Tuesday, November 3, 2009

Deal for LA Rail Car Factory Falls Through

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

by Rafael

AnsaldoBreda is an Italian manufacturer of passenger rolling stock, with a portfolio covering light rail, subways, standard speed and high speed products. SPCR radio reports that the company has walked away from a $300 million order for 100 light rail cars for Los Angeles MTA. In spite of earlier assurances, in the end the Italians were not willing to sign up to stiff penalties in the event of late delivery. It is now likely that the authority will have to execute an open tender process after all, which in the long run may well prove the best possible outcome.

What's Past is Prologue

In 2003, LAMTA awarded AnsaldoBreda a contract to build a new fleet of 50 model P2550 light rail cars with options for 2 x 50 more, in spite of delivery delays on two previous contracts. Evidently, third time is not the charm, as the company is late yet again - by three years, no less. The units already delivered are almost 6,000 lbs overweight, which means they cannot be used on certain lines.

Nevertheless, Mayor Villaraigosa pressed for these options to be exercised in a no-bid follow-on contract, with the understanding that the company set up a factory in LA and also move its corporate headquarters there. An LAEDC report dated March 2009 confidently forecast 535 manufacturing jobs and summarized that "in total, AnsaldoBreda will sustain continuing economic activity worth $368.5 million in economic output and 2,240 FTE jobs in Los Angeles County with estimated annual earnings of $91.1 million." Rumor has it the factory was to be built by an outfit headed up by the former chief deputy mayor.

Critics point out that this level of fresh employment could only be sustained with an annual output of 75 units, which would require additional orders from other US transit agencies. However, in addition its history with LAMTA, the manufacturer is now also several years late on unrelated orders from Denmark and the Benelux. The latter are for V250 "Albatross" high speed trainsets. Nomen est omen, though in all fairness the latter project has been hamstrung by factors beyond the company's control. Given AnsaldoBreda's global track record of missed deadlines, LAEDC's implied forecast that it would become a major player in the US rail car manufacturing industry was perhaps more pious hope than realistic expectation. After all, the company's assembly plant in Pittsburg never grew to the originally intended size, either.

Note that the deal that just fell through would have been ineligible for federal co-funding because the current surface transportation bill contains a five-year deadline for exercising options on existing contracts.

Plan B: Go Fish

With the passage of Measure R last year, LAMTA's needs have anyhow expanded to a total of around 200 cars for both subway and light rail in addition to refurbishment of the existing fleet. The increased size of the deal means the authority now has a much better chance of attracting bids from major players in the rail transit vehicle industry, some of whom also have high speed trains in their portfolio. Names mentioned in the radio interview: Siemens Mobility, Bombardier Transportation and Kinkisharyo, though this list was not meant to be exhaustive.

In principle, a fresh order would be eligible for federal co-funding in the context of even the current surface transportation bill, though that is already being extended for 90 days at a time because the Obama administration has decided to postpone discussion of the next one. Whichever bill would apply, there are long-standing FTA rules against federal co-funding if a tender process is skewed in favor of bidders who offer to set up a local manufacturing facility. Nevertheless, in order to help the Mayor save face, LAMTA intends to write just such a skew into the rules for the upcoming tender. That means sticking with the strictly local funding model in the (forlorn?) hope that USDOT will redirect its generosity to other component projects of Measure R so it ends up a wash.

For reference, Siemens Mobility already has a light rail assembly plant in Sacramento. Bombardier Transportation has rail maintenance facilities in Southern California and is also present other US states. Patentes Talgo S.A. is present in Washington state and is setting up a factory in Wisconsin.

Potential Implications for California HSR

While LAMTA has no formal authority whatsoever over vendor selection for the California HSR project, Los Angeles does wield significant clout in Sacramento. Don't be surprised if Mayor Villaraigosa attempts to sweeten the pot by dropping heavy hints regarding possible follow-on business from CHSRA to encourage bidders to set up shop in his city.

