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Metro awards rail contract to Japanese firm despite union protests

April 30, 2012 |  4:13 pm

MTA awards contract to Japanese firm
In a break with Los Angeles' organized labor movement, Metro board members Monday awarded a crucial $890-million rail car contract to a giant Japanese firm that unions claim will create fewer jobs than a competitor and might violate federal requirements to use American workers.

Metro officials say the contract with Kinkisharyo International to build 235 cars is critical for opening new light rail lines on time and replacing aging equipment on existing systems.

The new light rail vehicles will be needed for a variety of projects, including the planned Crenshaw Line, the Expo Line to Santa Monica and extensions of the Gold Line. The contract also will allow the Metropolitan Transportation Authority to replace an aging fleet of 69 cars on the Blue Line between downtown L.A. and Long Beach.

“We are out of slack, and the past two years have used up what slack we had,” said Art Leahy, Metro’s chief executive. “We are on the edge of slipping behind our construction schedule.”

Board members selected Kinkisharyo on the condition that two bid protests by its competitors -- Siemens Industry Inc. and CAF USA Inc. -- are resolved in the weeks ahead and that Metro receives a favorable review of Kinkisharyo’s bid from the Federal Transit Administration. The FTA is reviewing whether the company will violate American worker requirements by doing climate testing of certain rail cars in Japan and not the United States.

Metro staff has already rejected the bid protests as unfounded. Both companies have appealed to Leahy, who said he should rule in two to three weeks. Based on discussions with FTA officials, Leahy said he was confident that Kinkisharyo’s bid would comply with federal rules.

The board voted 8 to 2 in favor of Kinkisharyo. Member Richard Katz abstained. L.A. Mayor Antonio Villaraigosa, the Metro board chairman, and L.A. County Supervisor Mark Ridley-Thomas, another board member, did not vote because of potential conflicts of interest. Two other board members were absent.

[Updated, 5:40 p.m.: Later in the day, Metro officials said the vote tally had been misrecorded. Only Villaraigosa did not vote because of a potential conflict of interest. Ridley-Thomas and two other board members were absent.]

Labor and civic organizations, including the Urban League and the Southern Christian Leadership Conference, opposed the Kinkisharyo bid, saying the federal and local tax dollars that will pay for the rail cars should be used to create jobs in California, not Japan.

They said that Siemens, which has a factory in Sacramento, would create up to 1,122 jobs, open a new factory in L.A. and invest $5 million in job training programs. The employment figure is based on new hires, plus existing jobs that would be sustained if Siemens won the bid.

“Common sense and good business practices would dictate that Metro invest in our county and vote against sending jobs overseas,” said Maria Elena Durazo, executive secretary-treasurer of the Los Angeles Federation of Labor, AFL-CIO. “Too many of our families have not benefited from the recovery yet."

Transit officials said Kinkisharyo’s was the best offer in terms of price, project management and on-time delivery of rail cars performance. CAF’s bid was about $785.6 million. Siemens' was $940.6 million.

Metro’s analysis shows that the Siemens bid would create 391 new jobs, Kinkisharyo would generate 348 and CAF 205. Metro also contends that the overall economic benefit from job creation would be $140.6 million for Siemens, compared with $138.8 million for Kinkisharyo.

-- Dan Weikel


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Photo: Expo light rail personnel check a train before stopping vehicles and testing a street crossing. Credit: Al Seib / Los Angeles Times