Metro's newest subway cars -- the first are scheduled for delivery some time in 1981 -- will be assembled somewhere in the Washington area under the careful supervision of the prime contractor from Italy.
A Japanese firm is the apparent low bidder on a big new contract to build 110 subway cars for Philadelphia.
Cleveland's new rapid transit cars are coming from the Italian firm that won the Washington Metro contract.
Down in Georgia, Atlantans are very happy with their new subway and its splendid cars built by the French.
Everybody is very happy, that is, except Budd Co., the only American firm still in the business of bidding on prime contracts for subway cars or any other kind of railroad passenger car. Budd finished last among three bidders for the Washington contract and was apparently last among the bidders in Philadelphia, behind the Japanese, the Canadians and the Italians.
Hundreds of millions of dollars are involved because modern subway cars -- with their sophisticated electronic circuitry and the need to perform well despite heavy loads and constant accelerating and braking are expensive.
Washington Metro paid $300,000 for each of its first 300 cars.Its new contract with Breda Construzioni for 94 cars is for $76.4 million, or more than $800,000 a car. The primary difference is inflation. Breda's bid was $16 million lower than one from the Canadian Car Division of Hawker Siddeley Canada Ltd. Budd's high bid was $103.3 million.
"Our contention, on the basis of a study we have done, is that dumping truly did take place" in the Washington Metro contract, Budd Chairman Gilbert F. Richards said in a recent interview."We have licenses in France, in Spain, in Japan and in Australia, so we're intimately acquainted with the methods there of manufacturing and of building costs."
Dumping, frequently charged to foreign auto and television set manufacturers, is the process of selling a product abroad for less than market price in an effort to capture foreign sales.
Rep. James J. Howard (D-N.J.), chairman of the surface transportation subcommittee of the House Public Works Committee, where federal aid for transit systems begins in Congress, said last week that his subcommittee will consider strengthening the existing "Buy American" provisions of the Surface Transportation Act this year.
"We don't want to freeze free trade," Howard said. "But we don't want our entire transit industry and jobs going overseas."
Budd recently filed a petition with the U.S. International Trade Commission seeking the imposition of antidumping duties on Italian and Japanese rail cars, but that petition was denied last week.
The U.S. Justice Department vigorously opposed Budd while pointing out that all of the cars "manufactured" by foreign firms had to be assembled in the United States and had to contain at least 50 percent U.S. components for local transit authorities to be eligible for the 80 percent federal aid they receive in buying transit cars.
Foreign firms have entered the U.S. market in the absence of domestic firms, they have not driven domestic firms from the field, Justice argued.
In fact, Justice suggested that Budd might be seeking through its petition to gain almost exclusive rights to the potentially huge U.S. business.
Herman Foster, associate corporate counsel for Budd, said Thursday that despite the setback at the trade commission "I will have to recommend (to the Budd board) that we vigorously pursue this action." The U.S. Court of Customs would be the next logical stopping point.
New subways are under construction in Washington, Baltimore, Miami, Atlanta and Buffalo. New cars are desperately needed or on order in Boston, New York, Philadelphia, Chicago and Cleveland. Both Detroit and Los Angeles have serious subway plans which have received preliminary federal blessing. Honolulu and San Juan are looking to subway systems in the future.
Officials at the Urban Mass Transportation Administration, an agency of the U.S. Department of Transportation which doles out the federal aid for rail car purchses, estimate that orders for cars in the United States have been averaging 250 a year (excluding Amtrak) for the past five years.
With the impetus of new systems and the rebuilding of old ones, plus increased energy-crisis-generated emphasis on upgrading commuter rail lines, the UMTA estimates that car orders will average about 300 a year (excluding Amtrak) in the next decade -- assuming the approval of windfall-profits-tax money for transit.
With that future, why is only Budd left in the business?
There are a number of reasons, but the biggest ones appear to be uncertainties of the past, the wide variety of specifications manufacturers most meet to compete in the United States, plus heavy losses some manufacturers claim to have suffered on fixed-price contracts.
During the same five years, four U.S. companies have dropped out of the business: Rohr Industries, Pullman-Standard, General Electric and Boeing-Vertol. Even Budd's claim to being a U.S. company is somewhat suspect because Budd is a wholly owned subsidiary of a German firm, Thyssen A. G. Several of those carmakers cited the uncertainty of federal funding programs for mass transit as one of the reasons. Both GE and Boeing-Vertol, however, have retained their plant facilities and conceivably could return to the business in the future.
A problem all manufacturers have cited at one time or another is the lack of a standard U.S. transit car.
In San Francisco, the Bay Area Rapid Transit cars built by Rohr run on a wider gauge than those in the rest of the world. Washington Metro's cars are shorter than everybody else's because it was believed money would be saved by building shorter tunnels.
Rohr Industries, which built Metro's first 300 cars plus the BART cars, bowed out of the business after it lost the Metropolitan Atlanta Rapid Transit Authority contract in the French firm, Franco-Belge.
Rohr is pursuing a $50 million claim against Washington Metro, charging essentially that Metro-ordered modifications added to the cost of the cars. Industry sources believe that Rohr shaved its bids on the Metro fleet to nail down a strong East Coast presence in the early 1970s, then got caught with its fixed-price contract in years of extraordinary inflation.
According to the International Trade Commission's report denying the Budd petition, "Pullman-Standard has indicated that a major reason for their withdrawal from the market was the nature of the designing process for rail passenger cars." A Pullman official is quoted as saying that "the negotiations to finalize design can often become unreasonably burdensome, causing delays and confusion."
Mark Aron, deputy general counsel for the DOT, said "you hear every theory -- that foreign companies are subsidized, that they are dumping, that they get tax breaks, etc. -- but every time we look we find it is not a subsidy and that some of their industrial standards are higher than ours."