Rail Contract Intended as Boost to L.A. : Transportation: L.A. County commission hopes new deal with Sumitomo Corp. will allow time for defense industries to make the transition to transit.

Considering the political uproar that erupted the last time the Los Angeles County Transportation Commission awarded Sumitomo Corp. a car-building contract, the selection last week of the Japanese-owned firm to build 15 Metro Green Line cars was a bold stroke of policy-making.

Equally bold is the commission’s goal of awarding a separate contract--a $200-million, 87-car order scheduled to be approved next year--to develop an advanced transportation industry in Southern California. Bids on that phase will be taken in December.

Unlike January’s decision to buy 41 driverless cars from Sumitomo, a move that appeared to favor a foreign-owned company over a lower-priced American competitor and was later abandoned, the latest plan is designed to help revive the region’s sagging economy.

By giving the LACTC enough cars to run at least four trains an hour on the Norwalk to El Segundo Green Line in 1994, the new Sumitomo deal gives the commission time to help local aerospace and electronic companies forge new relationships with the world’s established rail car makers.

LACTC officials hope local firms will take the skills they learned in the defense and electronics industries and apply them to the growing transportation industry.

Because the interim order of 15 cars is small compared to most orders, the cost per car is high: $2.9 million. The larger order next year also may be expensive--LACTC Executive Director Neil Peterson said each car could cost $2.3 million because bidders are being asked to forsake their usual low-cost suppliers in favor of Southern California firms.

“It may cost more, but so what?” said LACTC board member Nikolas Patsaouras, a potential candidate for mayor of Los Angeles and the most ardent supporter of using transportation funds to revive the local economy. “That money will go to local companies, be regenerated locally and create jobs here.”

Los Angeles’ ambitious $185-billion transportation improvement plan, funded with half-cent sales tax surcharges and billions of dollars in state rail bonds, has created many construction jobs. Although some have gone to out-of-state workers with specialized skills, others have gone to local laborers.

Thousands of miners, electricians and laborers have been employed building the Blue, Red and Green lines, as well as freeway car-pool lanes. These jobs, LACTC officials say, have supported thousands of other workers hired by suppliers, supermarkets and related businesses.

Relatively few local jobs, however, were created by buying the trains--perhaps the most visual symbol of the public’s tax money at work. No domestic firms bid to build them, so Blue Line cars were imported from Japan, Red Line cars from Italy and Metrolink cars from Canada.

It is too early to determine how well the LACTC’s gambit on the Green Line project is working--bids are not due until Dec. 1. But there are some indications that it is reviving parts of the region’s battered manufacturing sector.

One potential bidder on the 87-car contract, Morrison Knudsen Corp., the firm that underbid Sumitomo on the first contract, announced last month that it had teamed with Lockheed Corp. and Hughes Aircraft Co. to work on transit projects--including the Green Line.

Annette E. Stiefbold, an associate director of new business research for Lockheed, said her company sees advanced transportation as a “very major new opportunity for us.”

Rockwell International, Northrop Corp., TRW and Aerojet also have talked with the leading rail car manufacturers, and LACTC representatives said that “announcement of additional (transit-aerospace) teams are expected shortly.”

The idea of using the county transportation commission to implement what amounts to a local industrial policy was met with skepticism when Patsaouras raised the idea 18 months ago. In June, 1991, the commission hired a manager to encourage suppliers to relocate in Los Angeles, but the issue rarely appeared at the top of anyone’s agenda.

The Sumitomo fiasco in January made Patsaouras’ proposal a top priority for the commission. Coming as the economy stalled, layoffs soared and President Bush returned from fruitless trade talks with Japan, the initial Sumitomo contract touched off a firestorm of criticism that forced the LACTC to withdraw the agreement and move into the economic development business.

There is still skepticism about the commission’s ability to create jobs. Supervisor Ed Edelman and Long Beach City Councilman Ray Grabinski have used their seats on the LACTC board to emphasize that the commission’s first duty is to provide transportation.

Other commissioners privately express doubts that established suppliers of electric motors and other high-value components can be enticed to build permanent factories in California when their factories lay idle or underutilized.

But even these skeptics believe that some sort of local development program is worth trying.

In January, Peterson met with the area’s leading aerospace companies to discuss the transportation market’s needs. Last month, the commission released a 91-page directory of every locally available product and service a rail car builder might use--cross-referenced by products and by firms owned by women and minorities.

The big payoff is expected in December when the commission awards the 87-car order, the largest single order in the LACTC’s 30-year plan.

The cars, which can be converted to driverless operation, will be used on the Green Line, a Blue Line extension to Pasadena and on at least one other light-rail line to be designated later by the commission.

Peterson said that the winning bidder on this contract, which is likely to be worth more than $200 million, will be chosen on three evenly weighted criteria: cost, experience and the degree to which the bidder is willing to help local firms. The bidders will be expected to aid local firms in developing high-tech innovations or in supplying more conventional components.