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Cities frustrated by rail car maker

By Gene Park

POSTED:
LAST UPDATED: 10:14 p.m. HST, Apr 05, 2011


Ansaldo Honolulu, as the winner of a $1.4 billion contract to build and operate Hono­lulu’s rail transit vehicles, has a lot to prove.

AT A GLANCE

>> Ansaldo Honolulu is a joint venture between AnsaldoBreda and Ansaldo STS. Both companies are owned by Finmeccanica, an Italian conglomerate of which 32 percent is owned by the Italian government.
>> Finmeccanica’s revenues in 2010 were $26.2 billion, with $31.5 billion in new orders.
>> AnsaldoBreda entered the U.S. market in 1978, and is headquartered in California.
>> Other driverless metro systems the two companies created are in Denmark, Greece, Saudi Arabia, Taiwan and Italy. This would be their first U.S. system.
>> The design and construction will cost about $574 million. During the construction period, maintenance and operations will cost about $167 million. The first five years will be about $339 million, while an optional extra five years will run about $318 million.
>> For information, visit www.ansaldohonolulurail.com.

Mayor Peter Carlisle announced last month that Ansaldo Hono­lulu will be awarded a contract to design and build rail cars, which would cost about $574 million, and to operate and maintain the cars through 2029, which would cost about $824 million.

Concern by residents and lawmakers grew when background checks on the company revealed a history with snafus, missed deadlines and rail cars that were heavier than expected.

But executives from the two parent companies — AnsaldoBreda and Ansaldo STS — point to a rec­ord of international success, as the company wins multimillion-dollar contracts worldwide and across the nation.

“The system your city is buying is a system that connects neighborhoods to neighborhoods,” said Lorenzo Reffreger, vice president of sales and marketing for AnsaldoBreda. “In that application of driverless, unmanned vehicles, we are the leaders in terms of orders and the number of contracts that we have.”

If the contract is signed, Hono­lulu’s rail system would be the first driverless system Ansaldo would build in the U.S., an American “crown jewel” for company officials to point to, he said.

From 2001 through 2009, the company says, it built and sold more than 1,200 cars in Italy, Brazil, Spain, Denmark, Taiwan and Greece. In Washington, D.C., AnsaldoBreda has a contract to build

466 vehicles. In Atlanta it has a contract for 100 vehicles. Hono­lulu’s contract is for 80 vehicles.

“You know us better than you think,” Reffreger said. “We don’t advertise like a mass consumer firm. But a lot of people have seen the Washington cars. … The Los Angeles cars that appear in many, many movies — we sold those cars.

“We believe the market has a lot of trust in this company,” he said. “Not just the Italian market, but the worldwide market.”

Globally the company has seen some success. The Copenhagen Metro, on which Reffreger says Hono-lulu’s system will be based, was recognized as the world’s best metro system during the MetroRail 2008 conference.

But officials in other U.S. cities still describe sour relationships with the company.

“It was just a really uncertain, erratic partnership,” said Michael Cano, transportation deputy for Los Angeles County Supervisor Michael Anto­no­vich. “The working relationship with them was just poisonous. Every single thing we asked for was like pulling teeth.”

The Los Angeles MTA awarded a 2003 contract to AnsaldoBreda to deliver 50 light-rail vehicles by 2007. By 2009 only 19 were delivered, and the vehicles were overweight by up to 6,000 pounds.

“They’re still behind, and we’re not sure if we’re ever going to get them to final acceptance standards,” Cano said. “But we can still use them. They’re in working condition. Some of the issues that we had in terms of the rail line and the ability to couple them with other brands of cars, that’s being fixed.”

In 2009, Metro officials projected that a three-year delay would cost taxpayers there an additional $5.4 million, including $1.8 million in consulting fees.

Reffreger said the final five cars are in their Pittsburg, Calif., factory waiting to be delivered.

“It’s true that it has been a challenging proj­ect,” Reffreger said of working with Los Angeles Metro officials.

Previous MTA officials said weight concerns were secondary to increasing the strength of the cars by adding elements and components to the vehicles, Reffreger said.

“AnsaldoBreda timely anticipated that the design was exceeding the expected requirement, but considering that the weight per axle target was still maintained, the authority decided to move foward,” Reffreger said.

“At a later stage, when the MTA management and design team members had completely changed, the position of the authority changed.”

Cano said communication with Ansaldo officials was difficult because they often had to check back with executives in Italy.