Like it or not, industrial policy - i.e. manufacturing job creation/retention - has been a factor in vendor selection in many HSR projects all over the world, especially for the prestigious initial order. I suspect CHSRA's role in vendor selection may therefore end up limited to the technical and commercial pre-qualification of a shortlist, though neither the Governor nor the legislature have said so publicly.

23 comments:

AndyDuncan said...

As I posted on Curbed LA, there's also now a large brownfield site about a mile from Union Station along the bank of the LA river, right above the Redondo Junction, that is looking for a tenant. I believe that's an Amtrak maintenance facility, it's just about big enough to fit a couple 400m trainsets.

AndyDuncan said...

To clarify, I believe that's an amtrak maintenance facility next to it. They might be open to sharing that space or reconfiguring to better utilize the total space.

Taylor yards, in the chavez ravine to the north would be preferable, as it would make it easier to enter the facility from the south, and it's larger, but that facility has been a point of contention with the LA-River redevelopment folk.

Rafael said...

@ AndyDuncan -

I'm guessing you're referring to this post: Metro's Rail Car Deal is Dead, What About That Manufacturing Land Downtown?

If that's the site the Mayor had in mind for the factory, I suspect it will remain reserved for that purpose, at least until it's clear if other train vendors are willing to bid for the enlarged contract and set up a factory to service it.

Executing a tender process of this magnitude takes many months, so don't expect this to be resolved quickly.

AndyDuncan said...

@Rafael, yeah I expect it to be reserved, at least in the short term, for another street car vendor. However, if LA's rather absurd contractual requirements remain unmet in the bid process, I wouldn't be surprised to see the mayor's requirement that the factory be placed in downtown LA be quietly retracted.

On another note, Berkshire Hathaway just bought up the remainder of BNSF.

Anonymous said...

Off topic-- definitely worth a new post

The CHSRA just published an organizational assessment conducted by KPMG.

Key nuggets:

Responsibility for decisions needs to be clearly vested in public officials

Staffing and oversight mechanisms are inadequate to ensure the public interest is fully protected

It's difficult to tell who's in charge--the Authority or the consultants

Can't have contractors overseeing other contractors

Interests of the Authority and its contractors are not always in alignment

Authority staff needs to grow and add highly-specialized expertise

and so on...

Rafael said...

@ AndyDuncan -

well, if the site itself is an issue, the run-through tracks for HSR will free up new land south of Union Station. To avoid tight curves, current proposals call for an alignment that reaches the river near 3rd Street, flying over the metro yard. This will entail substantial eminent domain takings. Cp PDF p87 of the Alignment Alternatives Report, option LA-A1, for details.

The Amtrak/Metrolink run-through tracks are a completely separate project with a completed EIS/EIR and waiting for funding. Eminent domain takings would be more limited. The design features a tight S-curve (radius ~200m) so tracks can reach the through tracks next to the river just north of the metro yard. Cp. PDF p26 of the same doc.

Note that the two sets of tracks would also be at different vertical elevations, as the HSR tracks will run a level above those for the legacy services at the station. Hmmm, don't you just love the smell of sulfurous diesel exhaust in the morning...at least EPA Tier 3/4 will kick in for new/retrofit engines in the next few years.

Still, you'd think they could figure out a way to minimize total eminent domain takings and blight by picking just one route and stacking the run-through tracks above one another all the way to the river. Note that HSR trains won't ever run through LAUS at significant speed but that there is a gradient to deal with.

The area bordered Alameda, US-101, the metro yard and 4th may not be high-value commercial real estate right now, but that may change once HSR makes commuting from as far away as Bakersfield a snap.

AndyDuncan said...

@Rafael: I agree in principal that two southern station throats is a bad idea in principal. But the alignment they've chosen for the metrolink through tracks hugs the freeway and the existing rail tracks except for the curve nearest the river.

If they were to put the metrolink tracks alongside the HSR tracks, then they could avoid the impact of that one small curve. To do that, however, would be problematic: The HSR section is set to go on an aerial. The additional two tracks of aerial heavy rail is going to be far more of an impact than that one small curve. Even worse would be if they had to put those tracks under the aerial, and now you've got to grade separate those streets, so you end up with three-levels of road and rail.

