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L.A. County transit leaders award rail car contract to Japanese firm

In a break with L.A.'s labor movement, Metro officials award a crucial $890-million rail car contract to the Japanese company Kinkisharyo International. Unions say it would create fewer jobs than a competitor and might violate requirements to use American workers.

May 01, 2012|By Dan Weikel, Los Angeles Times

In a break with Los Angeles' powerful organized labor movement, county transportation leaders on Monday awarded a crucial $890-million rail car contract to a Japanese firm that unions complained would create fewer jobs than a competitor and might violate federal requirements to use American workers.

Officials of the Los Angeles County Metropolitan Transportation Authority say the contract with Kinkisharyo International to build 235 cars is critical for opening new light rail lines on time and replacing aging equipment on existing systems. They rejected bids by Siemens Industry Inc. and CAF USA Inc.

The new light rail vehicles will be needed for a variety of projects, including the Crenshaw Line, the Expo Line to Santa Monica and extensions of the Gold Line. The contract also will allow Metro to replace 69 aging cars on the Los Angeles-to-Long Beach Blue Line, which suffered significant delays this year partly due to deferred maintenance.

Because of problems with earlier procurements, most notably with the firm AnsaldoBreda, Metro officials welcomed the contract, saying time has been running out for the purchase and delivery of rail cars before new lines are finished. A $300-million deal with the Italian company to build 100 vehicles fell apart in late 2009.

"We are out of slack, and the past two years have used up what slack we had," Art Leahy, Metro's chief executive officer, told the board. "We are on the edge of slipping behind our construction schedule."

Labor unions and civic organizations, including the Urban League and the Southern Christian Leadership Conference-Los Angeles, opposed the Kinkisharyo bid, saying the federal and local tax revenue that will pay for the rail cars should be used to create jobs in California, not Japan.

They said that Siemens, which has a factory in Sacramento, would create up to 1,122 jobs, open a new factory in Los Angeles and invest $5 million in job-training programs. The employment figure is based on new hires, plus existing jobs that would be sustained if Siemens won the bid.

"Common sense and good business practices would dictate that Metro invest in our county and vote against sending jobs overseas," said Maria Elena Durazo, executive secretary-treasurer of the Los Angeles County Federation of Labor, AFL-CIO.

Transit officials said Kinkisharyo's bid was the best in terms of price, project management, compliance with Metro's requirements and on-time performance. CAF's bid was about $785.6 million. Siemens' was $940.6 million.

Metro's analysis shows that Siemens would create 391 jobs in the United States, Kinkisharyo 348 and CAF 205. Metro also says that the economic benefit from job creation would be $140.6 million for Siemens compared with $138.8 million for Kinkisharyo.

The Japanese firm has stated it would comply with all federal requirements for hiring American workers and would build a local plant.

The board voted 8 to 2 in favor of Kinkisharyo. Member Richard Katz abstained. Los Angeles Mayor Antonio Villaraigosa, the Metro board chairman, did not vote because of a potential conflict of interest. Three other board members were absent.

Kinkisharyo was awarded the contract on the condition that bid protests by Siemens and CAF be resolved in the weeks ahead and that Metro receives a favorable review of Kinkisharyo's bid from the Federal Transit Administration. The FTA is determining whether the firm will violate American worker requirements by climate-testing a few rail cars in Japan and not the U.S.

Metro's staff already has rejected the bid protests from Siemens and CAF as unfounded. Both companies appealed to Leahy, who is likely to rule in two to three weeks. Based on discussions with the FTA, Leahy said he was confident that Kinkisharyo's bid complies with federal rules.

dan.weikel@latimes.com

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