One of the more interesting subplots to the news that the China-XpressWest deal is off are the complaints about Buy America rules. XpressWest cited those issues explicitly in explaining their decision to end the deal:
The biggest challenge has been a federal funding requirement that high-speed trains be manufactured in the United States, even though no such trains are produced in the country, Marnell said.
“This inflexible requirement has been a fundamental barrier to financing high-speed rail in our country,” Marnell said. “Is our leadership going to force projects throughout the United States to seek financial support for infrastructure in our country from foreign governments?”
There’s just one problem with this: high speed trains are already being built in the United States – in fact, they’re being built in California. CNBC took a look at how trains for Florida’s higher speed rail system are being built in Sacramento:
Brightline chose Siemens USA to build and maintain the first five trains, though it won’t disclose how much it paid. Siemens is doing that work in Sacramento. California happens to be trying to build its own high speed rail, funded by taxpayers, with a total price tag that could top $68 billion, nearly 30 times the price of Brightline’s Florida train.
The Siemens USA plant stands a few miles away from the California state Capitol, where the political climate appears increasingly antagonistic to manufacturing. That doesn’t bother Michael Cahill, president of Siemens USA’s rolling stock division. He said the company has been in the Golden State for 30 years.
“One of the great things about California is the positive spirit,” said Cahill. “In California there is an enthusiasm here that is unmatched anywhere else in the country.”
In fact, Siemens USA increased its 600,000-square-foot manufacturing plant in Sacramento by 20 percent because of the Brightline contract. The locomotives they’re building for Florida will run on clean diesel, and the passenger cars are made of stainless steel to make them resistant to rust.
The article goes on to explain that California offers a lot of upside for trainmakers, including state support for solar power and a workforce that is educated and can be easily trained for this kind of work.
As you can see in the excerpt above, the CNBC article is also pretty biased, written from a free-market perspective that somehow thinks it’s odd for California to be leading on this, and claims that state government is somehow hostile to manufacturing (they do know Teslas are made in Fremont, right?).
Siemens USA has been building light rail vehicles in Sacramento for cities across the Western Hemisphere for decades, and that gives the company as well as the state of California a significant competitive advantage. Siemens USA had already been planning to start up an HSR production line in Sacramento, and the Brightline order gives them their first crack at this growing market.
It’s unclear who exactly balked at setting up a second HSR manufacturing line in the USA – XpressWest or China – but considering Siemens USA’s experience, as well as Talgo (which set up a production line in the USA for Wisconsin’s aborted HSR line), it’s not that big of a challenge.
The Buy America rules, therefore, don’t really seem to be an obstacle to funding and building new HSR lines in the USA. Some folks in the comments to the China-XpressWest post suggested China’s economic woes might be an important part of the story. Certainly the country and its companies don’t have the money to throw around that they once did.
Whatever the case, it’s not the Buy America that are slowing the development of HSR in the USA. It’s the utter lack of political will to fund it, particularly in Congress. Simple as that.