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Foreign firms see profits in U.S. high-speed rail

LA ROCHELLE, France - The train factory here on the Bay of Biscay was created in 1918 by the masters of the industry - the Americans - to build troop transports during World War I. Today, French engineers, welders, and electricians work in the same long sheds for the French manufacturer Alstom Transport. They hope their new customers will include the old bosses, the Americans.

Yannick Legay, the product policy manager for Alstom Transport, at the La Rochelle factory. Alstom is competing with other foreign firms to build high-speed trains in the United States. (Photo by Paul Nussbaum)
Yannick Legay, the product policy manager for Alstom Transport, at the La Rochelle factory. Alstom is competing with other foreign firms to build high-speed trains in the United States. (Photo by Paul Nussbaum)Read more

Third of four parts.

LA ROCHELLE, France - The train factory here on the Bay of Biscay was created in 1918 by the masters of the industry - the Americans - to build troop transports during World War I.

Today, French engineers, welders, and electricians work in the same long sheds for the French manufacturer Alstom Transport, building the great-great-grandchildren of those early trains - sleek tubes of aluminum that travel at 225 m.p.h. They hope their new customers will include the old bosses, the Americans.

About 500 miles south, near Madrid, the Spanish manufacturer Talgo is building high-speed trains with a novel tilting design to permit faster speeds on curves and a gauge-changing mechanism to accommodate different rail widths without stopping. The factory walls have pictures of Talgo's first train, built 60 years ago by American Car & Foundry Co. in Wilmington, Del.

Once the world's railroad leader, with train makers such as Philadelphia's own Baldwin Locomotive Works, the United States is now a backwater, dependent on foreign companies to fulfill its dreams of high-speed passenger rail.

The French, Spanish, Germans, Japanese, or Chinese will provide the expertise that is a lost art in the United States. The countries that once relied on American ingenuity to build their trains now vie with one another to sell high-speed rail systems to the United States.

But, since U.S. law requires that the trains be built in the United States by American workers, foreign-owned train factories could mean thousands of jobs and billions of dollars for U.S. locales.

And the construction of bridges, tunnels, and stations around the country could mean work for tens of thousands more Americans.

Vice President Biden cited those jobs when he and President Obama announced $8 billion in federal grants for high-speed rail this year in Tampa, Fla.

"How can we, the leading nation in the world, be in a position where China, Spain, France - and name all the other countries - have rail systems that are far superior to ours?"

After noting how high-speed trains would reduce congestion, cut pollution, and increase productivity, Biden said: "Most important, we're creating jobs - good jobs. Construction jobs. Manufacturing jobs. And we're going to be creating them right now. We're going to spur economic development in the future and we're making our communities more livable all in the process."

A recent report by Boston-based Economic Development Research Group researchers estimated the number of jobs that U.S. rail spending would create: 24,000 construction and manufacturing jobs per $1 billion in capital investment, and 41,000 operation and maintenance jobs per $1 billion in operating investment.

In Spain, the government's ambitious push to build Europe's largest high-speed network has created 600,000 jobs in the last five years, according to officials of Adif, the Spanish rail-infrastructure firm.

That includes massive public-works projects such as bridges and tunnels, including a five-mile-long tunnel beneath the heart of Madrid to provide a high-speed rail connection between the city's two main train stations.

In La Rochelle, about 1,400 people work at the Alstom train factory, building equipment ranging from light-rail trams for Algiers and Jerusalem to the latest generation of high-speed trains for France and Italy.

Their pride and joy is the new AGV, the Automotrice à Grande Vitesse, or "high-speed self-propelled carriage," Alstom's newest entry in the high-stakes business of high-speed trains.

Introduced by President Nicolas Sarkozy at ceremonies in La Rochelle in 2008, the 224-m.p.h. AGV is designed to compete with the newest German, Japanese, and Chinese trains.

Workers are completing their first AGV export order, 25 sleek, Ferrari-red trains for the private Italian railway operator NTV, which will start running the trains between Milan and Naples next year.

The order is worth $800 million ($1.8 billion, including maintenance contracts).

The AGV, unlike its predecessors, has no locomotives. The electrical power to drive the train is distributed among the individual cars. The result is a lighter, faster train, with the capacity to carry more passengers.

"Fully loaded, the AGV weighs less than its competitors do empty," Yannick Legay, Alstom's product-policy manager, said proudly.

To cut down on wind resistance, the beak-nosed AGVs employ aluminum covers over wheel wells, rooftop cavities, anything that might create drag. On the AGV, Legay said, 95 percent of the train's energy is used to overcome aerodynamic drag, so seamless sleekness is crucial.

Aided by robotic welders, Alstom workers transform panels of stiff aluminum into car bodies, into which electricians pull miles of wire harnesses. Wheel sets, heating and air-conditioning systems, plumbing, and, finally, seats, are installed, and then it's off to the paint shop for the final exterior touches.

Workers here can produce about one AGV train set a month, which typically means eight cars.

This is the kind of work that Alstom, like other foreign train makers, would like to bring to the United States.

A country needs three things, Legay said, to develop high-speed rail: "Cities. Money. And political will."

A veteran of previous failed efforts to build high-speed rail in Texas and Florida, Legay said the missing ingredient in the United States has always been the political will. Perhaps now, he said, that has changed.

With a voter-approved $9.9 billion for high-speed rail in California, and President Obama's promise of $13 billion for high-speed corridors around the country, "we believe there is a political movement for high-speed rail in the United States," Legay said.

