Pressure to ‘Buy American’ Builds for Transit Project : Business: Foreign firms’ contracts for Metro Rail work spur efforts to require jobs for Southland.

Step aboard the Metro Rail’s Blue Line and you can see that each of the 54 trolleys has been named for a different Los Angeles County city, from Hermosa Beach to Hawaiian Gardens. It is a homey homage to the communities making up one of the largest manufacturing regions in the world.

But scan down and you can see another plaque bearing a different place name: Japan. That is where the Blue Line car bodies were made.

Check behind the car’s seats and you will discover, stamped in the metal, the country where they were manufactured: Canada. Peek under the trains, and you will find motors from Brazil. On the roof, a pantograph, or power-collecting arm, made in Germany.

Los Angeles County has embarked on one of history’s most ambitious public works projects, a $150-billion effort to build from scratch the nation’s second-largest rail transit system, its largest car-pool lane network and its biggest bus fleet--all in about a decade.

But a growing number of elected officials, union leaders and others--including unemployed, tax-paying aerospace engineers in Long Beach and assembly line workers in Van Nuys--wonder if the county is getting as much good as it should from the program.

Despite the growing pool of skilled workers gathering outside shuttered aerospace and automobile plants in Southern California, none of the region’s shiny new, expensive, labor-intensive subway cars, light-rail trolleys or commuter trains will be built here.

And unless something drastic changes, none of the 5,600 buses that local bus operators plan to buy in the next 20 years--most of them pioneering “clean fuel” buses that will be copied by bus companies in other polluted cities--will be built here, either.

Nor will any of the new generation of electric cars be manufactured in Southern California, even though the smog-choked region has single-handedly created a mass market for such vehicles by adopting the world’s strictest air-pollution regulations.

The reasons are basic. Until recently, no U. S. company made new rail cars, and now the only one that does must compete with foreign companies boasting proven track records. Domestic bus and car makers, meanwhile, have idle factories, so they say it is uneconomical to add new ones in Southern California, even if the region is their best market.

But with the continued recession, local elected officials and others, irked by a controversial decision last month to buy 41 Metro Rail Green Line cars from a Japanese-owned firm, are hounding the Los Angeles County Transportation Commission to spend at home more of the $150 billion it plans to spend on transit during the next 30 years.

“We Americans need the jobs these rail contracts provide, and we Americans can do those jobs,” said Los Angeles City Councilman Nate Holden, one of the most vocal proponents of the effort to spend transit dollars in California. “There’s no reason why the LACTC should feed American tax dollars into the Japanese economy.”

The chorus has been joined by a variety of people, from Los Angeles Mayor Tom Bradley to the president of the American Assn. of University Women and from Rancho Palos Verdes Mayor Pro Tem Jacki Bacharach to the chairman of California Common Cause.

LACTC member Gerry Hertzberg, who was named to the commission by Supervisor Gloria Molina, said he plans to ask the panel Jan. 22 to reconsider its decision to award the Green Line car contract to Sumitomo Corp. of America.

Seeking to stem the criticism, the LACTC is racing to adopt policies--some of them written before the current uproar--that will favor local companies in future contract competition. Under its proposed local business enterprise program, on some contracts Los Angeles-based companies would be awarded the work as long as its bid was no more than 5% to 7.5% higher than the lowest bidder.

In theory, the advantage would compensate local companies for the higher cost of doing business when located in Los Angeles. The amount of the advantage would depend on how much of the entire project would be performed by local companies.

At the urging of LACTC board member Nick Patsaouras, the commission also is considering using recently created federal grants to merge several transportation research programs at local universities into an Advanced Transportation Research Center.

The center could research solutions to Southern California’s problems with congestion, pollution, safety and long-distance commutes, Patsaouras said. It also could serve to foster the local manufacture of electric cars, clean-fuel buses, rail transit vehicles and the computers and software for electronically monitored “smart highways”--just as Stanford University planted the seed for Silicon Valley.

“What better location for such a transportation center than in Southern California?” he asked, noting the region’s recently idle aerospace and automobile manufacturing workers. “Put them to work, here in Southern California, designing and building these transit systems bought with our local tax dollars.”

A consortium of local business groups has a plan called the L. A. Millennium Project that goes a step further. It urges the Transportation Commission to rethink fundamental parts of its ambitious 30-year transportation-improvement plan.

