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Thursday, July 10, 2014
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Published: Tuesday, 10/1/2013

Supply chain for Amtrak locomotives takes root in U.S.

BY PAUL NUSSBAUM
THE PHILADELPHIA INQUIRER (McT)

Even before they’re built, Amtrak’s new locomotives run through Philadelphia.

Seventy new “Cities Sprinter” locomotives, worth $466 million, have begun to roll off a Sacramento, Calif., assembly line, complete with components made by Philadelphia-area workers in local factories.

The locomotives will operate on the Northeast Corridor between Boston and Washington and on the Keystone Corridor between Philadelphia and Harrisburg, Pa.

They will carry with them seats made by USSC Group Inc. of Exton, Pa., and steel handrails and tie-rods from Bentech Inc. of Philadelphia.

Both companies are major suppliers to transit operators around the world, employing hundreds of welders, machinists, fabricators and others.

They’re part of a far-flung American supply chain that feeds a growing domestic rail and transit industry, even though the biggest train-builders remain foreign firms.

Siemens Rail Systems, which is building the Amtrak locomotives in Sacramento, is a subsidiary of the German conglomerate Siemens AG.

Similarly, Alstom Transport Inc. in Hornell, N.Y., which is refurbishing 120 railcars that travel between Philadelphia and southern New Jersey, is a subsidiary of the French Alstom Group.

And Hyundai Rotem Co., which assembled 120 railcars for Philadelphia’s mass transit system in a South Philadelphia plant and which is building 75 commuter railcars there for Boston’s MBTA, is a subsidiary of the South Korean automaker Hyundai Motor Group.

Because of federal “Buy America” requirements, more than half of the components in the vehicles must be designed and built in the United States.

“It makes sense to get as much as possible domestically produced,” said Michael Cahill, president of Siemens Rail Systems, North America. Buying from U.S. manufacturers eliminates currency fluctuations and reduces shipping problems, he said.

“It’s much more straightforward to do business with American suppliers,” Cahill said. “We have made a conscious decision to increase our domestic content by one-third over the past 10 years.”

For the Amtrak locomotives, Siemens is manufacturing parts in its own plants in Norwood, Ohio; Alpharetta, Ga.; and Richland, Miss. About 70 suppliers are making components in 60 cities in 23 states, Cahill said.

So far, Siemens has shipped five locomotives to Amtrak; they are still being tested but are to be in service before the end of the year. All 70 are expected to be delivered by 2015.

For suppliers, the growing transportation business, fueled by federal and state funding, means local jobs and a boost for local economies.

“These are family-sustaining jobs” with good salaries and benefits, said Ray Melleady, North American managing director for USSC Group in Exton, the company that makes seats for trains, buses, fire trucks, and military vehicles, as well as fire-suppression systems for transit vehicles. “So many people in the private sector are dependent on these public-sector dollars.”

Of the company’s 150 workers in Exton and 750 in Chicago, 70 percent depend on public-sector contracts, Melleady said.

In Philadelphia, Bentech employs about 50 local workers in a factory that has been a neighborhood fixture since 1880. An additional 25 work in Lancaster, Pa., and Youngstown, Ohio.

In addition to the steel handrails for Amtrak’s locomotives, Bentech workers make driver partitions, luggage racks, bike racks and other components for trains, subways and buses around the world.

“Our motto is, ‘We boldly build what’s never been designed before,’ ” said Robert Benninghoff, manager of engineering and sales for Bentech.

In addition to providing direct jobs for its own employees, Bentech provides work for its suppliers of steel, glass and plastic.

“We try to use suppliers within a 150-mile radius so that if there is a problem, we can get to them,” Benninghoff said.

“We feed a lot of people.”

Siemens, Alstom and other foreign train-makers expect to profit from a growing U.S. transit market, and they hope the United States will eventually be a market for high-speed trains like those in wide use in Europe, Japan and China.

In the past 10 years, Siemens has invested $25 billion in its various businesses in the United States, including rail and transit.

“We’re definitely optimistic that there is a renaissance of the rail business coming back to the U.S.,” Cahill said.



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