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HSR: The Equipment and Funding Debacle


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#1 Northeastern292

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Posted 15 June 2016 - 07:44 PM

From Railway Gazette:

 

The biggest challenge faced by XpressWest is ‘the federal government’s requirement that high-speed trains must be manufactured in the USA’, said Marnell. ‘As everyone knows, there are no high-speed trains manufactured in the USA. This inflexible requirement has been a fundamental barrier to financing high speed rail in our country. For the past 10 years, we have patiently waited for policy makers to recognise high speed rail in the USA is a new enterprise and that allowing trains from countries with decades of safe high speed rail experience is needed to connect the Southwest region and start this new industry. After the environmental work connecting Palmdale to Victorville is completed, we intend to renew our request for support from the Federal Railroad Administration and are hopeful policy makers in Washington DC will allow the Federal Railroad Administration to adopt a more flexible and realistic approach to support high speed rail.’

 

Marnell said ‘the real question is: do those in Washington DC have the courage and vision to proceed, or is our leadership going to force projects throughout the USA to seek financial support for infrastructure in our country from foreign governments?’

 

The only way I can see this resolved (and Amtrak and California High Speed Rail Authority will run into this problem when they start receiving proposals for their RFPs) is if the feds relax the rules on Build America for a period of ten years to allow both overseas manufacturers, developers and investors to get involved and to allow those overseas manufacturers to build plants here in the States. To have the industry in this case is challenging when we don't even have the market, and yet we have proposals from the Europeans, Chinese and Japanese who are practically close to giving away the technology. The US manufacturers would make up through the manufacturing of rail ties, rails, and the infrastructure itself.

 

The reason that we almost no longer have to import streetcars/light rail vehicles/commuter railcars is because since the 1980s, we've had a huge amount of startups and legacy systems replacing equipment about to fall apart. The LA and San Diego metro areas went from (outside of Amtrak) not having a mile of commuter rail or light rail in 1980 to having hundreds of miles today. The amount of cities with commuter rail and light rail has skyrocketed since the dark ages (*cough* Reagan *cough*) of transit funding. Yes, many of the initial production vehicles are still built overseas (for instance, the first 38 MTA/ConnDOT M8's were built in Kobe, Japan with the rest in Lincoln, Nebraska). But out of those 425 new railcars, the bulk has been built right here in the states. And there's overlap too. Denver went to Hyundai-Rotem for equipment, Minneapolis' new S70 LRV's are very similar to the ones ordered by seven other customers (none who had existing light rail in 1980 and had discontinued streetcar service years prior.

 

If you want to have a market, you have to create it, nurture it and sometimes get the proper stimulus for the market. We should be doing everything it takes to bring high speed rail in the United States.

I have some sample letters I am writing to legislators about this if anyone is interested, especially the New Yorkers on the forum.

 



#2 John Bredin

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Posted 16 June 2016 - 12:28 PM

If you want to have a market, you have to create it, nurture it and sometimes get the proper stimulus for the market. We should be doing everything it takes to bring high speed rail in the United States.

The problem is that some people, including some members of Congress, don't see the need for a market in passenger rail cars in the first place, so the argument that we should encourage a domestic market doesn't have any traction with them. People who mock passenger rail proposals as a "choo choo" aren't going to give a tinker's damn whether the choo-choo is made in the U.S. or not.  :)



#3 cirdan

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Posted 16 June 2016 - 12:33 PM

Just some points that come to mind.

 

Siemens already has a significant manufacturing base in the USA. This is why they are able to build the Brightline trains in the USA as well as the ACS-64 and the Charger diesels.

 

These are facilities that were originally built for light rail manufacturing (as you explain) but are sufficiently versatile to handle everything from heavy locomotives to inter city cars to HSR.

 

Other foreign companies with rail vehicle manufacting facilities in the USA can do similarly. Those that don't actually have a HSR portfolio can partner with other companies that do.

 

So whereas the light rail renaissance started from zero, in an environment where passenger vehicle manufacturing had died out complately and a lot of knowledge lost, this is not really the case with HSR.



#4 afigg

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Posted 16 June 2016 - 05:24 PM

The only way I can see this resolved (and Amtrak and California High Speed Rail Authority will run into this problem when they start receiving proposals for their RFPs) is if the feds relax the rules on Build America for a period of ten years to allow both overseas manufacturers, developers and investors to get involved and to allow those overseas manufacturers to build plants here in the States. To have the industry in this case is challenging when we don't even have the market, and yet we have proposals from the Europeans, Chinese and Japanese who are practically close to giving away the technology. The US manufacturers would make up through the manufacturing of rail ties, rails, and the infrastructure itself.

Amtrak is well pass the stage of receiving responses to their RFP for HSR trainsets. They are supposedly close to finalizing the Acela replacement contract with Alstom, but the contract award and the RRIF loan approval has dragged out for a long, long time. Senator Schumer (NY) announced that Alstom had been selected last September (!) and still no formal signing off on the contract. 

