Bulletin
Investor Alert

New York Markets Close in:

June 15, 2010, 1:31 p.m. EDT

High-Speed Rivalry Picks Up Steam

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Central Japan Railway Co. (9022)
  • X
    East Japan Railway Co. (9020)
  • X
    Accenture PLC Cl A (ACN)

or Cancel Already have a watchlist? Log In

By Melanie Trottman And Paul Glader

Foreign railway operators and equipment makers are gaining steam in the race for a chunk of the $8 billion the Obama administration has awarded states for high-speed rail projects, but Amtrak, which wants to remain the nation's sole operator of high-speed trains, risks getting left at the station.

On a 2½-day trip to Japan last month, Transportation Secretary Ray LaHood officially hung out the welcome sign for foreign makers of high-speed passenger-rail technology to bid on the projects.

Mr. LaHood tried out Japan's high-speed trains, including Central Japan Railway /zigman2/quotes/205638698/delayed JP:9022 +0.33% Co.'s magnetic levitation train and East Japan Railway /zigman2/quotes/201416061/delayed JP:9020 +0.40% Co.'s bullet train, and he invited Japanese companies to "bring us your expertise" and "use American workers and American facilities."

The trip also had implications for Amtrak. The struggling U.S. national railway manager, whose fastest trains run between Boston, New York and Washington at speeds of up to about 150 miles an hour, is only now forming a high-speed rail department and searching for someone to head it.

"[Amtrak] would have been the default operator as recently as 18 months ago," says Brooks Bentz , a partner at consulting firm Accenture /zigman2/quotes/201711136/composite ACN -0.19% PLC who specializes in transportation. Now, "these other entities are going to aggressively chase this."

The Obama administration wants to put 13 new, high-speed rail links between cities in Florida, California, the Midwest, the Northeast and the Northwest. The Transportation Department is working with states to plan train-service upgrades and new rail lines for trains running at speeds of 150 to 220 miles an hour.

Speeding Up See details on 10 rail corridors that could be upgraded.
  • More photos and interactive graphics

To qualify for the stimulus funding, overseas companies must hire American workers and make parts on American soil, a stipulation the Obama administration cites when asked if the global competition disadvantages U.S. companies.

"We need the experience from overseas, but the jobs are going to be developed here from the U.S," says Joseph Szabo , head of the Federal Railroad Administration, which runs rail safety and assistance programs. "The opportunities are very ripe here for joint ventures."

The program could be big enough for General Electric /zigman2/quotes/208495069/composite GE +0.86% Co. of the U.S., Siemens /zigman2/quotes/214908078/composite SI -6.10% AG of Germany and Bombardier /zigman2/quotes/208994866/delayed CA:BBD.B -2.15% Inc. of Canada each to win contracts. Few consortia have formed to bid on the projects, and partnership talks are in early stages. Most companies are waiting for more information from states before structuring bids.

Lorenzo Simonelli , president and CEO of GE Transportation, has said his company is "ready to compete" for projects involving "higher speed" rail for trains up to 124 mph and—thanks to a partnership with China's Ministry of Railways—"true high-speed" rail for trains up to 220 mph. The ministry is a leading developer of such high-speed trains in China. GE said a contract for the partnership could create 3,500 U.S. jobs.

"At least 80% of the content of any potential high-speed rail or signaling equipment would be manufactured in the U.S. or sourced from U.S. suppliers," said GE spokesman Stephan Koller , who said final assembly would occur in the U.S.

Last week Amtrak wrote to the FRA, urging the agency to "recognize the value" of Amtrak's intercity passenger rail network as a base for expanding high-speed rail. "The recent federal legislation has completely changed the playing field," said Amtrak spokesman Steve Kulm . "We realize that introduces competition for Amtrak, and we believe we can compete."

Amtrak is also looking abroad. Amtrak officials have met with several equipment manufacturers, operators and infrastructure owners based in Asia and Europe to discuss partnerships, says Mr. Kulm, who declined to elaborate. He says it has also entered agreements with several states to operate their rail service and help with project applications.

The Virginia Railway Express, which serves Northern Virginia, recently awarded Keolis Rail Services America, a subsidiary of the French national railway, a five-year $85 million contract to take over operations of its railway from Amtrak in coming weeks. The French company is also bidding to operate rail lines in Maryland and California.

Still, some U.S.-based rail experts say foreign firms may not find the bonanza they are hoping for if they try to bid on such U.S. high-speed rail projects without a partner.

The FRA's Mr. Szabo expects a mix of competition, and said, "There's clearly a role for Amtrak."

Yoree Koh contributed to this article.

Write to Melanie Trottman at melanie.trottman@wsj.com and Paul Glader at paul.glader@wsj.com

/zigman2/quotes/205638698/delayed
JP : Japan: Tokyo
¥ 15,245.00
+50.00 +0.33%
Volume: 394,500
April 22, 2021 3:00p
P/E Ratio
N/A
Dividend Yield
0.85%
Market Cap
¥2989.02 billion
Rev. per Employee
¥62.31M
loading...
/zigman2/quotes/201416061/delayed
JP : Japan: Tokyo
¥ 7,215.00
+29.00 +0.40%
Volume: 977,700
April 22, 2021 3:00p
P/E Ratio
N/A
Dividend Yield
1.39%
Market Cap
¥2710.85 billion
Rev. per Employee
¥41.03M
loading...
/zigman2/quotes/201711136/composite
US : U.S.: NYSE
$ 290.17
-0.55 -0.19%
Volume: 758,192
April 22, 2021 2:22p
P/E Ratio
34.29
Dividend Yield
1.22%
Market Cap
$193.36 billion
Rev. per Employee
$87,603
loading...
/zigman2/quotes/208495069/composite
US : U.S.: NYSE
$ 13.47
+0.12 +0.86%
Volume: 36.87M
April 22, 2021 2:22p
P/E Ratio
23.13
Dividend Yield
0.30%
Market Cap
$117.28 billion
Rev. per Employee
$459,155
loading...
/zigman2/quotes/214908078/composite
US : U.S.: NYSE
$ 119.76
-7.78 -6.10%
Volume: 750,240
April 22, 2021 2:22p
P/E Ratio
87.81
Dividend Yield
N/A
Market Cap
$3.17 billion
Rev. per Employee
$452,972
loading...
/zigman2/quotes/208994866/delayed
CA : Canada: Toronto
$ 0.91
-0.02 -2.15%
Volume: 1.64M
April 22, 2021 2:07p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.32 billion
Rev. per Employee
$176,922
loading...

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.