Philadelphia cancels a train order with CRRC China

The Philadelphia Transit Authority is cancelling a train order with CRRC China. Philadelphia’s transit agency canceled a major train order because CRRC China was more than four years late and failed to deliver any cars.

The Southeastern Pennsylvania transit authority “terminated with cause” the contract with the U.S. subsidiary of Chinese railcar manufacturer CRRC for 45 double-decker commuter cars, reports the Philadelphia Inquirer.

Bid under Bombardier, contract later inflated

The contract was awarded in 2017, and the first cars were supposed to be completed in 2019, but none have been delivered. The USD 185 million contract was awarded at USD 34 million underbid to Bombardier, the other finalist in the auction, and came at a time when CRRC had not yet delivered any equipment in North America but had firm orders for equipment in Boston, Chicago and Los Angeles.

SEPTA said in a statement that it was “evaluating its options for recovering the funds that were spent on this project.” That’s more than USD 50 million, the Inquirer reports.

The SEPTA locomotive cars, CRRC’s first commuter cars for North America, were supposed to have 130 seats and were intended to solve the crowding problem that has developed on SEPTA commuter lines since 2000. By 2019, they were a year behind schedule, and by 2022, the Inquirer reports, SEPTA Executive Director Leslie S. Richards had reported problems with wiring, emergency exit windows, and seal and brake testing failures.

Quality problems at Buy America

CRRC, a state-owned company, is the world’s largest manufacturer of rolling stock. SEPTA’s contract was with CRRC MA, a subsidiary of the Chinese firm that opened a plant in Springfield, Massachusetts, to meet Buy America requirements for an order of 404 cars for Massachusetts Bay Transportation Authority rapid transit equipment. The first part of this order was placed in 2014 and remains years away from completion; it has been plagued by quality control and operational issues for the railcars that have arrived in service.

Cheap at first, expensive afterward

In March, the MBTA agreed to pay USD 148 million on top of the original USD 870 million from the two parties in an effort to see it completed by 2027. Without the additional funds, the MBTA said the order would have been completed no earlier than 2029.

Subsequent diplomatic tensions between the U.S. and China, security concerns, and congressional and industry worries about CRRC’s potential for artificially low pricing – along with problems with fulfilling its first U.S. contracts – have essentially driven the Chinese manufacturer out of the U.S. passenger rail market.

One of the provisions of the agreement with the MBTA to complete the Red and Orange Line cars gives the transit agency the option to buy the Springfield, Massachusetts, plant if CRRC sells it.

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