(Bloomberg) -- For nearly 20 years, a plan has been brewing for a high-speed rail line connecting Las Vegas to southern California.
Something was always getting in the way, from ballooning budgets to bureaucratic red tape, not to mention developer and investor switcheroos.
Like many US infrastructure projects, the dream of sleek, fast-moving trains connecting two of the country’s biggest entertainment meccas in just two hours turned into a game of speculation, with nothing getting built.
Now that shovels are finally in the ground on the $12 billion Brightline West project, there’s yet one more wrinkle: A corporate rivalry between two manufacturing giants vying to build the highly specialized trains that will reach speeds of more than 200 miles per hour — the fastest in the US.
The dispute threatens an already ambitious timeline to complete the 218-mile line for the 2028 LA Olympics. For the Biden administration, Brightline West is more than just a train project; it’s a test case for proving that high-speed rail can succeed in the US, something that Europe and Asia have excelled at for decades. The irony is that the federal funding and political backing that brought the project to life are contributing to its latest troubles.
Brightline West, backed by Fortress Investment Group, is partially funded with $3 billion from the bipartisan infrastructure bill. But with federal dollars comes the requirement to use US-made products under “Buy America” provisions.
The catch is that no company is currently building trains that meet Brightline’s high-speed requirements in the US. That’s set up a competition between Germany’s Siemens AG and France’s Alstom SA — both of which secured exemptions from the “Buy America” rules — to show they have the most American-centric option.
It’s the latest reminder that investment commitments and political will alone won’t solve America’s infrastructure deficit, especially if the domestic industry essential to support such investments is nonexistent after decades of capital starvation.
“It’s critically important that we actually get high-speed rail built here so that Americans can see what we’re missing,” said US Representative Seth Moulton, a Democrat from Massachusetts who serves on the House Transportation and Infrastructure Committee.
“Even though we all like ‘Buy America’, we can’t start there,” Moulton said in an interview. “We need to have some exceptions at the beginning and the exceptions are quite reasonable.”
In July, Alstom filed a lawsuit against the US Department of Transportation, challenging the decision to award the contract for Brightline West’s train sets to Siemens. In the suit, filed in the US District Court in Washington, DC, Alstom argued that the new Amtrak Acela fleet it’s building at its existing Hornell, New York, facility should be considered a domestic option.
Siemens, in a response filed in late August, dismissed the lawsuit as “a collateral attack.” The company had previously committed to building a new US factory to support Brightline West and announced on Sept. 9 that the site will be in Horseheads, New York.
By all accounts, the Brightline West project is moving ahead. But the Alstom lawsuit has rail advocates on edge, knowing how easily ambitious projects can be thrown off track. Brightline launched service in 2018 on a conventional inter-city rail line in southern Florida.
“Brightline West will plant the flag for high-speed rail in America and will lay the foundation for a new industry with unimaginable economic benefits,” Brightline CEO Michael Reininger said in a statement.
Even before the legal spat, Brightline West faced logistical challenges. The line’s starting point is slated for Rancho Cucamonga, about an hour’s drive east from downtown LA, which could be a hard sell for travelers looking for a quick trip to Vegas. There is a plan to eventually connect Brightline West with California’s long-delayed high-speed rail project, and commuters can already travel from LA to Rancho Cucamonga via the Metrolink regional line.
Currently, the closest thing to high-speed rail in the US is Amtrak’s Acela service, which tops out at 150 miles per hour in limited areas along the Northeast Corridor. The upgraded Acela trains Alstom is building are designed for 186 miles per hour, but will max out at 160, only after significant infrastructure improvements.
A filing by the Federal Railroad Administration, a regulatory body, shows that Alstom had proposed adapting its Acela models to meet Brightline West’s speed requirements by increasing power capacity and traction.
“We have a long track record of investing in the United States,” said Dani Simons, a spokeswoman for Alstom.
Alstom has invested $80 million in the Hornell plant that’s supporting its 2016 contract to replace Amtrak’s aging Acela fleet, a deal heavily backed by labor unions and New York Senator Chuck Schumer. Alstom had hoped those connections would give it a leg up in securing the Brightline West contract, according to people familiar with the process.
However, the Acela replacement has been plagued by delays, with the new fleet more than three years behind schedule and several train sets idling in a Philadelphia railyard due to safety test issues.
“Rail has enough headwinds already from massive government subsidies to highways and airports,” Moulton said. “We need team players. Alstom is not being a team player.”
Siemens is aiming to fill the gap. The company announced an unusual advance agreement with the International Association of Machinists and Aerospace Workers to allow for union representation talks at its new Horseheads facility once there are employees to organize. While other Siemens factories in the US have labor deals, its larger rail facility in Sacramento isn’t unionized.
Production at the facility, which will manufacture trains capable of reaching speeds of as much as 220 miles per hour, is set to begin in 2026. The first two train sets will be built and tested in Germany, with the remaining eight to be produced in the US. Brightline West is aiming for a 2028 launch, with the line running along Interstate 15 through the California desert.
New York might not seem like the obvious choice for a factory building trains bound for the West Coast, as manufacturers increasingly seek locations closer to their customers to minimize supply-chain issues and logistical headaches.
Siemens had initially considered Nevada, according to an FRA notice, but ultimately chose the New York site, which had already passed environmental inspections and requires minimal infrastructure upgrades, allowing for faster setup, according to a company spokesperson.
Politically, it’s a win for Schumer, who last week celebrated the 300 jobs Siemens’ new facility will create. The plant is just an hour from Alstom’s Hornell site, which the senator has also touted.
Siemens’ decision to base its factory in New York follows “months of relentless advocacy,” Schumer said in a statement. “It’s full steam ahead for America’s high-speed rail future, with every stop powered by union workers here in upstate New York.”
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