Obama's High-Speed Train Revolution: Foreign Firms Hoping to Ride US Rail Boom
Siemens, Bombardier and other rail engineering firms have high hopes for the US market because the Obama Administration plans to promote the development of high-speed rail networks. Germany's Siemens will showcase its Velaro ICE trains in Florida this week ahead of a bidding process in the state.
Visitors inspect the new Siemens Velaro train at the InnoTrans 2010 trade fair in Berlin. Will the German high-speed train soon be whisking passengers from Tampa to Disney World?
The high-speed Velaro trains, built by Siemens, can travel up to 250 miles per hour (403 kilometers/hour), but in Florida this week they were brought in by truck. The special tracks along sunny Interstate 4 haven't been built yet, and the gleaming cars are just a teaser of what may come. If the German company succeeds in its plans, the trains will one day whisk passengers from Tampa to Orlando, and from Orlando to Miami.
Florida is on the verge of accepting bids for its proposed high-speed rail lines, and Siemens wants a piece of the pie. The company is showcasing its Velaro line of trains, which it has sold in Spain, Germany, Russia and China, at a special event at Tampa's Museum of Science and Industry on Thursday, and will be touring the train cars around the state in coming days so residents and officials can see them first-hand, and be greeted by local celebrities, such as Ronde Barber, the captain of the professional football team the Tampa Bay Buccaneers.
The effort is a first step along the road to achieving a high-speed rail network in the United States. Last year, the Obama Administration outlined 13 possible high-speed rail corridors throughout the United States, from Florida to California. It is a broad agenda for a country that covers a third of a continent and is home to more than 300 million people, many of whom are dependant on their cars for transportation.
All Eyes on Vast US Market
European and other foreign manufacturers are eagerly lining up to dive into the US market -- 38 companies have officially registered interest in Florida alone -- but they have to contend with an uncertain future, filled with bureaucracy, politics, and, most of all, a need for more money.
"Certainly, the question which is dominant in the entire market is, 'Hey, what's going to happen in the American market?'" Edzard Lübben, head of Siemens' high-speed train business, told SPIEGEL ONLINE.
The proposal has a down payment of $8 billion from the federal government, with another $3 billion possibly on the way -- all part of Obama's stimulus plan to address the financial and economic crisis. Still, the planned route in California alone, which would run from the Los Angeles to the San Francisco-Bay Area, is expected to cost $45 billion, according to official estimates. Estimates for all of the routes combined range in the hundreds of billions of dollars to $1 trillion.
"Right now you can see that if no significant additional sources of money are found, most of the projects won't happen," Lübben said. If the plans were realized, the potential exists for Siemens to provide 100 or 150 trains, which would be a huge market for the company, he said.
The company has focused first on Florida, where all of the initial planning and environmental studies have been completed, and where the proposed line from Tampa to Orlando would run along a flat stretch of highway, with no right-of-way issues, sharp turns, or tunnels. State officials expect construction to start there in 2012, and for the line to be operational by 2015.
In January, President Obama awarded Florida $1.25 billion to start the Tampa-Orlando leg. Since then, Florida has also applied for $1.12 billion in additional high-speed rail funds from the federal government, which could largely complete the Tampa-Orlando project, according to the state's Department of Transportation.
Florida should find out early this month if it will receive those funds, Dick Kane, communications director for the state Department of Transportation, told SPIEGEL ONLINE. Florida plans to launch the bidding process for interested companies in November. A shortlist will be drawn up by March of next year.
Competition From Bombardier
One of the other companies registering interest in Florida is Canadian train manufacturer Bombardier which already has experience in the US high speed market, having produced train cars for the Acela Express line along the Northeast corridor, from Washington to Boston. That line, which has been operating for nearly a decade and was the first US foray into high-speed rail, can reach speeds up to 150 miles per hour (240 kilometers per hour), but generally averages half that.
"While the debate on high speed rail continues in the US, and development of some of the federally designated corridors is further along than others, we believe that the climate is right for trains," Robert E. Furniss, Bombardier's vice president of business development and sales in the US, told SPIEGEL ONLINE. The company estimates that starting in 2011, the US market for high-speed rail could number 145 trains and more than 1,000 cars.
Next month, voters in America go to the polls in mid-term congressional elections, and in some states high-speed rail has already become an issue with Republican candidates lining up in opposition to the plans. President Obama has remained firmly behind the proposal, even citing it in some of his stump speeches as he tries to drum up support for his Democrats.
In the midwestern state of Wisconsin, the Democratic governor Jim Doyle, an advocate of the proposed lines, has announced an arrangement with the Spanish train manufacturer, Talgo, for the company to locate its high-speed manufacturing and assembly plant in Milwaukee.
But both Republican candidates for governor in Wisconsin, which has received $810 million in federal funds for high-speed rail, have vowed that, if elected, they would halt construction of the proposed line from Milwaukee to the state's capital Madison. One of them, Scott Walker, has even set up a website called Notrain.com to oppose the line, which he says will cost the state too much to operate and maintain.
Some observers say objections like those are just short-term, and that the political will for high-speed rail in the US is strong.
"It's not so much that there's an opposition to high speed rail," Art Guzzetti, vice president for policy at the American Public Transport Association (APTA), told SPIEGEL ONLINE. "It's general disagreement on government and government spending. A lot of it is opposition to the administration and the things that they are doing."
Part of the Obama administration's plan for high-speed rail is a "Buy American" provision, which would require foreign companies receiving some of the initial federal funds to manufacture their products in the United States. In anticipation of getting US contracts, several companies have already increased their operations in the country, or have plans to do so.
Foreign Trainmakers Poised to Invest in US Plants
Bombardier has expanded its plant in Plattsburgh, New York, to include car body manufacturing, said Furniss. And Siemens has purchased land adjacent to its Sacramento facility, which currently employs 1,000 people and assembles light-rail vehicles used in cities across the country, and would extend the plant, as needed, Lübben said.
More than 70,000 people already work for Siemens in the US, Lübben said, and it is "feeling like an American company because we have many headquarters of different business units based in the United States."
While the company might find out in the next year if it will win the Florida contract, some of the other proposed lines are just in the early planning stages, and it could be years before they are realized.
"We're drawing a lot of parallels to the interstate highway system, and that took 40 years," said Guzzetti. "We're looking at a long time."
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