“Just about all of the pieces are in place right now to make this vast development project a reality,” the 14-page plan outline asserts. But, it adds, the LACTC must retract its plan to equip the Green Line with driverless cars, and then it must settle on standard, interchangeable subway, trolley and commuter rail trains.

The Transportation Commission has authorized four kinds of trains and is considering two additional, incompatible technologies for future lines. Critics have argued that this will increase the cost of buying, maintaining and operating the system.

“Once we settle on (standardized) technologies,” the report concludes, “then we create enough demand for each . . . to make it economical for a firm to locate its manufacturing facility in the Southland. We need to create a large enough unit order, over a long enough period of time, for it to make good business sense to locate a manufacturing facility here.”

Bradley was able to persuade the two companies bidding for the Green Line contract to agree to establish assembly plants in Los Angeles.

Even with that pledge, Sumitomo said only about 22% of the money it receives for building the cars will go to U. S. subcontractors. Bradley voted in favor of losing bidder Morrison-Knudsen Corp. of Idaho, which pledged that 66% of the contract would be spent in this country.

Sumitomo’s victory in the contest to build the Green Line cars illustrates the difficulty in trying to manipulate the region’s large transit program to create transit manufacturers in the area.

Sumitomo won the contract largely on the strength of a recommendation by staff engineers at the Rail Construction Corp., the Transportation Commission’s rail-building subsidiary. The engineers’ support was based on a subjective assessment of each bidder’s management skills and experience.

That process angered Bradley and many other critics, including Morrison-Knudsen Chairman William Agee. In a scathing letter to LACTC board members, Agee said no U.S. company will ever be able to win a train-building contract if it must have a lot of experience because the only way to get experience is to win contracts.

Morrison-Knudsen, which has experience in rebuilding transit cars and locomotives, lost many points in the Rail Construction Corp.’s evaluation because of its lack of experience in building new cars. A similar criticism was made about the electric-motor subcontractor, General Electric Co.

“If Los Angeles County is serious about developing local business and increasing minority business, it . . . must make a real commitment to do so,” Agee wrote board members after the vote in favor of Sumitomo last month.

“To do what the RCC staff has done--to base a contract selection nearly entirely on what American companies or their minority subcontractors have accomplished to that point in time--effectively discriminates against the American companies and minority subcontractors which are attempting to expand into new areas vital for America’s competitiveness. . . . It perpetuates a cycle that is nearly impossible to break.”

Even with improved intentions, remaking Los Angeles County into “Transportation Valley” will not be easy.

For one thing, there are not a lot of major train-building contracts left. The vehicles for all the train lines scheduled to open this decade have been ordered--subway cars from Italy, trolley cars from Japan, and commuter rail cars from Canada.

For another, it can be tricky to define a “local” or “domestic” company. Sumitomo would qualify as a local business under the LACTC-proposed “Buy Local” program because its subsidiary has a permanent office downtown, said Travis A. Montgomery, the commission’s economic development specialist.

At the same time, the local business enterprise program will only apply to relatively small or unusually complicated projects. State law requires that government contracts worth $50,000 or more must be awarded to the lowest qualified bidder unless the project is so innovative that factors other than cost can be considered.

Montgomery also said that the bus manufacturers he has talked to are reluctant to relocate factories to California because their usable factories are operating well below capacity. He said he is trying to woo them anyway with promises of cheap land and tax credits while also implying that local manufacture can be a deciding factor in choosing a contractor.

“When you add the local business enterprise (benefit) to that, it could be enough to bring them here,” he said. “We’re going to build 5,600 buses here over 20 years--more than anyone else in the country, I think--and that should give us some leverage in bringing a site here.

“Once we have a toehold, there is no reason we can’t start selling buses to San Diego and San Francisco . . . or all over the country,” he said.

The LACTC is eager to point out that a lot of local transit money has been spent on American and California subcontractors, and that will continue.

On Blue Line cars, U.S. companies made the wheels, doors, windows, brakes, air conditioners, intercoms and radios. About 22% of the cost of the controversial Green Line cars will be passed on tS. subcontractors--12.5% in Los Angeles County.

At the same time, most large construction contracts--usually the costliest part of transit projects--have been awarded to American companies. Several have gone to Morrison-Knudsen’s construction subsidiary. Many others have been won by Tutor-Saliba Corp. of Sylmar.

However, workers on the project note that even when a U. S. firm is the general contractor, it often builds the tunnels and stations with Korean steel and Japanese cement.