Early in President Obama’s first term, transportation secretary Ray LaHood traveled to Portland, Ore., stood before American workers in red, white and blue hard hats and made a pitch for their gleaming back-to-the-future product.
“These are the first streetcars to be manufactured in America in nearly 60 years,” LaHood told the cheering crowd in 2009. “This is the dawn of a new era for public transportation in the United States, a new opportunity to claim ‘Made in America.’ That is a great thing to be able to say!”
With the country just emerging from the Great Recession, it was a moment meant to show how federal backing could spark a rebirth in American manufacturing. But the years-long effort to help the firm, United Streetcar, has instead become an example of dashed Washington ambition.
Company executives and their patrons greatly overestimated the size of the market they could capture and underestimated the difficulty of starting a homegrown streetcar business from scratch. Executives hoped to sell 10 or 15 of the 8-by-66-foot vehicles each year and create hundreds of new jobs as communities embraced a national streetcar revival. The company’s president at the time, Chandra Brown, set her gaze further. “One day, we can’t wait to be exporting these cars,” she said during another LaHood visit in 2011.
Instead, the company built just 18 streetcars for three customers — the District, Tucson and Portland — and was late delivering them to all three cities. There are no new orders, and the facility built to produce up to 24 streetcars a year is dormant after the last Portland car was shipped out Nov. 21. Some workers have been laid off, others have been reassigned to United Streetcar’s parent company, Oregon Iron Works, which builds bridges and boats.
“We made a significant investment being in the streetcar business, and unfortunately there hasn’t been a marketplace that would justify that investment were we looking at it with the clarity of today,” said Oregon Iron Works President Corey Yraguen.
Or, as LaHood said, “maybe our calculations weren’t right.”
To many in Portland — which LaHood christened the “transportation capital of America . . . the green capital of America . . . the streetcar capital of America” — it seemed like a good idea.
The city is the cradle of what supporters call the “streetcar movement,” an effort to make streets and the areas surrounding them more people-friendly and vibrant with a new take on a throwback mode of transportation. Their basic idea is to lay tracks in existing traffic lanes to give the public an alternative to driving and to draw new development and a sense of community along the line.
But as Portland worked to put a streetcar system in place in the 1990s, they had to go to the Czech Republic to find the streetcars they needed.
“That was a little awkward, with different accents and six time zones, because all of these things require fine tuning,” said Rep. Earl Blumenauer (D-Ore.), who helped launch Portland’s streetcar system as a city council member and has been a relentless streetcar booster in Washington.
While scores of officials from other cities, including the District, visited Portland and came away hungry to replicate the city’s streetcar experience, Blumenauer’s congressional delegation colleagues teamed up on an effort to promote local streetcar production.
In 2005, Rep. Peter DeFazio (D) arranged for $4 million in earmarks, or congressionally directed grants, for Portland-area transit officials to buy an American-made streetcar. Competitors tried to get the contract. But the work ended up in the Portland suburb of Clackamas, as intended. United Streetcar was launched.
The company was still deep into building its streetcar prototype as Blumenauer rode along in candidate Obama’s campaign bus and talked up his “livability” agenda.
“The greatest day for Blumenauer was when Obama was elected,” LaHood said.
A day or two after the new president nominated LaHood as secretary of the Department of Transportation in late 2008, the former Republican congressman from Illinois got a call from Blumenauer inviting him to his office.
“Portland was more than just automobiles. It was cycling, it was streetcars, it was walking paths,” LaHood said. “Earl really convinced me DOT really needed to do more than build roads and bridges. We, in a sense, followed Earl’s lead.”
Then Washington started taking actions that looked promising for streetcar backers broadly — and United Streetcar in particular.
LaHood’s department changed internal rules that had been thwarting streetcar projects during the George W. Bush administration. Those rules used travel time as a key criteria for certain federal dollars.
“Streetcars don’t go faster than a local bus, so streetcars could almost never demonstrate they were cost-effective,” said Sean Libberton, a longtime Federal Transit Administration official who now works for the infrastructure firm Parsons Brinckerhoff. “Now its benefits measure is ridership. You still need a lot of riders to be cost-effective,” he added, but streetcars “are now in the game.”
Under Obama, impacts on the environment and economic development were also key criteria. “A lot of streetcar projects start as economic development projects, not transit projects,” Libberton said.
Portland’s streetcars had struggled under the old rules. But with the Obama administration newly in place, Portland received $75 million to expand its system. Cities such as Salt Lake City and Cincinnati followed.
“These streetcars will transform communities, transform neighborhoods and provide the alternative transportation people are looking for,” LaHood said. More than $500 million went to over a dozen streetcar projects from 2009 to 2014, a sliver of overall highway-heavy transportation spending but still an important infusion.
Critics question the efficiency and execution of many streetcar projects. One downside that has come up with the District’s H Street/Benning Road line, for instance, is that streetcars can gum up, and get caught in, already busy traffic lanes. In nearby Arlington, public skepticism of the high cost and uncertain benefit of a streetcar line caused officials to cancel an entire project this month.
Advocates for building amped-up bus service known as bus rapid transit, which sometimes includes dedicated travel lanes, say such projects can avoid some of those issues and spur more development for each dollar invested.
But with $48 billion in transportation projects as part of the economic stimulus, “we didn’t have to pick and choose,” LaHood said.
