail in America

Popular Sponsored Recommendations

How to Build a Predictive Maintenance Program: Lessons Learned from LSB Industries’ Success

Dec. 21, 2023
Register today and join this webinar to gain insight on best practices for setting up a predictive maintenance program from industry experts.

The Year of Results: Four Expectations for 2024 Manufacturing

Feb. 1, 2024
In 2024 manufacturers will need to focus on results, from achieving operational excellence to enhancing digital transformation, to navigating compliance. Stay ahead with crucial...

From Data to Action: Enabling the Connected Enterprise with a Digital Thread

Feb. 8, 2024
Manufacturers are transforming the enterprise with cloud technologies and IoT

Ecommerce Guide: How to Manage Order Volume Spikes

Oct. 2, 2023
Master the art of delivering a seamless ecommerce shopping experience! Learn how to streamline your operations to successfully manage seasonal sales order spikes.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!