French, Spanish, and German train makers and rail operators, competing against one another in Europe and Asia, see the United States as one of the most lucrative potential markets.

Many of the foreign companies already have operations in the United States, assembling commuter rail cars and building signal systems for American public-transit agencies. Those could be the foundations for a new high-speed rail industry in this country.

"Virtually every car builder has a facility in the U.S. where they hire local workers and pay good salaries and pay taxes and all that good stuff," said Tom Simpson, executive director of the Railway Supply Institute, an international trade association.

For high-speed rail, the Federal Railroad Administration has told manufacturers not to expect waivers from "buy American" laws.

"All the manufacturers would love to have us buy their off-the-shelf equipment," said Karen Rae, deputy administrator of the FRA and the agency's point person for high-speed rail. "But if we are going to have a new infrastructure in the United States, we are committed to bringing the manufacturing jobs to the U.S. - and not just assembly jobs."

"We did send a very strong message that we want substantive investments," she said.

Among the train builders with facilities already in the United States:

Alstom Transport has a plant in Hornell, N.Y., where it has manufactured and renovated more than 6,000 passenger rail cars and locomotives since 1983. Clients include Amtrak, New York City's Mass Transportation Authority, NJ Transit, Washington's Metro, and the Chicago Transit Authority.

Talgo Inc., which builds high-speed trains for Spain and other European countries, has a plant in Seattle to maintain five Talgo trains owned by the State of Washington and operated by Amtrak in the Pacific Northwest. In March, Talgo announced it would open a plant in Milwaukee to assemble train cars for service in Wisconsin and Oregon.

Germany's Siemens AG has a light-rail manufacturing plant in Sacramento, Calif., where it announced in February it was expanding in hope of landing contracts for high-speed train systems in California and elsewhere. The plant currently makes light-rail cars for Denver; Portland, Ore.; the Hampton Roads area of Virginia; Salt Lake City; and Charlotte, N.C.

South Korea's Hyundai-Rotem Corp., which builds high-speed trains for that country's KTX (Korean Train Express) system, is now assembling SEPTA railcars at a plant in South Philadelphia. Officials said the plant could be expanded to accommodate high-speed train construction.

Canada's Bombardier Inc. has about 2,800 employees in the United States, building trains, signal systems, and automated airport people-mover systems, and operating and maintaining trains such as the River Line that runs between Camden and Trenton. Bombardier has a manufacturing plant in Plattsburgh, N.Y., and two in Pittsburgh. The company's customers include Amtrak, SEPTA, NJ Transit, the Long Island Railroad and Metro-North, and the Chicago Transit Authority, as well as airports in Newark, New York City, Atlanta, Dallas-Fort Worth, Houston, Miami, Orlando, and Las Vegas.

Central Japan Railway Co., which operates high-speed trains between Tokyo and Osaka, is also in the hunt for contracts in California, Florida, and elsewhere, although it has no operations in the United States now.

And the Chinese government, which is spending $100 billion a year on high-speed rail at home, wants to partner with General Electric Co. to build and finance high-speed rail in California and other states.

The foreign players know that the first high-speed rail line in the United States will be closely watched, and that success could open the way for more lines, more money, and more contracts.

So they all tout their ability to work in the United States.

Siemens announced in February that it was expanding its operations in Sacramento, in hope of landing contracts for new high-speed development in California and elsewhere.

"Siemens is ready to not only bring its proven high-speed train technology to the U.S. market, but also to build the systems right here in the United States," Oliver Hauck, president of Siemens Mobility, said at the time.

Central Japan Railway chairman Yoshiyuki Kasai told a news conference this year: "I expect competition for the contract to be fierce in Florida. We will be the last to join the bidding. But I believe our Japanese system will be the most suitable for the line."

Alstom senior vice president Francois LaCote said: "Alstom already, in a way, is American. We have engineers and plants in America. We know how to work in the States."

With train sales in Germany, Spain, Britain, Korea, Taiwan, and other countries, "we already had to deal with different cultures and different ways of operating," said LaCote, who led the development of the French AGV train.

"We even adapted to British Rail, and that's not so easy," he said with a hint of Parisian disdain.

For foreign train makers, the market for passenger trains has been relatively small in the United States, limited largely to commuter agencies.

But now, with the prospect of support by the U.S. government for high-speed rail development, foreign builders might be able to count on long-term contracts and American workers on long-term jobs.

"You have a tipping point where you can bring a new industry in," said Art Guzzetti, vice president for policy of the American Public Transportation Association in Washington. "The government needs to create a stabilizing force, so there is a consistent number of orders year in and year out."

Foreign train manufacturers know from painful experience what a fickle market the United States can be.

"We have taken two very cold showers already," said Legay. "The Texas TGV and the Florida Express."

The Florida Overland Express, a 1990s plan for high-speed rail from Tampa to Orlando to Miami, was canceled in early 1999 by newly elected Gov. Jeb Bush. The Texas TGV, which was to connect Dallas, Houston, and San Antonio, died of failed financing in 1994, three years into a 50-year lease.

"In France, there was the political will 40 years ago to invest in a new form of transportation," Legay said. "The problem in the U.S. was to get political support and the public funding support. Those seem to be moving now."

Legay predicted that high-speed trains would be built and operating in Florida or California within five to 10 years.

The competition to build those American trains will be fierce, he acknowledged.

And, he said with abundant Gallic confidence: "Of course, we will be the winners."


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