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A Japanese rail-car maker with a manufacturing plant in Rochelle has lost a lucrative contract to build high-speed Amtrak passenger trains after years of safety problems, technical failures and layoffs.
Nippon Sharyo lost the contract from the California Department of Transportation, originally valued at $352 million, to Sumitomo Corporation of Americas and Siemens, the department said.
Although led by California, the contract involved the participation of multiple states, which were able to acquire modern high-speed rail cars at a lower price by banding together.
The original contract was announced in November 2012 by Illinois Gov. Pat Quinn and called for the production of 130 passenger rail cars. California agreed to buy 42 and 88 were set to go to the Midwest for Amtrak service to and from Chicago, Detroit and St. Louis. The contract was touted as the spark that would bring high-speed rail cars to the Midwest and California, allowing locomotives to travel up to 125 miles per hour.
Nippon Sharyo opened a new U.S. headquarters and the $35 million passenger rail car facility in Illinois in July 2012 with over $10 million in state and local investment and incentives, including tax credits and infrastructure improvements. The Rochelle plant, which also produces Metra rail cars, is about 80 miles west of Chicago, and the company also maintains an office in Arlington Heights.
Failed safety tests for the double-decker Amtrak rail cars led to significant production delays, and the Occupational Safety and Health Administration fined the company for multiple employee safety violations. Those “complications,” the company said, led to the loss of hundreds of jobs in recent years. At the Rochelle plant’s peak in 2015, the plant had 694 workers, according to spokeswoman Tracy Schmaler. As of last month, it had 54.
In the original contract, the state said that Nippon Sharyo had agreed to create 250 jobs and retain 15 at its office in Arlington Heights in exchange for incentives. It’s not clear how this agreement has changed. A spokesman for the Illinois Department of Commerce and Economic Opportunity didn’t return a call seeking comment.
Nippon Sharyo said it “will continue its business operations going forward with a reduced number of employees to meet the needs of existing customers and contractual responsibilities.” The company added that it has provided severance and job search support to its laid-off employees.
California Transportation Department spokeswoman Vanessa Wiseman said Nippon Sharyo did not deliver any useable train cars under the contract. The trains failed to pass crash tests.
The contract awarded to Sumitomo and Siemens is now valued at $371 million, the California Transportation Department said in an announcement last week, and now includes 137 rail cars. Eighty-eight of them are still destined for the Midwest. The cars, the first of which are expected to go into production within a year, will be made at Siemens’ rail manufacturing hub in Sacramento.
The cars to be built are now single-level instead of double-decker. According to the Midwest High Speed Rail Association, single-level cars are safer and better able to protect passengers in the event of a crash.
This article first appeared on www.chicagotribune.com
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