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Amtrak or Japtrak? Japanese Company Paid to Build Passenger Cars and Now They Can't Deliver


Written By: Christine Dantz

April 2016

If you're scratching your head at the headline, you aren't alone. Seven years ago, when most Americans were wrapped up in the recession, either losing their job, home, savings or all three, a Japanese company won the contract to bring Amtrak into the 21st century. Now, a little more than a year away from the deadline for delivery, the company admits it won't make the cut.

The Deal

The Japanese company, Sumitomo Corp. of Americas, bid and won a $352 million U.S. contract to manufacture 130 double-decker passenger cars for the embattled rail service in 2009. Amtrak, created in October of 1970, by President Nixon under the Rail Passenger Service Act, doesn't have an excellent track record for success. Now, with Sumitomo's admission, a bad track record is the only thing on track for the government-subsidized Amtrak.


Amtrak or Japtrak? Japanese Company Paid to Build Passenger Cars and Now They Can't Deliver

Sumitomo is building new passenger cars to upgrade Amtrak service in California, Illinois, Michigan, and Missouri. More than half of the money paying the Japanese company to build the all-American made double-deck cars comes from the American Recovery and Reinvestment Act of 2009. The Japanese company knew what they were getting into when they made the bid on all-American rail cars when they signed the contract, cementing the deal in stone. Sumitomo would have to follow a strict set of guidelines.

"To help U.S. manufacturers recover from the recession, the stimulus bill required the cars be built entirely in the U.S. with domestically sourced components and materials."

The Problem

Sumitomo is having the same problem that Back in the USA has reported happening to U.S. companies. America offshored so much of its manufacturing that some materials are difficult to find in the US. Assembly by Nippon Sharyo USA Inc., a longtime partner of Sumitomo, was suspended in the Fall of 2015, after the company failed to meet the contract's stringent requirements. If you didn't guess already, Nippon Sharyo USA, Inc. is another Japanese company, with a subsidiary in America.


Amtrak or Japtrak? Japanese Company Paid to Build Passenger Cars and Now They Can't Deliver

According to Nippon, the company has no prior experience building the advanced double-decker passenger rail cars, which is one reason for the delays. With a one-year delay, Nippon is seeking permission to make the cars in Japan and not at the $100,000,000 factory it built outside Chicago in order to meet the requirement of being "Made in the USA."

The California Department of Transportation's chief of rail and mass transportation, Bruce Roberts explains,

"The intent is good, but 100% buy-American has been more of a challenge than we anticipated."

Now, even though these potential issues should have been thoroughly researched and included with the bid, the company has announced it will not make the September 2017 deadline as promised. In fact, it doesn't expect production to begin until 2018, pushing a completion date closer to 2019 or later. These delays do nothing but push America further behind in high-speed rail transport.


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I wouldn't accept this excuse from my 11-year-old son, will America accept it from a billion-dollar company that signed a contract and already received payment? Given the amount of money and time already spent on the flawed project, they will allow not only this delay but any future delays. Let's hope that America's leaders learn a lesson from this embarrassing delay and change the bidding process for government contract work. Let's task American companies with government bids, and put Americans to work on the American infrastructure, that's how we will make America great again.

References
A History of America's Railroad: Timeline. (n.d.). Retrieved from Amtrak.
Braniff747SP. (2012, May 12). File: Amtrak-GEP42DC-Heritage Phase III Livery.JPG. Retrieved from Wikimedia Commons.
Matthew Neleigh Gummigoof at en.wikipedia. (2006, January 8). File: Auto Train lounge.jpg. Retrieved from Wikimedia Commons.
Tita, B. (2016, April 10). Delays May Derail Stimulus Funding for Amtrak Railcars. Retrieved from The Wall Street Journal.

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Other Articles of Interest:

Buying American Made Products

Political Win Could Be Financial Gain for Companies 'Made in the USA'

The TPP: Politicians Aren't Ashamed of Taking Our Jobs

What Percentage 'Made in the USA'

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