The newest cars in SEPTA’s Regional Rail fleet will come from the world’s largest rail car producer, a Chinese company attempting to gain a foothold in the U.S. market.
The transportation authority’s board voted unanimously Thursday afternoon to award a $137.5 million contract to CRRC MA, the American subsidiary of China Railway Rolling Stock Corporation. The contract includes an option for an additional 10 cars for $23.5 million.
The multilevel cars will add about 6,000 seats to SEPTA’s Regional Rail system, which has seen a 52 percent growth in ridership since 2000, SEPTA officials said. The new cars will have upper- and lower-level seating, and will be pulled by new electric locomotives expected to arrive next year. The CRRC cars themselves are scheduled to arrive in 2019, and will likely be put to work on some of SEPTA’s longer routes.
“On these longer trips we felt it was important to make it a more comfortable trip,” said Jeff Knueppel, SEPTA’s general manager.
CRRC MA has contracts to build rail cars in Boston, Chicago, and Los Angeles, but its plant in Springfield, Mass., won’t be completed until October and it has yet to construct a single car. It scored “acceptable” on a technical rating, middling performance on a five-tiered rating system, but the price, $34 million less than the nearest competitor, the Canadian company Bombardier, was impossible to resist, SEPTA officials said.
At SEPTA’s board meeting Thursday, representatives from Bombardier made the case that their more than 10 years of building rail cars in the United States — where Federal Railroad Administration standards require heavier, more sturdy cars than those built in Europe or Asia — mattered more than their higher price tag. Bombardier scored “very good” on its technical rating.
“The price difference kind of evaporates when you consider the risk you’re taking,” said Maryann Roberts, a spokeswoman for Bombardier.
SEPTA officials, though, said this time around they won’t be the first buyer from a new manufacturer, as they were with Hyundai Rotem. Boston’s MBTA has $842 million in contracts with CRRC MA for 404 cars, and they believe the kinks of a first-time operation learning American practices will happen with Boston’s contract, not Philadelphia’s.
They also noted the cars on order are less complicated than Silverliner V’s, which have their own propulsion systems. These cars will not have motors.
SEPTA built safeguards into the contract they said will protect against delays and manufacturing problems.
SEPTA officials will be sent to Tangshan, China, to oversee the design of the new cars, said Ron Hopkins, SEPTA’s chief operations officer, to ensure the demands of American rail cars are being met. There will also be a team of welding experts to review the work, he said. Last year’s Silverliner V problems were caused by a flawed weld, and welding came up as an issue again this year with cracks found on Market-Frankford Line subway cars. The officials are seeking more rigorous testing than previous contracts required, including fatigue testing on any component that would ground the fleet if it failed, Hopkins said.
The contract also includes a penalty of $500 per car, per day, for vehicles that are either late or have to be pulled from service due to a manufacturing problem during the warranty period.
CRRC MA’s parent company is state-owned, and American legislators have complained about China subsidizing the company so it can underbid competitors for public contracts in the United States. CRRC is seeking to become a major player in the U.S. rail industry after China invested hundreds of billions of dollars in its domestic rail infrastructure.
“As a mature rolling stock manufacturer we have our own mature process to provide mature products,” said Jai Bo, CRRC MA’s vice president on why his company can quickly perform in the American market.
Complaints about government involvement with Chinese companies is not new, said Ruth Gordon, a Villanova law professor with an expertise in international trade, because the country operates in a hybrid capitalist and communist system.
“In China, one of the stakeholders is often the government,” Gordon said.