Cost Control said...

The KPMG reports should be most welcome by true supporters of HSR. CHSRA has always had serious oversight and accountability issues with the consultants seeking to run away with the project funds.

Robert Cruickshank's response to this report will be interesting to see whether he is a CHSRA stooge or someone who actually advocates a well-functioning and honest HSR institution.

Rafael said...

@ Andy Duncan -

you need to think in 3D for this.

The Amtrak/Metrolink run-through tracks need to fly over the freeway as well as the LA Metro tracks. That means they're elevated all the way to the river, then descend to grade level.

The HSR tracks will be elevated two levels (~60 feet) above the freeway and end up one level above the Amtrak/Metrolink tracks before crossing via a new bridge just north of Redondo Junction. Afaik, plans do not call for HSR tracks at grade level anywhere on the right bank of the LA river.

In other words, the run-through tracks could be stacked on top of one another along a single route, with motor vehicles at grade level.

Rafael said...

@ anon @ 12:07pm, Cost Control -

the fox-guarding-the-henhouse theme was much in evidence during the October 2009 board meeting/workshop, at which KPMG shared its preliminary findings.

CHSRA currently has a staff of 11. Board member David Crane is paranoid about hiring anyone else because under California law, bureaucrats are entitled to lifetime employment.

IMHO, worrying about that right now is a clear case of fiddling while Rome is burning. Cost estimates for LA-Anaheim have already ballooned because Parsons Brinkerhoff has no financial incentive to contain them.

On the other hand, the California civil service's salary scales are too low to attract the top talent that David Crane quite rightly wants for this project. Large organizations tend to waste a lot of time with various business processes instead of focusing on the substance.

Strategy A:
-----------
Hire folks who are already in their 50s and sweeten the modest salary with generous fringe benefits.

For example, someone has to go overseas and get a first hand impression of how communities deal with visual, noise and vibration issues, how HSR trains are built and maintained etc. You also want your own staff to have ridden the trains as passengers, traveled along in driver cabs, spent a day in a modern train control facility etc. How else are you going to assess the quality of what outside consultants and equipment vendors are offering/delivering?

Shoot for a mix of foreigners with first-hand experience in managing HSR line planning/construction and Americans with expertise in US regulations and railroad operations (both freight and passenger). The objective is to cover all the relevant bases so the outside consultants can't pull the wool over CHSRA's eyes.

By the time its time to wrap up the organization, these old salts will be in or at least near retirement.

Strategy B:
-----------
Set up a state-owned California corporation whose board members are by statute those of the CHSRA. This corporation would act as the authority's private temp agency, charged with recruiting top flight talent for the duration of specific sub-projects, with the option to renew.

Compensation packages should be based on metrics such as project on-time performance, cost containment, outcomes of external audits etc.

Some of the existing CHSRA staff may want to transfer to employment by the temp agency. It would be up to the board to decide if they want to allow that.

Strategy C:
-----------
Combination of A and B.

AndyDuncan said...

you need to think in 3D for this.

You need to stop being so patronizing.

I am thinking in 3D.

The AA clearly states that they eliminated the tall aerial option (page 80) and that the HSR tracks will travel at-grade along the river (diagram on page 78) before climbing to travel on an aerial through the arts district.

The north side of the 101 freeway is nearly a full "level" taller than the south side, so there's no need for metrolink trains to "descend to grade", they'll be nearly at-grade already, they only have to get over the frontage road (arcadia) which is already partially lowered as it goes under the new gold-line bridge.

In fact, that Gold line bridge (visible on google maps) is nearly a perfect example of what the metrolink tracks are going to look like, both curve radii and elevation.

The HSR tracks will, in fact, have to climb to around 60-ft to be at around 30-ft when they arrive at the northern side of 101, but they can do that throughout the line from the river to the station, instead of needing to be at 60-ft for the whole duration.

