Business | Chinese rail maker on track to replenish Boston subway cars

Chinese rail maker on track to replenish Boston subway cars

New plant in Springfield, Massachusetts, is the latest development for CRRC in the US, where there is a growing market for new vehicles

April 7, 2017 1:23 PM (UTC+8)
A train approaches an MBTA station. Photo: Wikimedia Commons
A train approaches an MBTA station. Photo: Wikimedia Commons

CRRC MA, the Massachusetts unit of Beijing-based China Railway Rolling Stock Corp., is busy hiring and training scores of US workers. It is opening a large plant, bringing in foreign-savvy Chinese execs and pumping cash into local businesses and charities. The Boston project follows the parent company’s successful bids to win a brace of lucrative subway supply contracts from major American cities.

The CRRC subsidiary has won a total of US$843 million in contracts since 2014 to manufacture subway cars for the Massachusetts Bay Transportation Authority (MBTA), Boston’s mass transit system. A total of 404 cars will be built. It’s currently constructing a 204,000 square-foot rail car manufacturing center in East Springfield, Mass. to locally assemble the vehicles and is hiring and training 150 local workers. Production is slated to begin next year.

The openings for production supervisors, engineers and assembly workers in Springfield mean sorely needed employment in a New England state that lost thousands of manufacturing jobs to foreign competition and automation beginning from the 1970s.

“You can’t argue with jobs,” said CRRC MA spokesperson Lydia Rivera.

Most recently, CRRC MA unveiled a mock-up of its new subway car for Boston’s Orange Line at a ceremony with city officials on April 3.

The progress at Springfield is the latest development for CRRC in a growing US market for subway cars. In March, the company inked a contract worth up to US$647 million to supply 64 new subway cars for the Los Angeles mass transit system and made a winning bid of US$137.5 million bid to provide 45 railcars to the Southeastern Pennsylvania Transit Authority, which includes Philadelphia.

CRRC also broke ground in March on a US$100 million plant to assemble subway cars in Chicago. The cars will be supplied to Chicago’s transport authority in a deal worth US$1.3 billion. Rivera says CRRC’s nearly-finished Massachusetts plant will supply subway cars for the Los Angeles project in 2020.

In another potential coup, a consortium led by CRRC and Canada’s Bombadier is reportedly close to landing a coveted US$3.2 billion contract to provide 1,025 cars for New York’s subway system. Other US cities are also said to be discussing potential contracts for subway cars with CRRC.

Project on track

CRRC MA’s Rivera says the Springfield facility will open in October, with rail car assembly starting in spring 2018. The first cars will be delivered to the MBTA in December 2018, with deliveries continuing through 2022. It’s the first time that Boston has replaced its aging subway cars in decades.

The 40-acre CRRC complex includes a 2,240-foot dynamic test track, a staging/storing area, and an engineering and administration building. It’s built on the site of an old Westinghouse factory.

The China train maker also seems to be following the game plan adopted by Japanese companies like Toyota when they hired locally and opened US plants in the late 1980s.

“CRRC was smart. They identified North American transportation professionals who could work with them on the project from the beginning,” said Rivera, adding that the company also assigned internationally experienced English-speaking Chinese employees to work with American staffers. An American, Mark J. Smith, is the plant manager.

PHOTO1
Massachusetts Transportation Secretary Stephanie Pollack gives opening remarks at MBTA’s Orange Line subway car unveiling in Boston on April 3, 2017. Photo: CRRC MA

Rivera says CRRC was also focused on recruiting the right locals for the project. “We talk to all the applicants and explain to them that this is an international company, that there will be cultural differences and that this job requires a unique person,” she said.

CRRC MA also dispatched 30 local workers, including union members, on April 7 to the company’s facility in Changchun, China, for training in assembling the railcars and technology transfer activities. The team includes mechanical and electrical assembly workers, line supervisors, manufacturing engineers and test technicians.

“They are going to work side by side with CRRC assembly workers in China. This will be a three-month program,” Rivera said.

Only subway car shells are being shipped in from China. The rest of the hardware and technology will be installed by US workers, who will be paid at least US$66,000 annually.

On local sourcing of parts, Rivera says CRRC’s procurement team is working in western Massachusetts with a local development corporation to identify potential parts suppliers. It isn’t clear yet what percent of parts will be locally sourced.

Community paybacks

Rivera says CRRC also plans to cooperate with local vocational schools to train workers for the Springfield plant.

At the community level, Rivera says CRRC MA contributes thousands of dollars to school scholarships and economic development activities and spends heavily on local vendors for corporate events.

US subways costly

CRRC’s experiences reflect the realities of building mass transit in the US today.

Large US cities can’t afford the huge cost overruns often associated with building mass transit projects like subways. Most are keen on saving money and analysts say one of CRRC’s strengths is its ability to underbid competitors in supplying quality rolling stock.

This was the case when CRRC beat Bombardier, its nearest rival, in the subway-car bidding wars in Boston and Chicago.

Analysts blame high labor costs, consultant fees and the complexity of replacing old subways systems for the soaring cost of mass-transit infrastructure in the US.

New York’s partly finished Second Avenue subway in Manhattan, for example, is expected to weigh in at over US$17 billion. Phase 1 costs for the project are estimated at US$1.7 billion per km, with Phase 2 pegged at US$2.2 billion per km.

The bill for what’s touted as history’s most costly subway is especially high since workers are boring through solid bedrock to create the 8.5-mile subway line’s tunnels. But urban planners in Chicago and other US cities face similar, if lesser, cost hurdles.

Subway construction costs outside the US are generally lower. Singapore’s new Circle Line stretches 35.5 km and cost about US$130 million to build per kilometer.

Doug Tsuruoka is Editor-at-Large of Asia Times

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