Building Lasting Economic Recovery Through High Speed Rail
Today I’m going to be in Sacramento for the California Labor Federation’s Economic Recovery Summit. The agenda includes discussions about creating jobs that can provide lasting economic recovery, ensuring a broadly shared prosperity that won’t be dependent on a massive wave of debt as were the last three economic booms. It also includes a discussion of “rebuilding California’s crumbling infrastructure.”
The Labor Fed has been a strong supporter of high speed rail and for good reason: it will create an estimated 130,000 construction jobs and 450,000 permanent jobs. In a state facing the worst unemployment since the Great Depression, these are compelling numbers. HSR opponents need to explain where exactly they plan to create similar numbers of jobs.
Those are familiar stats to blog readers. But it’s worth exploring in some depth just how high speed rail can contribute to lasting prosperity in California beyond the obvious benefit of over a hundred thousand construction jobs.
First, the big picture. California is suffering from an economic crisis right now partly because of overdependence on oil-based forms of transportation. When gas prices broke $3 per gallon in 2006, the housing market peaked as buyers were no longer able to service debts. That bubble would have eventually burst, but it burst at a specific time and for a specific reason, that being the ripple effect of high oil prices throughout the economy. When oil prices spiked again in 2008, it helped push the nation into a severe recession.
As we know, oil prices are projected to keep rising in coming years. The only reason they’ve stayed below $100/bbl is the recession, and even then the prices at California pumps have hovered around $3 all year.
There can be no lasting economic recovery without bringing down transportation and energy costs. High speed rail is a key part of that. By providing both regional and intercity transportation, it helps stave off the impact of the oil-driven airline crisis, enabling business travel to continue in the state at stable prices. By helping produce electrification on the Caltrain corridor, and potentially on some of the SoCal railroad corridors, HSR will help daily commuters enjoy stable costs as well.
Those savings have been described as a green dividend. Sustainable and green transportation policies have saved residents of Portland, Oregon $2.6 billion. The ripple effect throughout the local economy has made Portland one of America’s leading cities, and provides a model that California would do well to emulate.
We’ve talked often at this blog about how high speed rail can play the same role as Depression era projects like Shasta Dam and the Golden Gate Bridge in driving economic recovery. The construction generates badly needed short-term employment, and the system operations generates long-term savings and economic activity, just as the Golden Gate and Bay Bridges do after 70+ years.
There’s another interesting aspect of HSR and economic recovery, which we touched on in yesterday’s post, and that is the construction of the trainsets themselves.
For 6 years earlier this decade, 2001 to 2007, I lived in Seattle, Washington. One of the dominant players in Washington’s economy since World War II has been Boeing. The state’s economy has often risen and fallen with the cycle of aircraft production, but that production was a central part of growing the state’s middle class.
There’s no reason why California cannot play a similar role for the rest of the nation, and maybe even a global market, with high speed train construction. Already Siemens and Alstom have set up plants in California. Since we are further ahead than any other state in HSR plans, it’s likely that by the time other states start their own HSR construction efforts, California will already be producing trainsets. Those other projects could conceivably look to California to produce the trainsets they will use on their own systems, and provide an ongoing market for high speed rail production based in California.
Of course, it’s not a given that it would turn out that way. Talgo is planning to open a factory in Wisconsin. The Detroit area is full of cheap land and skilled assembly line workers needing jobs. And you can bet other state HSR projects will try and woo the trainmakers to their states.
But if California starts making trainsets first, we’ll still have an advantage. It would likely be cheaper to buy trains made in pre-existing California factories, with an existing workforce, than to buy trains made in a new factor with a new workforce – the latter has higher start-up costs to recoup than the former. And other states would still be able to meet Buy American rules by ordering California-made trainsets.
Other states are beginning to blaze this trail. In 2007, Oregon Iron Works established a subsidiary called United Streetcar to produce streetcars for Portland at its Clackamas factory. Their success has already led to orders from Tucson, and other cities planning streetcar lines are considering ordering from United Streetcar. Colorado Railcar would likely have been in a similar position in the DMU market were it not for its financial collapse last year.
California used to be a major producer of industrial products – steel at the Kaiser mill in Fontana, automobiles in Van Nuys and Fremont (among other places), even tires in Salinas. Those industries produced broadly shared economic prosperity, at least until the great wave of deindustrialization and offshoring hit after 1975.
Today we can restore some of that prosperity by building more environmentally sustainable, clean, green industrial products like HSR trainsets. California can and should take the lead in producing them – and the only way we will do it is by seeing through to completion the high speed rail project voters approved in November 2008.
A few quick points:
(a) the burdened cost of a factory worker in California is very high, so it’s not a given that other states would be interested in buying HSR trainsets made in the Golden State. Exporting them overseas would be even harder, even with a weak dollar. The US simply isn’t a leader in this technology. Still, California HSR alone will need several hundred rail cars plus ongoing maintenance for them.
