Metro Debates FY10 Budget, Including Measure R

5_27_09_ansaldo.jpgPhoto of Ansaldo-Breda built High Speed Rail Car via Jimcb/Flickr

Tomorrow is the fourth Thursday of the month, and that means it’s time for another packed agenda for another Metro Board agenda.  The agenda is dominated by the adoption of Metro’s FY10 Budget and various side items such as the next chapter in the controversy surrounding Ansaldo-Breda rail car suppliers.

The"big-ticket" item tomorrow should be the debate over next year’s budget.  Last week we discussed how the budget proposes a 120,000 cut in service hours in bus operations, just a year after the Metro Board bent over backwards to avoid any sort of cuts.

Unlike last week, we can now see how Metro is planning to spend the first of its 30 years of Measure R funds on page 13 of the budget.  In its first year, Measure R is projected to put aside over $100 million dollars for projects in future years. For example, it is "saving" over three times as much money in its highway expansion coffers than it is spending.  On the highway side, Metro is socking away $54 million in funds and spending only $16 million, over three-quarters of which will be spent on sound walls.

On the rail expansion side, by far the most money will be spent on Phase II of the Expo Line.  The current budget draft has Metro spending $71 million on rail expansion, with $61 million going towards Expo Phase II.  However, a motion by Director Antonovich would take the $27 million that staff was planning to save and directing it towards the Gold Line Foothill Extension.  While our friends at I Will Ride are pretty excited about this proposal, its bound to be one of the most controversial agenda items.

Ansaldo-Breda appearing on the agenda guarantees a strong turnout from organized labor as they did last month.  Generally, I consider the controversy about whether or not to "extend the expiration of the option, exercising the option, or allowing expiration of Contract No. P2550 with AnsaldoBreda S.p.A. for 100
additional light rail vehicles
" as the Board puts it is outside of my area, but since the union presence could dominate the meeting, I thought it only fair to give warning.

Of course, there are always surprises from activists and the board at meetings with agendas this long and complex.  We’ll have a full report tomorrow after the meeting.

  • Erik

    “Delivery of [AnsaldoBreda] IC4 trains has been a highly unsatisfactory process. It is absolutely grotesque that the trains are only being delivered now.”

    -Lars Barfoed, Danish Minister of Transportation, May 20th, 2009

    http://www.berlingske.dk/article/20090520/danmark/705200076/

    “Let there be no mistake. The process has been unacceptable and there is every indication that Ansaldobreda’s poor performance is predominantly the issue here. Neither DSB’s Board of Directors nor DSB’s Corporate Management can comprehend how Ansaldobreda, having produced trains for more than 100 years, can fail in this way with a delivery. ”

    Press Release from Danish State Railways, May 20th, 2009

    http://www.dsb.dk/cs/Satellite?pagename=DSBUK/Page/Forside&c=Page&cid=1075364616427&bid=1148307492142&b=Pressemeddelelse

    ”We bought a lemon,” said (Boston’s MBTA) General Manager Michael H. Mulhern referring to the Breda Green Line Trolleys.

    http://www.boston.com/news/local/massachusetts/articles/2004/12/12/mbta_halts_purchase_of_green_line_lemons/

    Breda Costruzioni Ferroviarie, the Italian firm that won the $132.7 million contract to build the buses, said in 1986 the buses would weigh 43,290 pounds apiece. Design changes increased the buses’ estimated weights to 45,164 pounds.

    But when Breda completed its first prototype vehicle in January 1989, the coach weighed 50,300 pounds. Metro calculated that, with passengers, the weights at both the middle and rear axles would significantly exceed the 20,000-pound load limit.

    http://www.seattlepi.com/archives/1990/9004180064.asp

    David Bell of the (Seattle) King County Economic Development Council says Breda has shown interest in assembling the vehicles in the Seattle area, and using it as a beachhead for getting other West Coast bus contracts.

    http://www.seattlepi.com/archives/1987/8701120368.asp

    Metro paid $5 for brass rings available for 10 cents apiece, for example, $258 for $4 oil filters and $233 for $60 wheel bearings.

    The agency never shopped around to obtain the lowest price on the parts. It just bought them from the bus manufacturer, Breda Costruzioni Ferroviarie of Pistoia, Italy.

    Until the audit is done, Metro has no way of knowing how much money it may have wasted or how much it can get back by returning the parts.

    Metro officials say it may be difficult to replace all the expensive parts with cheaper ones, because Breda may void its warranty on various bus components.

    http://www.seattlepi.com/archives/1991/9105170059.asp

  • I have to admit I’m quite anxious about tomorrow. Just to clarify, the Foothill Extension is seeking only $10 million out of the $27-28 million unallocated fund. And that $28 million is based off of the estimated projections for the 2010 Measure R revenue, which was questioned at the Budget and Finance Committee meeting as to whether or not it’s a proper projection.

