Illinois company in final stages of bidding to make high-speed rail cars for Amtrak

Deal, which could arrive in mid-November, would be for 130 cars totaling $352.3 million

By Alejandra Cancino | Chicago Tribune | September 28, 2012

A rail manufacturer based in Illinois is in the final rounds of bidding to build 130 high-speed passenger rail cars for use on Amtrak routes in Illinois, Michigan, Missouri and California.

The order would total $352.3 million.

The bid was submitted by Sumitomo Corp. of America and Nippon Sharyo U.S.A., which opened a $35 million passenger rail car plant in Rochelle in July.

The Rochelle plant is also making 160 “Highliner” rail cars for Metra Electric line customers in the Chicago area, as well as 12 diesel cars for California’s Sonoma-Marin Area Rail Transit, 18 cars for Metrolinx in Toronto and eight bilevel passenger cars for the Virginia Railway Express in Alexandria, Va.

Illinois officials hope the announcement helps attract more manufactures to the state, especially those involved in rail equipment. Gov. Pat Quinn said a deal, expected by mid-November following an audit by the Federal Railroad Administration, could mark a “historic beginning to increased rail equipment manufacturing, assembly and production in Illinois.”

Rochelle Mayor Chet Olson said the plant has sparked interest in the area. “We are already seeing an upside in businesses and other companies contacting us to look at the area and look at the logistics.”

To lure Nippon Sharyo to Rochelle, various governmental units including Rochelle ponied up about $11 million in incentives.

The state in 2010 offered an incentives package worth more than $4.7 million composed of training funds, grants and corporate income tax credits over 10 years. The Illinois Department of Transportation kicked in another $5.5 million to build a rail spur from the BNSF Railway main line to the new factory, and Rochelle offered $866,000 in incentives.

In return, Nippon Sharyo pledged to create at least 250 jobs in Illinois and to retain 15 workers from its office in Arlington Heights.

The rail cars will include wireless Internet access and must meet Buy America requirements, which allow companies to tap into federal incentives through states, municipalities or transit authorities. Under the requirements, companies have to produce 60 percent of the total value of the rail cars in the U.S. The final assembly must be done by American workers with American-produced steel, iron and manufactured components.

A spokesman for Nippon Sharyo said the company is excited about the project, but he declined to make further comment.

Most of the funding for the cars will come from Federal Railroad Administration grants totaling $808 million. A portion of that money will be used to fund high-performance diesel locomotives capable of sustaining 125 mph, and for making single-level passenger cars.

Existing Amtrak locomotives would be used initially to propel the new rail cars at speeds of up to 110 mph. The request for proposals to make the new locomotives is expected to take place by the end of the year.

“This is good use of federal money,” said Joan Fitzgerald, interim dean of the School of Public Policy and Urban Affairs at Northeastern University and co-author of the report, “Reviving the U.S. Rail and Transit Industry: Investments and Job Creation.”

The 2010 report said a $12 billion investment in rail vehicles and bus purchases would create more than 79,000 jobs. If the U.S. invested $37.2 billion — a level comparable to China’s investment in rail and bus vehicles — more than 250,000 jobs could be created, according to the report.

“You’ve got to start somewhere revitalizing passenger rail,” Fitzgerald said. “These are good manufacturing jobs.”

The cars are expected to be delivered between fall 2015 and early 2018. California will receive 42 rail cars. Illinois, Michigan, and Missouri will divide the remaining 88.

Tribune reporter Jon Hilkevitch contributed.

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