(b) setting up a little refurb shop for Amtrak cars is not at all the same thing as setting up a big factory to build oodles of brand-new HSR rolling stock.
(c) the bulk of construction jobs will come from the earthmoving and other civil and electrical engineering components of building the infrastructure. The HSR vehicle contracts amount to just a small fraction of the total investment, so let’s not focus on those jobs to the exclusion of all others.
(d) Colorado Railcar did go under, but its assets and most of the workforce ended up with a new company called US Railcar. Its FRA-compliant DMUs are targeted at standard-speed commuter/regional rail in North America.
Peter Reply:
December 2nd, 2009 at 9:45 am
Does anyone know if US Railcar has any orders, and if so, when they’re planning on starting manufacturing again?
Rafael Reply:
December 2nd, 2009 at 10:24 am
Florida Tri-Rail uses double-decker DMUs from Colorado Railcar. Not sure if they’ve placed any orders for additional rolling stock with the new company.
Peter Reply:
December 2nd, 2009 at 10:31 am
In one of the SunRail pdfs they showed a picture of one of the Colorado Railcar double-decker DMUs. I’m guessing there’s a good chance they will order from them.
Robert Cruickshank Reply:
December 2nd, 2009 at 2:08 pm
Those are all indeed issues people are aware of. Here at the CA Economic Recovery Summit some of those very issues were mentioned. Those shouldn’t be obstacles to building an HSR railcar industry in CA, but should be things to consider and manage as we move forward with this plan.
I think it would be a great idea for a California start-up company to design a new high-speed train. If they got federal funding and poached engineers from overseas, they might be able to do it. Build it in the Central Valley, God only knows they need the jobs there (and will need to change from the ag-only economy).
Jack Reply:
December 2nd, 2009 at 10:12 am
Like Rafael said the cost to manufacture in California is just too high. Something would need to be done about this cost in order to establish a new manufacturing industry. Heck the cost to manufacture anything in America is prohibitively expensive. There is a reason why all these companies outsource this stuff.
Joseph Reply:
December 5th, 2009 at 9:27 pm
Europe can maintain manufacturing infrastructure and the US can too. We have a less of a tax burden on industry. Many of our problems are related to over crowding and overburdened infrastructure. It’s ironic.
Rafael Reply:
December 2nd, 2009 at 10:26 am
No offense, but the US is about 50 years behind the curve on HSR technology. It’s not something a rinky dink startup can crank out in a garage.
For comparison: would you buy a PC developed from scratch in e.g. Ecuador?
Peter Reply:
December 2nd, 2009 at 10:29 am
I’m not saying they would crank it out in a garage. Of course they would have to do a lot of R&D. We have to start somewhere, though…
Alon Levy Reply:
December 2nd, 2009 at 10:35 am
There’s no infrastructure for it in the Central Valley. It’s possible a US company could build a decent train in the future, but such a company would probably be based in the Bay Area or Boston, where there are a lot of engineers, and even then it’d take until the 2030s for it to produce good EMUs.
Peter Reply:
December 2nd, 2009 at 1:02 pm
All the better reason to start developing them now.
Peter Reply:
December 2nd, 2009 at 1:03 pm
Otherwise it’s the same argument for not building HSR to begin with: “Oh, it will take so long to complete, there’s no point in starting now.”
AndyDuncan Reply:
December 2nd, 2009 at 2:46 pm
It’s not even a hypothetical any more though. It’s already happening. GE is doing it inorganically with a technology sharing partnership. Other firms could do something similar. It took less than 20 years to develop the TGV, and less than 10 years for the first Shinkansen. Obviously today’s trains are much more sophisticated, but even a company starting from scratch wouldn’t really be starting from 1950s tech.
Peter Reply:
December 2nd, 2009 at 2:48 pm
Awesome. Have they publicized any of their preliminary designs? In other words, anything for me to drool over yet, and my wife to roll her eyes at?
Peter Reply:
December 2nd, 2009 at 3:02 pm
Ahh, this happened 14 days ago, so likely not…
Alon Levy Reply:
December 2nd, 2009 at 5:19 pm
Japan cribbed ideas from the US streamliners, and even then, Kawasaki was a major manufacturer of rolling stock for Japanese commuter railroads. Alstom was a major manufacturer of trains, too, and had already made lightweight rapid rail equipment.
wu ming Reply:
December 3rd, 2009 at 2:27 am
no infrastructure in the central valley? just in the sac metro area there is a top-notch engineering school at UC davis (which has a long history of environmental engineering), several green tech research centers (including an electric car research facility in west sac right off 80), two UCs (davis and merced)and two CSU (chico and sac state) campuses, plenty of water resources and a forward-thinking energy utility in SMUD, a decent airport (sac metro airport) in the middle of expansion, several major rail lines and highway connections, reliable rail connection to the bay area via the capitol corridor (and down the valley via the san joaquins), dramatically lower housing prices than either LA or the bay area, and ample space to build factories. and given the area’s employment crash, city governments would fall over themselves clearing the way for businesses, were anyone considering building them.
it’s not as superlative a place to live as the bay area, but it’s a good enough place to put factory and R&D centers.
