APTA | Passenger Transport
July 19, 2010

In This Issue


The classifieds in this issue offer a diverse group of jobs including a transit general manager and several other executive positions!


New Rail Investment Study Sees More U.S. Jobs

The expanding U.S. commitment to all modes of passenger rail should lead to considerable manufacturing growth in coming years, according to a new report from the Apollo Alliance titled U.S. Manufacture of Rail Vehicles for Intercity Passenger Rail and Urban Transit: A Value Chain Analysis. Marcy Lowe, a senior research analyst at the Duke University Center on Globalization, Governance, & Competitiveness, was the lead author of the report.

The report identifies at least 249 manufacturing locations in 35 U.S. states for passenger railcars and their components, which would benefit from increased investment at the federal level—such as a transportation authorization bill including larger investments in public transportation projects.

“Our research found that while there is already a healthy chain of U.S. manufacturing locations that produce components and systems for railcars, the sector still has plenty of room to grow if the next federal transportation bill prioritizes public transit and rail investments,” Lowe said.

Charles R. Wochele, vice president, industry and government relations, with ALSTOM Transportation Inc. and incoming chair of the APTA Business Member Board of Governors, explained that while the major railcar manufacturers—ALSTOM,. Siemens, Bombardier, and Kawasaki—are multinational firms based outside the U.S., all four of them have sizable investments in the American market. “Siemens is a German company that provides more U.S. jobs than General Electric,” he noted.

Wochele called the U.S. railcar market “extremely competitive” and much more open for railcar manufacturers than many of their home markets.

Gene Germaine, director of business development for Kustom Seating, tied together the potential for increased numbers of U.S. manufacturing jobs with the importance of enforcing Buy America regulations, which he called “a minimal standard that should be adhered to.” He emphasized that “the U.S. market can supply any of the products that can be purchased offshore, can do it at a competitive rate, and can supply quality products accordingly.”

Key Findings
The report lists several major concerns regarding U.S. investments in passenger rail and transit rail: “How much of the required ‘rolling stock’—the passenger locomotives and railcars—will be manufactured in the United States? What gaps in the current U.S. supply chain need to be filled? What are the relevant opportunities for U.S. manufacturing?” The report maps out the U.S. supply chain for six rail types: intercity passenger, high-speed, regional, metro, light rail, and streetcars, and reports these key findings:

* At least 249 U.S. manufacturing locations in 35 states includes 15 railcar builders, five locomotive builders, and 159 Tier 2 systems and component suppliers with relevant U.S. manufacturing locations, with a variety of sizes from fewer than 20 employees to thousands of employees at several sites;

* While U.S. domestic content rules ensure that 60 percent of content is U.S.-made, higher-value activities are still mostly performed abroad. Many railcar manufactures and system suppliers in both Tier 1 and Tier 2 are not U.S.-owned and keep their higher-value activities such as design and engineering in their home countries, complying with Buy America requirements by completing the manufacturing and assembly at U.S. facilities;

* The U.S. value chain includes several gaps—specific manufacturing activities that are not typically performed in the nation—which differ from one rail mode to another. For example, a high-speed rail component may currently be manufactured exclusively overseas, while the equivalent component for regional rail is made domestically by several firms;

* Manufacture and assembly of passenger and transit railcars and locomotives comprise an estimated 10,000 to 14,000 U.S. jobs, including about 4,000 Tier 1 employees and 6,000 to 10,000 in Tier 2;

* These jobs may have a more positive impact than their numbers suggest. The organization quotes a report showing that, compared with other job sectors, manufacturing is estimated to have the largest multiplier effect—generating $1.40 of added economic activity for each $1 of direct spending—and creating on average 2.5 additional jobs for each manufacturing job;

* Growing the U.S. industry will require committing much larger and more consistent U.S. investments to intercity passenger and urban transit rail; and

* Several additional measures can help develop the U.S. industry and capture higher-value activities in the supply chain, such as improving the accountability and transparency of Buy America rules; revisiting U.S. standards and specifications to stabilize the market and lower costs; increasing government support for research and development; and adopting a collaborative, orchestrated approach to expanding the supply chain, encouraging innovation, and bringing new technologies all the way through prototyping and commercialization.

The full report is available online.


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