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Company building Orange, Red Line trains is way late with deliveries so the MBTA tosses them some more money to speed things up
By adamg on Fri, 03/29/2024 - 8:32am
When the T hired CRRC to build hundreds of new cars despite not having any experience with American subways but at a price that was just too good to pass up, the contract contained penalty clauses in case the company was late. CommonWealth Beacon reports the T will be paying CRRC $148 million more - and will waive up to $131 million in penalties if CRRC delivers all the cars by the end of 2027, four years late. Both sides blame the pandemic and restrictions on Chinese companies by the Trump administration.
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Comments
On the bright side
By paying them more, we'll be sure they'll remain responsive and there will be no shortage of parts in the future.
And there absolutely no way they'll miss the future deadlines and extort Massachusetts again. After all, they agreed to a contract.
/S
Notable that in an attempt to help Springfield, the state has gifted them a failing casino and deadbeat train contractor that will halt work entirely US once the next president is elected.
Even if they halt work...
...They're not shipping the factory back to China in an Amazon box.
The infrastructure is built and staying.
While true
In all likelihood it will be tied up in lawsuits and not be of interest as-is to any other firm for some time to come even if the state purchases it.
The solar factor in Danvers (much smaller) suffered a similar fate when the company failed.
I'm skeptical of efforts by local or state government to invest in a private company or mandate a local presence as a catalyst to improve that region's economy or grow an industry. These efforts are well intend but rarely provide what's promised.
Why not?
During World War II, the Soviets dismantled factories threatened by the German invasion, shipped them to Siberia, and rebuilt them there.
After the war they did the same thing to factories in their zone of occupied Germany.
If I were the Chinese, I would certainly not abandon my factory to the Americans.
Factory
Can’t argue about the casino but part of the New contract is that the T will acquire it if they leave.
That's a non-starter
The T is in no position to run a train manufacturing facility and once CRRC is gone, they won't be able to source the parts to keep building the remaining stock anyway.
And even if the all the materials are available, no domestic manufacturer is going to be willing to come in and operate the plant on a contract basis building another company's design.
So the T's only option will be to try and find a buyer for the plant -- exactly what CRRC would be doing themselves. Only the T would take a loss buying it from CRRC and reselling it.
It's possible CRRC will ship back all the tooling that's valuable to them and just give the site to the state in exchange for not completing the contract in a few years.
Other contracts
There are already some orders by other agencies (SEPTA and LAMTA) that will involve the Springfield plant, so I wouldn't expect it to shut down for a while.
The other contracts with
The other contracts with Philly (SEPTA) and LA are both small (64 cars for LA and 45 for SEPTA). LA has already decided not to exercise options to buy more CRRC cars and has placed another order with Rotem. These contracts will be long finished before the MBTA Red Line cars are done. Chicago (CTA) also has an order with another CRRC division which is being completed at a plant in Illinois. Like LA, they have already decided not to execute options and have requested bids for another builder for their next order.
total boondoggle
If they're so busy making trains and behind schedule, where are the job openings?
The only job listed is for a facility repair/maintenance worker.
Framing
Every other bid would have required spending more money and would have delayed getting the desperately needed new trains even longer. Yes it seems like we are rewarding them for bad service and that sucks but it would suck even more to keep the old red line trains in service for years longer.
The factory takeover clause is important here
« As part of Thursday’s deal, the MBTA said it will secure the right to purchase the Springfield factory if CRRC does decide to abandon it at some point in the future »
So it's not just COVID relief, pragmatism, unexpected external factors, etc. -- the T is partly buying an option to purchase.
I think the critical thing here is: Does this new arrangement lock down a *purchase price* for the factory in that event? And is it marked down by the $279 million difference in contract value?
These stipulations are worthless
The state also had penalties for missed deadlines in the first contract.
In ~3 years if the trains are still delayed and CRRC is threatening to just sell the factory to the state and abandon the project, do you actually think the MBTA would agree to take it over? Do you think the other transit agencies with contracts would want the T to execute that clause?
That clause would seem to favor the company since they are assured a buyer of the site for what would likely be a premium vs a private sale.
Not guaranteed
The sale to MBTA wouldn't be guaranteed, if/when the time comes, the company has to ask the state first, and the state could say no.
in that case
Suffolk Construction and HYM can do a joint venture
.
If I recall correctly, I don’t think they’ve paid anything in penalties, despite it being in their contract.
The MBTA gets an option to purchase? How is that a win?
How about an option to TAKE the property? Treat the factory and everything in it like collateral, in the event the company goes belly-up or fails (again) to deliver.
The Commonwealth is not a good businessman
The officials making the deal have no personal stake in its success. If it fails, it won't be until they're out of office and have moved on.
Until officials are held personally accountable for their decisions as public employees, no deal the Commonwealth makes will ever turn out well.
Does anyone remember the Big Dig?
Does anyone remember the Big
no never heard of it, what happened
Kids, don't try this at work
Not completing your work and then asking for a raise in order to get it done will generally not be successful if you are an individual employee rather than an entity with a government contract.
Don't ask me how I know this.
I think
This says more about the boss (MBTA) than the employee here.
Government agencies in a nutshell. Just this week
The MBTA does the following.
Confirms a operating deficit of ~$670M
Reduces fares for certain income brackets, increases staggering deficit by ~10%
And now this, waiving $131M and shelling out and additional $148M, increases staggering deficit again by a whopping 50%
In what world does this make any sense.
When MBTA funding keeps coming up and we think all MA residents should contribute regardless if they use the T or live somewhere it actually services. How do you sell this as a good investment.
MBTA is not a for-profit corporation
It's a government agency. Its purpose is not to make money but to provide essential services.
It's also part of the larger Department of Transportation. If all MA residents contribute to the T, they also contribute to I-95 and I-93, even if they live out in the Berkshires and never use those highways.
It's part and parcel of being part of a larger community. You're going to pay school taxes even if you don't have children. You're going to pay for public colleges even if you never take classes there. You're going to pay for police and fire departments even if you never need their services. Why is public transportation any different?
Are they owned by Bechtel?
Are they owned by Bechtel?