From: ahk@chinet.com
bob wrote:
>Adam H. Kerman wrote:
>>John Levine wrote:
>>>>Significant value is created in the design phase and the skilled
>>>>manufacturer of major components, very little of which occurs in
>>>>Hornell.
>>>Huh. I would have thought that traction motors and locomotives were
>>>major components, but opinions apparently differ.
>>Feel free to demonstrate that they design and manufacture nearly all the
>>parts for traction motors there, since you're ignoring what I'm saying.
>>As far as a locomotive, that's just a platform that valuable components
>>are assembled to. Final assembly of a locomotive is not where the major
>>value is added. In locomotive construction, the skilled labor does
>>the wiring for control systems, as an example.
>>EMD, years ago, kept the locomotive engine factory at McCook, Illinois,
>>but consolidated all final assembly at London, Ontario. The significant
>>value was added in McCook. Under Caterpiller ownership, final assembly
>>was moved to Indiana. They closed London given the demands of the auto
>>workers union. They kept McCook 'cuz cheaper labor wasn't the issue.
>>>And in any event, who else could they have picked to build train sets?
>>>Bombardier? Hitachi?
>>If the nations of the world didn't have "buy domestic" laws and the
>>United States didn't have excessive buff strength requirements that
>>effectively freeze out European train sets? What's the
>>point in speculating.
>How long have you got and how much money are you willing to pay? These
>trains are not a clean sheet new design, they are built on decades of
>experience within Alstom of both the TGV and Pendolino platforms. The cost
>of reproducing all of that experience in order to actually design these
>trains in the US would be astronomical if it can then only be used to sell
>a once-in-20-years NEC equipment order. There is a good reason why, if you
>want a 200 mph capable tilting train there are basically only three
>suppliers in the world who can meet the requirement. There simply isn't
>enough demand to support more. It's the same reason why there are only two
>global suppliers of 200+ seat airframes, three suppliers for their engines
>and so on.
>Robin
That's very well put.
I disagree a little:
One of the reasons that the domestic market died is that, when rolling
stock was ordered by private transit companies and railroads, they spread
the business around to ensure that they'd never unintentionally create a
sole-supplier situation. They were also willing to place smaller orders.
Transit agencies placed enormous orders and held the manufacturer responsible
for all design flaws, even though it was the transit agencies themselves
specifying equipment that the manufacturer had to buy from elsewhere and
had to be made compatible. Under those circumstances, manufacturers
withdrew from the market one by one, or went bankrupt. Risk was unreasonable
and reward was too small.
Expanding on John Levine's hypothetical, maybe if transit agencies had
bought smarter, the domestic transit and railcar manufacturing market
would still exist. It's still pointless speculating.
Your point about "decades of experience" was very well put. Yes, that's
what the consumer is paying for. Final assembly in and of itself doesn't
add significant value to the product. It's almost entirely irrelevant
that it takes place domestically. It's just feel-good legislation for
one's constituents.
I disagree about your airframe comment entirely. Airbus is the result
of domestic protection laws of various European countries. The supply
marketplace has been so thoroughly interfered with we have no idea
what would exist.
I don't think there's much of a market for those huge planes at all. One
of the new runways at Chicago O'Hare was built to land those things, paid
for entirely by taxes and surcharges on airline passengers flying on
planes that had no trouble landing on runways sized for the jet age
in the 1960s.
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