Business
5:10 am
Fri September 28, 2012

Rochelle Company Selected for Big Rail Car Contract

Rochelle-based Nippon Sharyo has been named the intended recipient of a $352 million contract to build 130 bi-level passenger railcars to accommodate high-speed rail expansion in Illinois and two other Midwest states as well as California.


“It is good news for Illinois that the intent to award has gone to Illinois-based manufacturing company Nippon Sharyo,” Gov. Pat Quinn said. “These state-of-the-art passenger railcars will help Illinois and other states across the nation provide faster, safer and more convenient train service to millions of daily travelers, as well as support hundreds of Illinois jobs.”


Eight Illinois routes with Chicago as one terminus will operate with the new cars, including future Amtrak routes through northern Illinois to Dubuque and to the Quad Cities. Other Illinois routes are the Illini/Saluki to Carbondale, the Lincoln Service to St Louis), and the Illinois Zephyr/Carl Sandburg to Quincy. Routes to Michigan are the Blue Water to Port Huron, theWolverine to Detroit and Pontiac, and the Pere Marquette to Grand Rapids.


The Missouri River Runner between St. Louis and Kansas City also will use the cars.


These routes will receive 88 of the new railcars. The remaining 42 railcars will be used on three routes in California. California and the Midwest Coalition pooled resources for the negotiations to acquire the railcars at lower costs because of the higher volume under one contract. Sumitomo Corporation of America submitted a bid of $352,276,000, or approximately $2.7 million per railcar.


“We are proud to partner with Caltrans and the Midwest Coalition to cost-effectively procure the state-of-the-art passenger railcar equipment needed to address the increasing demand for efficient and convenient passenger rail service throughout the state,” said Illinois Transportation Secretary Ann L. Schneider.


“With Amtrak ridership at record levels in Illinois and the official purchasing process of the railcars under way, this massive project will continue to boost America’s manufacturing and assembling industry and provide improved travel options for the entire Midwest,” she added.


The Notice of Intent to Award is only one step in the contract process. Caltrans and IDOT must conduct a federally required Buy America pre-award audit to verify assembly locations and manufacturing facilities for railcar components. Buy America rules require that all 130 cars are assembled and all major components are manufactured in the United States.


The Federal Railroad Administration must approve the audit before the contract is awarded. Sumitomo Corporation of America also will be required to submit insurance policies and performance bonds. A fully executed agreement is expected to be in place by mid-November.


The first railcars are scheduled for delivery in the fall of 2015, with the final car expected to be delivered in early 2018.


“These 130 bi-level railcars will revitalize America’s passenger rail manufacturing industry base by creating new jobs up and down the rail supply chain and fostering a stronger market for passenger rail,” said U.S. Secretary of Transportation Ray LaHood. “They will improve passenger service and provide more flexibility for train operations and, because multiple states have – for the first time – pooled their resources and settled on a standardized design, this top-of-the-line equipment can be purchased, repaired and maintained for the lowest possible price.”


Funding for the new rail equipment comes from Federal Railroad Administration grants totaling $808 million. Of these funds, $551 million was reserved to purchase the bi-level railcars; the remainder is slated to fund future locomotive and “trainset” procurements as well as to support project management and oversight expenses.


“We congratulate Nippon-Sharyo for submitting a competitive bid on this unprecedented, multi-state procurement of 130 premium, bi-level passenger railcars, which will be essential to addressing ever-increasing transportation needs of the 21st Century,” Secretary Schneider said. “Without Governor Quinn’s leadership and millions invested through the Illinois Jobs Now! capital program, expansion of the railcar industry production in Illinois and the support of hundreds of railcar assembling jobs would not have been possible.”


Nippon Sharyo opened its manufacturing facility in Rochelle in July 2012.  Illinois helped lure the company to the city with $10 million in tax credits, job-training funds, and infrastructure improvements, including $5.5 million for a rail spur from the Burlington Northern Santa Fe main line to the new factory.  The state also facilitated a contract between Nippon Sharyo and Metra to build 160 passenger railcars for the Chicago-area rail system.


Nippon Sharyo has said it expects to employ close to 300 people at its Rochelle plant when it reaches full operation, sometime in 2013.