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Anatomy of a $1.3bn deal; China’s CSR and Chicago's new railcars.

Posted by Luke Upton on Mar 10, 2016

ResizedChicago_Train_1When the tender for the largest order in Chicago Transit Board (CTA) history, 846 of the new 7000-series rail cars was issued in 2014, it had a ‘US employment provision’ that asked the bidders to provide the number and type of new jobs they will create related to the production of the cars. It also requested bidders to outline their job recruitment and workforce training plans.

“Our goal is to help create as many U.S. job opportunities as possible, and to encourage local opportunities wherever possible. Additionally, we believe this will increase competition among bidders and result in the best prices and highest quality product for CTA customers, essential in building a world-class transit system” said Mayor Rahm Emanuel on the issue of the tender. But it wasn't quite that simple. 

By May 2014, Bombardier and Sumitomo Corp. of America were the only two companies that had bid for the contract. Bombardier was the lowest bidder with $1.39 billion compared to Sumitomo’s $1.55 billion but the CTA reopened the tender and dropped a requirement in the original tender process that the new cars had to be compatible with the CTA’s existing 5000 Series cars, which are the newest current series and still being delivered by Bombardier.

“We decided to seek new bids for the cars to encourage a wider range of bids from rail car manufacturers around the world,’’ CTA spokeswoman Tammy Chase quoted in the Chicago Tribune. “We think that requiring compatibility so that the two types of cars can be coupled together was one of the factors that limited the responses we received.”

Now fast-forward to March 2016, and the contract is awarded to CSR Sifang America JV, a unit within China’s massive CRRC Corp.

So how did they get it?

Firstly, and quite simply, they were the lowest bidders. CSR submitted a bid of $1.309 billion for 846 railcars. As a result CTA will purchase a base order of 400 cars first, with options to purchase the remainder in coming years. Prototype models are expected to be complete in 2019; following testing, the cars will go into service in 2020.

Secondly, since 1962 CSR has built more than 30,000 rail cars for more than 20 countries in Asia, South America and the Middle East. But crucially for this deal, already have a footprint in the USA, with them building $567 million worth of rail cars for Boston’s transit system.

And thirdly, and as part of its winning bid CSR have pledged to build a brand-new rail car assembly facility in Chicago – the first of its kind in 35 years. The facility is expected to generate 170 jobs, and represents an investment of $40 million.

“With this agreement, CTA riders will get state-of-the-art rail cars and Chicago returns to our roots as the place where the next generation of rail cars are built, providing good jobs for our residents. That is a classic win-win for Chicago,” said Mayor Rahm Emanuel in a statement. “This historic agreement was the result of strong collaboration between the City, our federal partners, the Chicago Federation of Labor, and Jobs to Move America, and I cannot thank them enough for their partnership in making it possible. Working together we will continue to bring more 21st century manufacturing jobs to Chicago while also building a modern CTA to help power our 21st century economy.”

Read the Rail and Metro Innovation Guide 2017

“It has been over 30 years since the last rail car rolled off the Pullman assembly line on Chicago’s Southside,” said Chicago Federation of Labor President Jorge Ramirez. “Today’s announcement is the culmination of nearly two years of collaboration with Mayor Emanuel to bring rail car manufacturing back to Chicago where it belongs. We commend the CTA for including the U.S. Employment Plan in this bid process, leading the way to high road manufacturing jobs, and thank Mayor Emanuel for his ongoing commitment to build a world class transit system."

“Chicago is a shining model for the rest of the nation, providing a blueprint for leveraging the billions of public transit dollars spent each year to bring back manufacturing, encourage investments in workforce training, and jobs for U.S. workers. We look forward to partnering with CSR to deliver a high road program that prioritizes the creation of career paths for Chicago’s low income and communities of color,” said Jobs to Move America National Policy Director Linda Nguyen Perez.

With the deal done, what about the cars themselves?

ResizedChicago_Train_2The new rails cars will feature of mix of forward-facing and aisle-facing seats, a seating configuration designed to ensure customer comfort while maximizing passenger flow and capacity. The design was based on studies CTA conducted to solicit feedback from CTA riders on preferences related to seating and design— the first time the CTA has sought rider input on seating layout. 

The cars’ design will resemble the 5000-series, the CTA’s newest rail cars, with stainless steel bodies, LED lighting and signage, and AC power propulsion for a smoother, quieter ride. The cars will replace the oldest cars on the CTA system, some of which are more than 30 years old.

Once delivery of the new rail cars is complete, the CTA will have its youngest rail fleet in decades—reducing the average age of CTA rail cars from 26 years in 2011 to 13 years when the 7000-series are delivered. The new rail cars are projected to save the CTA about $7M annually in reduced maintenance costs and reduced use of power.


 

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Topics: Rolling Stock, projects

Luke Upton

Written by Luke Upton


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