Putting the HSR aerial through that area is going to be difficult enough, there's no reason to have to build a structure with nearly twice as much (maybe more due to the increased weight of the FRA trains) concrete simply so that you can avoid isolating exactly TWO businesses. Not to mention the increased noise of having both the quiet HSR trains and the loud diesels going through on an aerial.

"impact" is exactly why it's a better idea to squeeze the FRA line in along the existing rail and freeways.

Rafael said...

@ AndyDuncan -

sorry, I didn't mean to come across as patronizing. Just wanted to make sure we weren't get our wires crossed.

Here's the Google Street View of the Gold Line overpass. Turn right to see to tops of the roofs over the Union Station platforms, left to see the terrain just south of the freeway.

Here you can see where the subway trains emerge to grade level at the end of Ducommun Street.

So the plan for the Amtrak/Metrolink run-through tracks is to descend to grade level in the western section of the S-curve and then loop around the subway portal in the eastern section?

If so, that would generate multiple grade crossings at city streets. Wouldn't it be safer to stay elevated through of Center Street and then descend one level in the final approach to and along the river bank?

Constructing the elevated section directly above the eastern portion of Ducommun Street would also permit slightly larger curve radii in the S - perhaps large enough to stack the HSR tracks on top.

The present alignment for the HSR run-through tracks appears to cut a pretty massive swathe through several city blocks all the way down to 3rd Street. Are you sure there are just two businesses that would impact?

Stacking the run-through tracks would keep more of those parcels intact for future development into transit-oriented office towers. The whole business with the run-through tracks isn't going to win any beauty pageants anyhow.

It should be easy enough to add a pedestrian overpass across the freeway in-between the light and heavy rail overpasses. Almaden/1st is served by the new Gold Line Eastside Extension that opens on the 15th.

In theory, they could even extend the subway lines by one stop (at grade on the S Santa Fe Ave side of the metro yard) to improve transit access to the area between 1st and 4th. The tunnel section and portal already exist, at-grade construction is cheap by comparison.

AndyDuncan said...

Plate 21 of Appendix E to the AA shows the only detailed alignment of the metrolink through tracks that I can find. They will be running an aerial across and along the 101 and somehow (I can't find that plate) meeting up with the tracks along the river. Given the grades involved, I think it's reasonable to assume that they'll be mostly aerial for that stretch.

The two businesses I'm referring to that will be impacted by this alignment are Amay's Bakery and Noodle, and whoever is next door to them. They are in the armpit of the 101 and the existing tracks, north of the red line tunnel entrance. Those are the two businesses that will be isolated by this alignment.

The route is a brownfield route along the freeway and existing ROWs, so moving this alignment away from here is going to only protect those two businesses. The tracks are going to be above streets, offramps, and the existing red-line. That's pretty low impact, even for an aerial.

The only parcels you're splitting are the parking lot over the red-line tunnel and the section of land next to the freeway onramp.


The HSR alignment will indeed cut a pretty wide swath through that area, it looks like they are going to try to go over many of the existing buildings rather than taking them out completely (though some clearly have pilings marked on their roofs). A lot of those are warehouses, so that's not a huge problem.

Putting FRA rail over those warehouses, in addition to the HSR tracks, might not be possible, as it would require more and larger supports.

My point was that dragging the heavier, noisier metrolink trains through the same area as the HSR tracks is going to have a higher impact than putting it along the route they've chosen, where it will only really affect two businesses.

One other thing, any stacked alignment would have to negotiate the 1st-street bridge. Plate 22 of appendix E shows that they already have to get to nearly 60' to get over that bridge. Though that does mean they'll already be at nearly 2-level height by the time they leave the riverbank, and that the aerial through downtown is going to have to be rather high for the entire length.

Anonymous said...

Rafael: Yes Yes...

Let's expand the CHSRA staff to 500 or so, and put their wage scale above all the other government employees --- make sure they get their defined benefit plans, with full vesting in 5 years, rather than 30, because after all the project is not going to be a lifetime employment opportunity but rather a somewhat short employment opportunity, and we do want to get the very best people.

