Legislation passed by federal lawmakers on Wednesday raised serious questions about the future viability of a massive subway car manufacturing facility in Springfield that is producing new Red Line and Orange Line cars.
Backed by the Chinese government, CRRC Corp. opened its 200,000-square-foot Springfield factory in 2017 as part of its agreement to supply the cars to the Massachusetts Bay Transportation Authority. It had about 120 workers at the end of 2018, and predicts employment will top 300 by 2020.
But a provision in the National Defense Authorization Act, which the House passed Wednesday, prohibits the use of federal transit dollars to procure buses and railcars from Chinese state-owned or state-controlled enterprises, according to a statement from the office of US Representative Harley Rouda, a California Democrat.
Rouda said the inclusion of such a provision is a “win for American companies, workers, and our national security.” The US Senate will vote on the $738 billion defense policy bill next.
President Trump has said he would sign the bill after striking a deal with House Democrats.
The legislation does provide a two-year-window allowing for transit agencies to procure contracts from Chinese-owned businesses, and also makes exceptions for transit agencies like the MBTA that have existing contracts, according to the office of US Representative Richard Neal, a Springfield Democrat, who has strongly supported the facility. He said he pressed for the exceptions as part of negotiations on the broader bill.
Whether such provisions will be enough for CRRC’s Springfield location to stay in business remains to be seen. Messages left with a company spokeswoman were not immediately returned Wednesday night.
State Representative Shawn Dooley, a vocal critic of CRRC, thought the federal legislation would be the kiss of death for the Springfield plant.
“This is a flat-out ban on any nonmarket economies doing rail or bus,” said the Norfolk Republican. “Unless CRRC starts making toasters in Springfield, I don’t see how that assembly facility stays in business.”
He said that Chinese government-backed companies like CRRC are able to compete unfairly.
“They’ve subsidized their own manufacturing plant in order to put free-market companies out of business,” he said.
While Rouda said the legislation would “stop the flow of Americans’ taxpayer dollars to Chinese state-owned or state-controlled companies,” Neal claimed a victory of his own with the bill, dismissing Rouda’s statement as “nonsense.” He called CRRC “important to Springfield and the region.”
“These railcars are being built for Massachusetts residents by Massachusetts residents at a competitive wage with negotiated health and retirement benefits,” he said.
Neal framed the exceptions in the legislation, which he pressed for as a victory for CRRC and Springfield. CRRC has secured contracts for train cars in Boston, Philadelphia, and Los Angeles.
Neal said the company would still be able to take on work from those cities and potentially more transit systems.
“During those two years they can secure a lot of additional work,” Neal said. “This two-year window, coupled with all the work they’re going to continue to have . . . I think there’s still [a chance] for them to continue to expand and grow.”
In a statement, John Scavotto Jr., business manager of Sheet Metal Workers Local 63, hailed Neal’s “tenacity on Capitol Hill,” saying the congressman saved hundreds of jobs in Western Massachusetts through his work on the bill.
Transit agencies sometimes take years to prepare fleet procurements. But Neal said CRRC will have an incentive to make as many competitive bids as possible for manufacturing work before the two-year window expires. Neal also acknowledged that he shares some of the national security concerns with CRRC’s critics, but, “that’s what the CIA and the FBI are for.”
Earlier this year, the Senate’s top Democrat called for federal authorities to probe whether a plan for new subway cars built by CRRC, which is one of the world’s largest train makers, could pose a threat to national security.
While there are no US-based manufacturers for passenger trains, freight manufacturers that worried Chinese companies would undermine their businesses with low bids have lobbied for laws limiting facilities like CRRC’s.
CRRC, which has an $843 million contract with the MBTA, is manufacturing major components of the 404 new railcars in China, before shipping them to Springfield for full assembly. So far, two six-car sets on the Orange Line have entered passenger service, though both have been pulled amid mechanical concerns about a wearing pad between the cars’ trucks and bodies.
The Red Line, which has even older subway cars, is also due for a full fleet replacement by the end of 2023.
Material from the Associated Press was used in this report. Danny McDonald can be reached at firstname.lastname@example.org. Follow him on Twitter @Danny__McDonald.