Is the proposal to increase domestic content requirements for transit rolling stock to 100 percent realistic?
Recent testimony before the U.S. Senate Committee on Banking, Housing & Urban Affairs addressed the proposal of increasing the Buy America requirement from 60 percent to 100 percent. While today there is a 60 percent domestic content requirement for components and subcomponents, the administration has proposed to increase Buy America to 100 percent by 2019 arguing that it will bring more manufacturers and suppliers to the U.S.
"We all want Buy America, we all want to create jobs here … but we’ve got to be competitive, too," said committee Chairman Richard Shelby (R-AL).
American Public Transportation Association President and CEO Michael Melaniphy’s testified saying achieving 100 percent is not realistic due to the market size and the uncertainty of funding.
“Last year there were 16.5 million cars sold in the U.S. In a good year, the total transit market from all bus suppliers is about 5,000 buses,” he stated. “We play in that same supply base.
Melaniphy elaborated by saying, “Right now in the bus space, we only have one domestic heavy-duty engine manufacturer. One. For everything. And the production that we are as part of their global space is a couple days production at one plant.
“We are miniscule in the overall space so our ability to influence that, quite frankly, is challenging. And it goes for transmissions, axles, all those different components.”
As those manufacturers often build for much more than only FTA-funded vehicles, mandating that they do everything to meet this mandate for such a small portion of what they do is challenging.
As a former bus manufacturer, Melaniphy said he had factories under him for more than 10 years and offered that perspective. “You often make agreements with your communities for tax incentives, employment, investment in capital, these other things and if you have to take those jobs and take them out of that city or country and you have to move them somewhere else, you violated those.”
While the bus and rail manufacturers don’t really “make” those vehicles, they make the shells and assemble the rest from a supply base that is a global supply base he said. “Achieving 100 percent is not a realistic opportunity in this current space and there’s a reason. There are no U.S. manufacturers of rail cars at all. All the manufacturers are from around the [world]. Our base simply isn’t big enough given the uncertainty of long-term funding makes that more challenging."
Community Transportation Association of America president, board of directors, Barb Cline, who is also the executive director of Prairie Hills Transit, testified that in South Dakota, because of the size of the service areas that they have, they don’t have a specific vehicle that they use in every community. By having 100 percent Buy America or 98 percent Buy America, it has eliminated some of the vehicles that they found were most effective in the service area. “We just can’t buy them anymore because they don’t meet the requirements.”
Harry Lombardo, Transport Workers Union of America, AFL-CIO, international president, said while he didn’t have the data and experience that some of the others testifying had, he was an advocate that Americans should have the opportunity to get the best job they can. “If we can initiate Buy America as many of our so-called competitors do in their own countries, I would support that.”
The first thing you have to do is put yourself in a taxpayers’ mindset, said U.S. Senate Committee on Banking, Housing & Urban Affairs Ranking Member Sherrod Brown (D-OH). His response to Melaniphy was, “I just don’t accept the argument that nothing can be done, that we can’t move from 6o to 70 to 80 to 90.” He also asked for ideas from transit manufacturers about real steps to increase the use of domestic suppliers and identify components, like steel, where U.S. suppliers can step in.
Melaniphy acknowledged that there are some new manufacturers that have come and set up plants in America to meet Buy America, so it is something they continue to push on, though he stressed, “It’s volume and predictability of a long-term funding bill that helps to incentivize them to make the investments they need to make, to build a product that they might not otherwise do.
“Getting to 100 percent is realistically not possible but as we look at where we’re at, we think 60 percent is a good, dependable number.”