This will of course lead to much lower costs in the long run.

Boy you are one smart guy.

anon (member of all trade and gov't employee unions)

Robert Cruickshank said...

Rafael makes excellent points regarding the CHSRA staffing issue that I'll heartily second. The problem isn't with "the CHSRA," as if the entire Authority is fundamentally flawed and to blame.

The problem is that David Crane, who is a right-wing ideologue, wants to use the CHSRA as a proving ground for his ideas. It is my hope that whomever wins the governor's race next year will appoint less ideological and more practical people to the CHSRA board - i.e. NOT David Crane - to provide cost-effective oversight.

Rafael said...

@ anon @ 4:53pm -

- who said anything about a staff of 500?

- who said anything about vested options/shares at all?

- what is a vested benefit? Health care after 5 years, don't get sick in the meantime?

The point is we DO want high-quality people to supervise the outside consultants, experts who have first-hand experience building and running HSR systems. Those don't exist in California's civil service today.

David Crane's obsession with saving millions on payroll while outside consultants are baking additional billions into the construction plans is penny wise and pound foolish.

Rafael said...

@ Andy Duncan -

I think we are at cross purposes after all. I'm not talking about switching the Amtrak/Metrolink run-through tracks to the proposed alignment for HSR.

Quite the reverse: I think it would be appropriate to think about implementing both sets of run-through tracks as an S-curve, albeit one with slightly less severe curve radii. This would leverage the HSR project to finally fund the run-through tracks for Amtrak/Metrolink. In addition, it would preserve more of the land parcels south of the station for transit-oriented redevelopment.

The biggest issue would probably be the vertical profile near 1st Street. It's a trade-off between an HSR ramp right through the Arts district vs. a tall flyover of that street, right next to the river.

MAP

Brandon in San Diego said...

I agree aboput CHSRA staffing levels. 11 people is woefully understaffed for what they need to do.

However, working for CHSRA and State has two major drawbacks not yet discussed.

1) Job site is in Sacramento, and

2) Burden of continual State budget deficits being carried on the backs of state employees. IOU's?

Who would want to be a part of that mess!

Brandon in San Diego said...

Andy,
You got me with your comment about Metro's contracting requirements!

Yes, they are stiff... they actually expect a contractor to follow a contract; delivering vehicles on time and not 3 years behind schedule... and within weight and not 6,000 pounds over.

TomW said...

This wouldn't be the same Ansaldo who so completely and utterly botched a resiginalling project in the UK (Manchester south), that it had to be abandoned and the old manual lever frames with absolute block working re-instated, wiould it?

Given their track (sorry) record on delivering things on time, it's no surprise they weren't willing to risk delay penalties. Trouble is, any promoises about delivering things on time to potential future clients will fall rather flat, because they will be asked "if you're so good at dlivering things on time, how come you were afraid of delay penalties?"

Well done for LAMTA for sticking to its guns.

AndyDuncan said...

@Rafael: I see, though I don't know how much less of an impact your layout poses than the HSR layout. you're saving a little bit by aligning with a street, but not much. I still think you're at a greater net impact than the two-approach solution, but I suppose it's all academic anyway.

AndyDuncan said...

Ah, found the final EIR/EIS for the run through tracks project.

Their "alternative A" is similar to yours, although it stays more or less to the north of the building at garey and Ducommon, but crosses the parcel between vigness and center.

There are notes in the EIR that mention the new, two-story warehouse on that parcel, which made that alternative less desirable.

They don't appear to have studied an alignment along your route, probably because it would involve going over or taking that aforementioned building, and because the other parcels were vacant at the time.

Also interesting is that the tighter curve requires them to run four tracks across the freeway and transition to two tracks south of 101, rather than doing the transition over the freeway as in their originally preferred alternative, and probably in yours as well.

Rafael said...

@ Andy Duncan -

the point is that increasing the curve radii would allow HSR to stack its tracks on top of those for Amtrak/Metrolink.

That way, the combined footprint of both run-through track projects would be much smaller.