    Look for a sea of yellow-gold shirts tomorrow =] Our shirts are a bit more orange than the Bus Riders Union, in case people get confused.

  • Leo

    What surprises me is how no one seems to have figured out yet that the number of jobs AnsaldoBreda says they will create is so far out of the realm of reality. Anyone with some manufacturing background will see right through their nonsensical claims and see them for what they really are: a complete and total fabrication! Wake up MTA…..you’re being royally TAKEN!!!!

  • Leo, Metro staff have recommended not to exercise the options–they know. they know. Now if only the politicos will concede…

    http://www.metro.net/board/Items/2009/05_May/20090528Item38.pdf

  • Alan

    Erik — Why are you citing articles about buses built 20+ years ago? Those clearly have no bearing on the current discussion, and the way you present them is disingenuous, at best.

    Leo — The job creation numbers AnsaldoBreda is promoting come from a study by the LA County Economic Development Corporation. You can read the study here: http://www.laedc.org/reports/consulting/2009_BredaRailEconomicImpact.pdf

    To summarize for those who don’t want to download the pdf: The impact of manufacturing the trains in LA is not limited to the manufacturing jobs which are created directly. First, there are additional jobs created to build the manufacturing facility and in support roles. Second, and more importantly, creating those jobs in LA means that money is reinvested in the local economy…people with jobs spend more money > this money goes to local businesses > local businesses hire more people > repeat. This is called an economic multiplier.

    Dana — You may know the answer to this, but I haven’t been able to find information so far: are any of the other companies promising to manufacture the trains locally? Seriously, we need all the jobs we can get.

  • Erik

    Alan-Because AnsaldoBreda has been pulling this crap for over two decades!

    Bid Low, promise the impossible, promise a “permanent” factory in the jurisdiction buying their late-delivered and unreliable vehicles!

    Seattle, Boston and Denmark will never ever buy another AnsaldoBrda product. Can you guess why?

  • Alan

    Erik, who do you think should build the trains? Just curious, I’m not sure who else is in the mix, and you seem to know the industry, or have you only researched AnsaldoBredaa?

  • Erik

    Alan-Anyone! Anyone except AnsaldoBreda.

  • Erik

    Alan-LA Metro does not have an existing fleet large enough today, to cover the network LA Metro is going to have in about 5 years from now.

    LA Metro’s rail network size and ridership is about to grow exponentially!

    If LA Metro’s order is delayed like EVERY SINGLE AnsaldoBreda contract has been in the past two decades, LA Metro will have stations and tracks sitting empty with nothing to move customers with until the order is finally fulfilled.

    Other AnsaldoBreda customers were either starting from scratch (Seattle-Tunnel Bus, Copenhagen-Automated Metro) so delays in equipment just meant delay in opening a service no one had used before or had existing fleets that could be coaxed to solder on (Oslo, Boston, San Francisco, Gothenburg, DSB)

    Will LA Metro be able to lease cars from other operators in North America to cover this shortage? Not likely given the differing specifications of systems in other cities. Welcome to the North American light-rail transit operating environment! What guarantees will AnsaldoBreda have in place should this occur; what assistance to LA Metro will the contracts call for?

    I expect that the only solution LA Metro would have if AnsaldoBreda’s deliveries go as its record in the matter prediscts, would be to run one-car trains in place of the now 2- or 3-car trains on the Blue, Green and existing Gold Line, in order to provide service on existing lines and the new lines (Expo,Downtown Regional Connector, the two Gold Line extensions, etc.) joining the network very soon. How will this impact LA Metro’s existing customers?

  • Leo

    Dana,

    I agree that the staff must know, what I don’t understand is why the press is not bringing the facts to light for everyone to see. Those numbers are the easiest thing to disprove.

    Erik,

    I saw the LACEDC study. It cites 535 direct employees plus another 126 in their headquarters for a total of 661 employees. A 100 car order comes nowhere near generating that much employment. Now, if those numbers are based on the assumption that they will win other contracts, that’s a huge gamble and if you look at their performance in the last several years it appears they have only won one contract for a rehab in Buffalo which is apparently a disaster.

    Further, that study does not indicate how they came up with the numbers. LAEDC is not a railcar builder, so the had to get the number of labor hours from someone, ostensibly AnsaldoBreda, in order to calculate the necessary manpower. To make it look good those numbers would have been heavily inflated in order to give the impression of high levels of employment.

    This is a tough business and I have no specific problem with AnsaldoBreda other than they are apparently not well managed. My problem is that they are trying to get the order for the cars using politics, deception and outright lies to get what they want. Who will pay the price? The people of Los Angeles. In my book, that’s not the way you do business.

  • Ron

    Leo and Erik, if you’re so worried about politics and corruption, why don’t you look into the political and corporate ties of Mike Cannell, who is now General Manager of Rail Operations at the MTA and whose son works at Siemens, Breda’s biggest competitor here. The NY TImes wrote about it (http://www.nytimes.com/2009/02/12/us/12transit.html) and nobody wanted to follow up? Cannell’s claim to that reporter that Siemens Energy (where his son admittedly works) and Siemens Rail are not connected is totally dishonest.