The Obama administration seized on United Streetcar’s story. In April 2011, administration officials promoted the firm on the White House Web site with a glowing Department of Transportation-produced marketing video.
“President Obama has challenged Americans to dream big and build big. United Streetcar has risen to that challenge, and they’re doing it all with American parts, labor, and ingenuity,” LaHood wrote in the accompanying blog post.
The administration was in the midst of ratcheting up the pressure on local officials to adhere to “Buy America” rules for federally funded projects. Those rules meant that more than 60 percent of the value of a streetcar’s components had to be from the United States, and they had to be assembled in the country.
The message was filtering down.
“Because of the Buy American clause . . . we went with Oregon Iron Works,” said Shellie Ginn, who managed Tucson’s streetcar project. The total amount of Tucson business for United Streetcar: more than $30 million, including eight streetcars, spare parts and warranties, Ginn said.
In the District, a Czech competitor, Inekon, appeared to beat out United Streetcar in a competition to sell two streetcars to the city’s government. The Czechs had also sold three cars for the District’s streetcar system years earlier. They said they could assemble the latest cars in Iowa.
But District officials took the unusual step of simply throwing out the Czech firm’s higher-scoring bid.
“The wrong folks kept winning,” said D.C. Council member Tommy Wells (D-Ward 6), adding that federal officials were “very clear. They wanted Oregon to get the award.”
The District then relied on an obscure purchasing provision to buy the cars through an existing contract between Portland and its hometown manufacturer.
Getting contracts was one challenge. The company also struggled under the weight of the work itself.
They started with a Czech design. They had some early trouble finding engineering talent and other qualified workers. Executives pushed efforts to buy parts from 300 suppliers in 32 states. But that supply chain slowed them down, said United Streetcar President Kevin Clarke.
When company technicians discovered that the stiffness of some suspension springs was slightly off, “we had to go off and re-source what ended up being 64 of these massive 100-plus-pound springs,” Clarke said.
Hairline cracks were also showing up in parts meant for car noses.
“That’s one massive monolithic piece of fiberglass. We spent months working with our supplier of those to get the manufacturing process . . . ironed out where we had a fiberglass shell that will last 30 years,” Clarke said.
Another problem: unlike in Europe, the United States lacks uniform standards for the basic features of a streetcar. That means customers might ask for longer, wider or faster vehicles or those that can handle different loads or ride on different suspensions.
“You’re essentially designing a new vehicle. [It’s] very expensive to set up a manufacturing line and only build three or five of a particular product type,” said Yraguen, the Oregon Iron Works president. Drivers looking to buy a Ford Explorer can select from different models and colors, he said. But “you don’t get to say, ‘This is great, I’d like the steering wheel on the other side and I’d like it two inches taller.’ ”
The blown deadlines soured relations with some buyers.
The District’s city administrator, Allen Lew, oversees development of the streetcar system, which has faced repeated setbacks and has yet to open. Buying the streetcars “took forever, because we went Buy America,” Lew said, though it was only one of many delays. “The last thing I want is to order 60 of them from the same plant that can’t deliver three on time.”
When he heard that message from Lew last year, Clarke told him the company had been through a “massive learning curve” and would be “much, much quicker” next time.
“The thing that breaks my heart right now is we figured out how to pull together all these American resources and American people to build a very nice streetcar, and we don’t have the orders to build more,” Clarke said.
Will there be a next time for United Streetcar?
Company officials say the economic downturn and lower-than-expected federal spending undercut them.
But so did competition.
The company lost out in Seattle to Czech firm Inekon, which won a bid to sell the city streetcars that can run for stretches without overhead wires. United Streetcar was also edged out in Cincinnati by CAF USA, a subsidiary of a large Spanish firm, which has a production facility in New York. United Streetcar officials noted the Seattle order is also behind schedule.
There’s also American-owned competition. Pennsylvania-based Brookville Equipment, which has refurbished historic streetcars in San Francisco, signed a deal last year to sell two streetcars to Dallas.
“We’re in hibernation,” Clarke said, but open to selling cars based on the designs they’ve already invested in. He said they’d consider a new design for a big enough order.
Parent company Oregon Iron Works is in better shape than before it got into streetcars, Yraguen argued, with more employees and ongoing work making nuclear components and combatant craft for U.S. Special Forces. Executives said they stand behind their streetcar warranties and will continue offering support.
Portland congressman Blumenauer said the U.S. government is making the same mistake with streetcars it made decades ago when it essentially ceded the market in light-rail cars to big foreign competitors. Washington should have bought a large batch of rail cars and made them available to cities cheaply, Blumenauer said.
“We would have two or three American light-rail manufacturers in the United States, rather than just Siemens and Bombardier,” he said, referring to the German and Canadian transportation behemoths.
Now the U.S. government should order 500 or 1,000 streetcars and give a few companies the chance to produce 50 or 100 each, Blumenauer said. That would get production humming. Cities would only get to choose the “color and carpet.”
He’s been pushing the idea despite Congress’s recent history of failing to pass major, multi-year transportation bills. Lately, there’s been one short-term extension after another. “You don’t build world-class infrastructure six months at a time,” Blumenauer said. “It drives me crazy.”
In recent weeks, Blumenauer floated the idea of such a large purchase in a meeting attended by the president of United Streetcar.
“That would be wonderful,” Clarke said. “I heartily support that. I support Earl Blumenauer and his efforts.”