September 2012

What Really Helps U.S. Manufacturers in the Public Transportation Industry

by Cliff Henke

Last spring, the Federal Railroad Administration (FRA) released a $551 million Request for Proposals (RFP) to procure approximately 130 new bi-level passenger railcars from an American builder. The cars would be used on Amtrak’s intercity routes in California, Illinois, Michigan, Indiana and Missouri as well as potentially for a new line in Iowa.  What is different about this RFP is that it requires that these cars be completely American-made, not simply with the minimum 60% domestic content as required for decades in the public transportation program. The funding for the intercity vehicles is being provided by the FRA’s High-Speed and Intercity Passenger Rail Program, through funding in the American Recovery and Reinvestment Act enacted in 2009.

The FRA hopes to announce the successful car builder some time before the end of 2012. The cars are scheduled to be delivered starting in 2015.

If this announcement sounds like a familiar refrain from the past, it is. It is merely the most dramatic and recent example of federal intervention in the U.S. railcar and bus marketplaces. To be sure, state and local governments attempt to do similar things, though the prohibitions against “local options” have in theory been established in law for about as long as Buy America rules.

Yet, do such provisions help U.S. manufacturing? Reviews by many from the supply side of the industry say not really. They have seen various attempts to strengthen Buy America and other policies introduced over the years, all designed to bolster them and other U.S. suppliers. Their comments suggest, that at best, these attempts have only modest impacts toward their goals. Some observers contend that a few of these policy changes may have actually reduced U.S. jobs.

More jobs, lower costs?
The FRA’s tender also employs several other features designed to bolster American companies and jobs — and many of these have also been tried in various ways. First, the RFP includes the new uniform vehicle standards that many federal and private sector officials alike believe will drive down lifecycle costs and allow more manufacturers and suppliers to compete, fostering a healthy competition while helping to lower barriers to market entry and encourage growth in the U.S. domestic supply chain for passenger rail equipment. The common design should also make it easier to train personnel, source and inventory parts, and lower maintenance and rehabilitation costs in the aftermarket and field service support, which in turn should also reduce overall lifecycle costs and improve equipment reliability and overall quality. It remains to be seen, however, whether such standards can help meet the more stringent Buy America goals.

The car design also includes the latest industry crashworthiness and other safety standards that were developed as part of the FRA/FTA-funded APTA Standards Development program. Of course, the cars will also be compliant with the Access Board’s latest accessibility standards pursuant to the Americans with Disabilities Act.

The effort to purchase standardized equipment is led by the Passenger Rail Investment and Improvement Act Section 305 Next Generation Corridor Equipment Pool Committee, comprising state transportation officials; leadership of the FRA; management representatives of Amtrak and affected host freight railroad companies; passenger railroad equipment manufacturers and suppliers; and commuter railroad staff.  The committee has also completed specifications for high-performance diesel locomotives that can travel up to 125 mph and single-level passenger railcars.  

The committee was formed as a mandate in the Passenger Rail Investment and Improvement Act (PRIIA) of 2008. It authorized it “to design, develop specifications for and procure standardized next generation” equipment Amtrak and state intercity passenger rail programs may need. It further mandated development of standard specs that could be part of a procurement pool of next-generation trainsets.

Further, the Obama Administration has seen this law as a means not only to expand higher-speed rail services but also to revitalize the U.S. rail equipment industry. It is a reason why President Obama and his team have taken a much stronger interest in the subject as their predecessor, who actually signed the legislation.

In addition, to help raise the U.S. content bar, the U.S. Department of Transportation (DOT) partnered with the Department of Commerce’s National Institute of Standards and Technology through NIST’s Manufacturing Extension Partnership (MEP). The arrangement is designed to connect the more than 34,000 domestic suppliers registered in the MEP with rail-related business opportunities. Both agencies contend that the MEP will help U.S. railcar builders retool their production capabilities to meet the demands of this order and thus catalyze the supply chain toward much greater domestic content in railcar manufacturing.  


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