“AnsaldoBreda would basically come into an issue and say, ‘We have to go back to Italy and say we need permission to get this, this and that,’” Cano said. “They were just a subsidiary. It’s a very strange organizational structure that caused communication problems.”

Ansaldo Honolulu’s plan is to have a permanent representative in Hono­lulu, with “Italian experts and locally recruited people,” Reffreger said, adding that the company operates subsidiaries all over the world.

However, Eugenio Dotta, Ansaldo STS senior vice president of sales and business development, clarified that decision-making for the system will still be done in Italy.

“The people that will be here will be completely autonomous in running the contract,” Dotta said. “They are not autonomous in changing the vital core of the system.”

Reffreger added that Los Angeles officials had the right, at all times, to reject the continuation of production for the vehicles, but opted to forge ahead.

AnsaldoBreda and Ansaldo STS both fall under Italian conglomerate Finmeccanica, nearly one-third of which is owned by the Italian government. AnsaldoBreda is the vehicle-building arm of the company, while Ansaldo STS handles signaling and operations.

Los Angeles isn’t the only U.S. city reporting problems. The Niagara Frontier Transportation Authority in New York gave AnsaldoBreda a $40 million contract to refurbish

27 light-rail vehicles. AnsaldoBreda subcontracted Gray Manufacturing Industries in Hor­nell, N.Y., to do the work.

Hornell Mayor Shawn Hogan said GMI had to lay off 23 workers in December last year due to a cash flow delay stemming from a spat between the transit authority and AnsaldoBreda.

“They couldn’t agree on safety issues,” Hogan said. “They just weren’t talking. … Those cars were supposed to be delivered in July 2010.”

The first car was delivered last month.

Hogan said he never dealt with AnsaldoBreda face to face, but looked into the situation because of the lost jobs. Hogan authorized a $150,000 economic development loan for GMI to help pay for interest it owed in obligations.

“By our standards that’s a lot of money,” Hogan said.

Reffreger said despite issues in those cities, AnsaldoBreda has a rec­ord of achieving specifications for other proj­ects, including heavy-rail vehicles in Georgia, Metro Madrid in Spain, and the Metro Circumvesuviana in Italy. The Los Angeles Red Line cars had significantly lower weight than what was required, Reffreger said.

However, Los Angeles Metro officials offered up a harsh assessment of the Red Line vehicles in a 2009 memo to AnsaldoBreda President Giancarlo Fantappie.

“Sixteen years following the 1993 opening of the Red Line, the reliability and availability of the 30 base buy vehicles is by far the lowest of all Metro’s rail vehicles,” Metro officials said.

Reffreger said MTA officials recently cited their newer vehicles as the best-performing fleet in the system, which was instrumental in landing a new Miami contract.

“At the end of the day, the reference from L.A. was, ‘They make a heck of a vehicle,’” Reffreger said.

Some local residents have expressed concern that each two-car train would seat only 72 people, although with standing room for 318. But that’s what city officials asked for, Reffreger said.

“This is not a regional train going from city to city where the ride takes upwards of two hours and sitting is a priority,” he said. “We are completely used to this type of interior design and number of seats. Our proposal is along those guidelines.”

Concerns from rail naysayers are understandable, Reffreger said. In every jurisdiction they’ve been to, rail construction is met with apprehension. Rail transit can be difficult to grasp for people who have never had it, he said.

“This is a ‘field of dreams’ industry. ‘If you build it, they will come,’” he said.

Ansaldo officials declined to address their costs for operations and maintenance, including accusations from the losing bidders about moving costs out of the design and construction portion to win a more favorable review. The procurement proc­ess is still under way, and no contract has been signed.

Reffreger also wanted to assuage fears that the contract means the jobs will be in Italy. The engineering will be done in Italy, but operations and maintenance will produce local jobs. Ansaldo Hono­lulu’s construction partner is local firm Watts Constructors.

“Jobs in this industry are career-building jobs,”Reffreger said. “These are the types of jobs that put people through college and pay mortgages.”

Jobs often are a desired side effect to rail construction, especially in small cities like Hogan’s Hor­nell. Hogan counted on the subcontracting work for GMI to help stimulate his city’s economy.

But his experience with AnsaldoBreda led him to do a Google search on the company, and “all I got was the nightmare in Los Angeles.”

“In my mind — and I’m speaking as someone on the outside looking in that’s been impacted negatively — I would definitely think twice before awarding them a contract,” Hogan said. “Or at least I would double-dot the I’s and double-cross the T’s.”






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