    The last 3 agencies Mr. Cannell worked for all “suddenly” decided to get rid of their manufacturers and go with Siemens instead. Something’s not right here. Cannell’s already awarded MTA engineering contracts to HIS old employer, Booze Allen. When is the board going to stand up and say they don’t want this corruption at Metro?

    Given Siemens longstanding record as THE MOST corrupt corporation in the world, why is our city letting Cannell take us for a ride?

    http://www.nytimes.com/2008/12/21/business/worldbusiness/21siemens.html

    Last time we had Siemens cars in LA it was a complete DISASTER, far far worse than the small problems the MTA is having with the Breda Cars.

    http://www.thefreelibrary.com/Report+slams+Siemens+rail-car+plant:+inexperienced+workers,+delays+in…-a016682382

  • Leo asked “what I don’t understand is why the press is not bringing the facts to light for everyone to see…”

    The media has always bveen rather weak at covering transportation issues. The Times just let go its reporter for the beat and TV folks are clueless. This will not be the only issue where the only place to get the goods is this blog.

  • Erik

    I realize that as I post this we are minutes away from the start of the meeting, but I want to raise the “ok so what if…” of a potential plant here in Los Angeles.

    So let us say that the Metro Board agrees to buy the 100 cars from AnsaldoBreda, and AnsaldoBreda builds their fancy LEED factory in Los Angeles.

    And they build the 100 cars and fulfill the contract.

    Then what?

    Is LA Metro obligated to buy further cars from them? No. Not unless they are the winning bidder in future contract bids-having the factory in Los Angeles may lower their cost somewhat, but it cannot, ethically, allow them to have a lock on all future LA Metro railcar purchases.

    Look at Sacramento: Has Sacramento always bought rail cars from the Siemens plant located in Sacramento (which employs 500, soon to be 700 people, BTW)? Well, yes Siemens got the orders in 1987 and 1991, but I am not certain the location of the Siemens plant had anything to do with that; anyone know when the Siemens plant in Sacramento opened?

    Regardless, in 2002-2003 when Sacramento RT needed more railcars, did the bid automatically go to the hometown Siemens? No, it went to CAF who had the winning bid.

    And look at aviation:
    Alaska Airlines, despite being based in Seattle, bought most of their planes from Long Beach’s McDonnel-Douglas before the Boeing-MacDac merger in 1997.
    Air France, despite being having the HQ of Airbus in Toulouse, still buys an awful lot of Boeing aircraft each year, in fact they were the launch customer for the 777 freighter. Germany has the other major Airbus factory in Hamburg and despite this Lufthansa is the launch customer for the new Boeing 747-8.

  • Erik
  • Thanks for the props Dana, but let’s give credit to Eric at Blogdowntown who has done a lot more on AnsaldoBreda than I have.

  • Erik

    Ron-Have I ever said I favor any specific company? No.

    Well you can argue “yes” in that I favor ANYONE ELSE except AnsaldoBreda.

    Why? Because AnsaldoBreda has a long and unique record of delays in delivering products that end up requiring far more maintenance than other manufacturers vehicles at the same location. No other company has shown itself to be as incompetent as AnsaldoBreda, except for its two predecessor companies Ansaldo Trasporti and Breda Ferroviaria.

  • Leo

    Erik,

    You really seem to have an ax to grind with AnsaldoBreda. Are you or were you directly involved with any of those procurements? While you do raise some vaild issues, what’s the point of digging up items from twenty years ago when the company was owned by someone else and under entirely different management?

    From what I’m reading from the other writers it would appear that Siemens as actually been accused of corruption which in my book is far worse than simply being a poor performer. While AnsaldoBreda is pushing pretty hard to get the options by opening the local plant, they seem to have been up front about what they are trying to do. I’m not saying I agree with the approach, but I think I would rather try to manage a poor performer over having to look over my shoulder all the time in dealing with a corrupt one!

  • Erik

    Leo,

    If a snake-oil salesman you had observed in other cities was coming to your town with the same-old spiel and lies that you had seen before, wouldn’t you warn your neighbors so that they might avoid the fate of those in the other places?

    That’s exactly what AnsaldoBreda is doing here, and no, my going back to contracts 20 years ago is intended to show a pattern. A pattern that has been going on at least since 1988 with the Seattle Tunnel Bus and has continued to today with the IC4 for Denmark and the Albatros for Holland.

    And it is a behavior that was rampant at both Ansaldo and Breda before and after their merger.

    You want to dance with these liars, fine, but don’t come running to me when you get your feet stepped on or rather more likely, crushed.

    And for the record I have never favored any one company over AnsaldoBreda. There are plenty of capable suppliers out their, even if we agree to elimintate all the ones based in Italy and Germany.

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