Wolf Richter www.testosteronepit.com
I have used high-speed rail extensively in Europe and Japan. For medium distances, from city center to city center, it’s faster than flying. In the US, there is only the Acela Express, which runs on old track. I took it countless times from Manhattan to DC. It was hassle free and fast. High-speed rail works. But not the way California is doing it.
They offered voters a plan and a website with renderings of cool-looking trains. It would connect LA and the Bay Area with extensions to San Diego and Sacramento. The initial stage would be funded with California general obligation bonds and federal dollars. The vast majority would be funded later in some unknown manner. Cost would be $35.7 billion. Voters approved it by referendum (Proposition 1A). That was November 2008.
By November 2011, cost estimates had ballooned to $98.5 billion. Voters realized they’d been had and became restless. The California High-Speed Rail Authority (CHSRA) made a formal request for $2.7 billion—the first tranche of the $9.95 billion in Prop 1A bonds. The federal government would chip in $3.5 billion. It would fund a 130-mile segment of civil works and track between Bakersfield and Fresno in the Central Valley. However, it would lack electrification as well as high-speed train control and communication systems. So it can’t be used as testing ground for high-speed trains. At the most, it might be used by regular diesel trains.
And now another hullabaloo erupted: The California High-Speed Rail Peer Review Group recommended in its letter to the legislature that the project be put on hold. It points at a number of fundamental issues, particularly the fact that long-term funding has not been identified. In light of the current budget fiasco, future funding for the project might not materialize, which would leave California with a useless section of high-cost rail in the Central Valley.
The CHSRA shot back with a press release that called the letter "deeply flawed, in some areas misleading and its conclusions unfounded." It used terms like "egregious errors,” “unsupported assertions," and "unfounded assumptions." And politicians began another round of public arm wrestling.
But the dominant economic problem inherent in the project isn’t even discussed: not much high-level work will be done in the US. The worldwide leaders are companies in Japan, Germany, France, Canada, and China (with IP appropriated from foreign partners). And they’ve been lobbying the government for years.
Siemens, which builds the German high-speed trains, is well established in the US and has been waging a publicity campaign. Roelof van Ark, a former executive of Alstom, the French TGV builder, is the CEO of the CHSRA. And Governor Schwarzenegger made a special trip to China—that was well before the horrific high-speed rail accident near Wenzhou in July that killed 40 people. An investigation pinpointed some causes: equipment, procedures, and corruption. It put a damper on California’s enthusiasm for Chinese trains.
California has a history of farming out its infrastructure projects. Exhibit A: The San Francisco-Oakland Bay Bridge. It is years behind schedule. The budget for the eastern span has ballooned from $1.3 billion to $6.3 billion. And the landmark 525 ft. tower of the "self-anchored suspension" bridge was fabricated in ... China. For more on collapsed bridges and buildings in China (pics), the high-speed rail accident, and the economics of having a big part of the Bay Bridge built there, read.... Our Chinese Bay Bridge.
The high-speed rail system will have even more foreign content. Building the civil works and laying the track will be done by local workers. But design and engineering will be done overseas by companies with expertise in the field. Trains will be designed and manufactured overseas as well, though companies might promise to assemble them in the US. Mere crumbs. US Taxpayers will fund the project—as they fund highway construction. But part of the funds will go to foreign companies and advance their technologies. High-speed rail is a worldwide business, and the leaders have become export powerhouses. Yet it's another sector that American industry abandoned long ago.
Is the auto industry next? Practically every car or truck sold in the US today contains Chinese-made components, though Chinese-designed vehicles haven't made it yet. Chinese automakers scramble to move from shoddy copy-and-paste models to products that would be competitive in the US. A government priority. And they’re getting there through the back door.... The US Auto Industry Drifts Off To China.