Andre Peretti Reply:
December 2nd, 2009 at 1:25 pm
General Electric, thanks to its technology-sharing agreements with its Chinese partners has gained access to the know-how of Alstom, Bombardier, Kawasaki and Siemens. In a way, it suits them well as none of them ever seriously tried to collaborate with GE.
An error that SNECMA of France didn’t make. Instead of trying on its own to penetrate the American market, it chose to team up with GE. CFM International, their joint 50/50 venture is now the world’s N°1 jet-engine maker, with more than 20,000 engines sold. This exemplary collaboration ought to have inspired other European firms. Well, regrettably, it hasn’t.
Peter Reply:
December 2nd, 2009 at 2:13 pm
I think that GE would be a likely US candidate for designing the US’s first “homespun” HSR train.
It would likely be cheaper to buy trains made in pre-existing California factories
It would be even cheaper to build them in the existing factories that churn out passengers cars now. New York City subway cars, Metra MUs etc don’t fall out of the sky, they come from factories here in the US. Factories run by companies like Alstom, Bombardier and Kawasaki.
Rafael Reply:
December 2nd, 2009 at 10:48 am
Agreed, the big-ticket civil engineering bits (grade separations, tunneling etc.) California-based companies will be able to handle just fine. The HSR-specific superstructure bits (railbed, rails, OCS, trains, signaling, train control) should be implemented by specialized companies that have already cut their teeth on someone else’s nickel. It doesn’t matter as much where they choose to set up shop, as long as it’s somewhere in the US. Senators representing states that aren’t part of any officially designated HSR corridor will want to bring home some bacon as well. Without their votes, there won’t be enough federal dollars to go ’round and California HSR won’t get built. Keep in mind that there will be maintenance facilities in California in any case.
Terrestrial WiFi on board is an exception to this division of labor, Silicon Valley should be able to come up with something better than the Europeans on that score. For now at least, it’s not within CHSRA’s scope, though. Dunno why, maybe the whole “network of invisible tubes” thing may is too much for some of the older members of the CHSRA board to wrap their heads around.
AndyDuncan Reply:
December 2nd, 2009 at 2:39 pm
10 years is a long time from now in tech terms. Why worry about wifi right now? We probably won’t be using wifi in 10 years, we’ll be using something else. Planning on anything 802.11 related right now would be a stupid idea. Imagine if the trains were going live today, and CHRSA was touting the analog phone ports on each seat for you to plug your laptop’s modem cable into.
Chris Reply:
December 2nd, 2009 at 5:55 pm
Agreed. LTE and WiMax will have already been completely rolled out by then – and we’ll have possibly moved to something beyond those. As someone who’s been using an air card on my laptop for three years, I can tell you that as soon as price comes down enough (about $40 a month now for unlimited use) and it’s combined in with your cell phone bill, no one will be using Wifi.
Robert, you really need to get on this show on kgo radio. This host, Gene Burns, a former libertarian turned democrat, is really big on the idea of solving the immediate job problem by having Obama implement more large projects in an almost WPA fashion because it “creates good jobs now and itcreates something lasting for future generations” I’ve called his show before. He is frustrated with Obama for moving so slowly. Now it was his producer I spoke with once, who is under the impression that high speed rail is still just a pipe dream. I told her, “no, its coming along just fine”. She seemed skeptical and while I listen to the host every evening, I keep waiting for him to discuss this project as its right on target with his views. Some one needs to get on that program and get the facts out ( to the west coasts largest listening audience.)
The lack of public discussion is frustrating. kgo someone has to do it.
Missiondweller Reply:
December 2nd, 2009 at 10:32 am
Yes, agreed. As I’ve mentioned before, its important that people understand that HSR is a proven form of transportation and not new (just new to us Americans). Most people here in the US do not realize how wide spread HSR is in other developed countries.
Rafael Reply:
December 2nd, 2009 at 11:12 am
Even if Washington were to make available an additional $50 billion for HSR via the “infrastructure bank” that Reps. Oberstar and Mica (Chairman + Ranking Member of House Transportation Committee) proposed in their draft of the next surface transportation bill, the requisite environmental work hasn’t been completed yet. Only a limited amount of dirt can be turned in the short term (next 3 years).