 

Amtrak dealt with the Buy America issues by getting two waivers from the FRA which were granted in November and early December. One waiver that was granted separately to both Amtrak and the CA HSR allowed each to have the first 2 HSR trainsets to be built and assembled outside of the US to speed up the testing and verification process. Amtrak also got a waiver allowing the aluminum car body shells and many of the critical brake components to be manufactured outside of the US on the grounds that these were specialized components that would take years to develop the capability to build in the US and would be very costly to do for a limited production run of 28 trainsets.

 

The major issue with Buy America is that it drives up costs, sometimes by A LOT, especially for limited production runs. I'm sure Xpress West tried to get Buy America waivers for their RRIF loan application, but I strongly suspect it is much easier for a state agency or a government owned entity such as Amtrak to get waivers from the FRA (and US DOT) than it is a for a privately owned venture such as Xpress West. Has a lot to do with bureaucratic CYA from potshots or attacks from Congress if the FRA were to freely grant waivers to some private company. As a private venture, XW has to keep the costs down as much as possible. The problem is that if XW gets any federal funding or federal backed loans, the Buy America requirements kick in. And it is very difficult to go out and raise $6 billion or so in fully private equity or bonds.

 

XW was apparently hoping the Chinese would provide the equipment and possibly all of the financial backing, but China, speaking in big picture terns, may be seriously overextended on national and corporate debt at the present time. Add in the politics of US - China relations and you get a very complicated situation for XW with regards to getting Chinese backing.



#5 Northeastern292

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Posted 16 June 2016 - 05:29 PM

Just some points that come to mind.

 

Siemens already has a significant manufacturing base in the USA. This is why they are able to build the Brightline trains in the USA as well as the ACS-64 and the Charger diesels.

 

These are facilities that were originally built for light rail manufacturing (as you explain) but are sufficiently versatile to handle everything from heavy locomotives to inter city cars to HSR.

 

Other foreign companies with rail vehicle manufacting facilities in the USA can do similarly. Those that don't actually have a HSR portfolio can partner with other companies that do.

 

So whereas the light rail renaissance started from zero, in an environment where passenger vehicle manufacturing had died out complately and a lot of knowledge lost, this is not really the case with HSR.

 

Good point, but apparently XpressWest is fixated on the notion that they NEED foreign funding. Maybe XpressWest could get European investors, and have Siemens build the equipment.

The only saving grace is that Nevada now has a high speed rail authority.


Edited by Northeastern292, 16 June 2016 - 08:43 PM.


#6 Northeastern292

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Posted 16 June 2016 - 08:42 PM

 

The only way I can see this resolved (and Amtrak and California High Speed Rail Authority will run into this problem when they start receiving proposals for their RFPs) is if the feds relax the rules on Build America for a period of ten years to allow both overseas manufacturers, developers and investors to get involved and to allow those overseas manufacturers to build plants here in the States. To have the industry in this case is challenging when we don't even have the market, and yet we have proposals from the Europeans, Chinese and Japanese who are practically close to giving away the technology. The US manufacturers would make up through the manufacturing of rail ties, rails, and the infrastructure itself.

Amtrak is well pass the stage of receiving responses to their RFP for HSR trainsets. They are supposedly close to finalizing the Acela replacement contract with Alstom, but the contract award and the RRIF loan approval has dragged out for a long, long time. Senator Schumer (NY) announced that Alstom had been selected last September (!) and still no formal signing off on the contract. 

 

Amtrak dealt with the Buy America issues by getting two waivers from the FRA which were granted in November and early December. One waiver that was granted separately to both Amtrak and the CA HSR allowed each to have the first 2 HSR trainsets to be built and assembled outside of the US to speed up the testing and verification process. Amtrak also got a waiver allowing the aluminum car body shells and many of the critical brake components to be manufactured outside of the US on the grounds that these were specialized components that would take years to develop the capability to build in the US and would be very costly to do for a limited production run of 28 trainsets.

 

The major issue with Buy America is that it drives up costs, sometimes by A LOT, especially for limited production runs. I'm sure Xpress West tried to get Buy America waivers for their RRIF loan application, but I strongly suspect it is much easier for a state agency or a government owned entity such as Amtrak to get waivers from the FRA (and US DOT) than it is a for a privately owned venture such as Xpress West. Has a lot to do with bureaucratic CYA from potshots or attacks from Congress if the FRA were to freely grant waivers to some private company. As a private venture, XW has to keep the costs down as much as possible. The problem is that if XW gets any federal funding or federal backed loans, the Buy America requirements kick in. And it is very difficult to go out and raise $6 billion or so in fully private equity or bonds.

 

XW was apparently hoping the Chinese would provide the equipment and possibly all of the financial backing, but China, speaking in big picture terns, may be seriously overextended on national and corporate debt at the present time. Add in the politics of US - China relations and you get a very complicated situation for XW with regards to getting Chinese backing.

 

 

I wonder if XW will get the Nevada HSR Authority involved. I don't care what the heck it takes, I want to see  California HSR, Texas Central AND XpressWest up and running in the next ten year. America should have a high speed rail network to rival the Chinese.


Edited by Northeastern292, 16 June 2016 - 08:43 PM.





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