A year ago, the people of Barre, Vt., dug deep in their pockets to help lure a Canadian subway car assembly plant to town. The $4.2 million plant occupies the top of a grassy peak overlooking the Rock of Ages company, a granite quarry and tombstone maker that symbolizes the hard times this area is trying to escape.
Barre is attempting to diversify from the dwindling granite business, and the plant opened by Bombardier Inc. of Canada added about 150 jobs in the area surrounding Barre (pop. 7,000).
Hopes soared in Barre when Bombardier won a $650 million contract from the New York City transportation authority to assemble 825 subway cars--more than three times the total orders previously at the Barre plant.
But now it appears Barre may face disappointment because of an international incident. Confronted by stiff political pressures to preserve American jobs, the Treasury is considering moves that could take the lucrative New York contract from Barre and give it to Budd Co. of Troy, Mich.
Buy-America advocates have championed the issue as keeping American jobs in America, meaning with Budd, and the controversy has added to the rising trade tensions between the United States and Canada.
Almost lost in the fuss is a crucial fact, the people of Barre are saying: Budd is not an American firm. It is a subsidiary of a German-owned firm just as Bombardier Corp. in Barre is a subsidiary of the Canadian firm. The Barre workers are Americans, too, they protest.
"Orders of this size come by once in a decade," says a spokesman for Sen. Donald Riegle (D-Mich.), who wants Budd to get a crack at the contract. The main difference between the two foreign-owned firms is that the subway cars made by Budd would have 80 percent U.S. content compared with 40 percent U.S. content if made by Bombardier, the spokesman said.
The administration is looking into the case because the Canadian government provided low-interest subsidized loans to New York City to help get the subway car deal for Bombardier at interest rates well below the minimum level formally agreed to by the major industrial nations. The administration is considering matching the Canadian subsidy to put Budd in an equally competitive position.
Treasury Secretary Donald Regan must decide before July 15 whether the Export-Import Bank can match the subsidy. Then the bank's governing board must decide whether it wants to grant the subsidy, and the New York authorities must determine whether they want to cancel the Bombardier contract--which they can do up until next week--and offer the contract to another firm.
However, the people of central Vermont, awaiting the federal government's decision, feel their well-being teetering. If Bombardier keeps the contract, plant employment will double, but if it loses the deal, there may be layoffs, a company spokesman said.
The townspeople were so intent on getting Bombardier to move there that they raised $200,000 and lent it to the Canadian firm at 4 percent interest to show it was acting in good faith, said Arthur Kreizel, secretary of development and community affairs for the State of Vermont. In addition, the state spent $225,000 to train the workers at the plant.