The same is not true for the $950 million reserved for legacy rail operators in prop 1A(2008). If Congress wants immediate job creation, it could match those 4:1 using funding mechanisms unrelated to HSR. Use the money to implement PTC signaling statewide using something off-the-shelf like ERTMS 2.3.0d. Cut a quid-pro-quo deal with the freight railroads on expanded trackage rights for FRA-compatible standard speed passenger rail, including the construction of new turnouts and sidings where appropriate.
Alon Levy Reply:
December 2nd, 2009 at 5:20 pm
And reform the FRA to abolish the buff strength standards…
i sent the following to my favorite radio host, mabye we can get him to do an hour on the topic.
Dear Gene,
I listen at work, Sunday-Thursday and you really keep me entertained and informed. I have called in a couple of times as well. I am in full agreement that Obama needs to step things up when it comes to job creation. I’m a big supporter of the State’s high speed rail project and once when I spoke with your screener, I found out she is under the impression that this project is still just a pipe dream. Not so! You could do a great service if you had some one on your show to get the real information out there on this very important, job creating project. I’m betting you have experienced high speed rail in Europe already and know that its a great way to travel.
There is a very informative blog here: http://www.cahsrblog.com/ The California High Speed Rail Blog run by Robert Cruickshank. He is very knowledgeable and you can find the most up to date information on the project and its ups and downs. I would love to hear an hour on this topic Building Lasting Economic Recovery Through High Speed Rail.
Granted I am biased as I work for the railroad (Amtrak) but let me say, the railroad equals lots of good jobs. These are the kinds of jobs the cover everyone from lesser skilled coach cleaners, to highly trained engineers, administrative staff, marketing departments, food service jobs, mechanical jobs, jobs of every level and skill and there is unlimited opportunity to move throughout the company throughout your career.
High speed rail would spread these types of permanent jobs throughout the state in addition to the more immediate construction, engineering and support jobs for today. Not to mention the obvious transportation benefits. So please take a moment to check out the blog as well as the CAHSR official site.
As a side note, I can’t help but suggest to you a trip on our Coast Starlight. I’d suggest you and friend take a Santa Barbara day trip in first class (199 for two) you get a private compartment and three meals, plus the afternoon “local wines and cheeses” tasting in the first class “pacific parlour car.” I’m not going to pretend the food is French Laundry quality, but the sights are beautiful, the people are fun and its a great trip. Just pop over to the ticket office on Pier 2 next to Sinbads and see me! I’ll convince you.
Take Care and keep up the great radio.
Rafael Reply:
December 2nd, 2009 at 11:15 am
I think you just spent $199.
Gene is my favorite kgo host. His show i alway conducted with intelligence and he is a master of the english language as well. Is just very enjoyable to listen too. He infuses a lot of common sense and generally avoids being partisan ( with the exception of disdain for the last 8 years)
He’s on at 7. take a listen.
everyone here should email him to do an hour on hsr.
@jimsf
Everyone should email several different radio stations, not just one.
Incompetent HSRA to rescind Pacheco Pass HSR route selection
Robert Cruickshank Reply:
December 2nd, 2009 at 9:26 pm
This is an incorrect title – they aren’t rescinding the route selection, they’re rescinding the EIR to address what the judge found in the case brought by Atherton, Menlo Park, PCL and others. Pacheco will remain the route selected.
Tolmach has been spinning BS on this all day, and I’m going to have something on this up for the blog tomorrow.
Joey Reply:
December 2nd, 2009 at 10:01 pm
Will this be before or after the results of the board meeting are posted?
morris brown Reply:
December 2nd, 2009 at 10:50 pm
Whether they will or will not rescind the route selection is not known. What is known is that they must find a new ROW that they can obtain from San Jose to Gilroy and after studying that they must re-examine whehter Pacheco or Altamont is the preferred route to the Central valley. You can say whatever you want, but that is what the court demands.
I personally doubt that Pacheco will be rejected, but that possibility must be examined and for sure many more people now understand what a train blasting through their towns at 200 MPH will mean for their quality of life.
Item 11 on the Authority’s board agenda tomorrow is interesting. Keep your eyes and ears open.
Joey Reply:
December 2nd, 2009 at 10:57 pm
Just a technical point – what does trains speeding through cities at 200mph have to do with Pacheco? Isn’t that more or less independent of which route is taken?
Does anybody know what the views are of the CAHSR project from the different candidates running for governor next year? Whitman, Brown, etc.
O/T: The CHSRA will decide at its meeting tomorrow what to do with the Bay Area-Central Valley EIR/EIS. Should be interesting. Also beginning a MOU with BART, among other things.
Joey Reply:
December 2nd, 2009 at 10:01 pm
Oops. Didn’t realize that it had already been semi-mentioned two posts up…