SPRINGFIELD — The Massachusetts Bay Transportation Authority agreed to modify its contract with the city’s CRRC rail car company giving them more time and more money, saving some 400 jobs in the city and ensuring annual tax payments of hundreds of thousands of dollars continue.
The deal will extend the company’s deadline to deliver a total of 404 railway cars from the long-missed due dates of January 2022 and September 2023 and increase the cost of the contract by $148 million to over $1 billion.
The decision was the most cost-effective and efficient one to ensure the beleaguered MBTA will still get rail cars to replace some that are operating more than 10 years beyond their useful life, said Phillip Eng, general manager of the MBTA.
If the authority did nothing, officials estimated it would take until 2029 to get all 152 cars ordered for the Orange Line and 252 for the Red Line. If they ended the contract and went to find a new company, it would take at least until 2030 to get the first car from them. Both were too long, he told the board in a meeting on Thursday.
With CRRC delivering completed cars regularly since October, state officials at the behest of Gov. Maura T. Healey decided the contract had to be “deeply dived into” to find a way for it to work for Boston and the Chinese company, Eng said.
“We continue to see when we put these cars into service we are having, they perform well and they are giving improved reliability the trip riders deserve,” Eng said.
But that wasn’t always the case.
In early production days, CRRC was not only well behind schedule, cars were shipped with quality issues, including problems with undercarriages that kept cars from turning and created excessive noise, battery failure and brake problems.
Quality has improved and CRRC officials pledge to improve efficiency as well.
“We are pleased that after months of in-depth discussions with the MBTA to accelerate delivery of the Red and Orange line subway cars, we have developed a balanced well-thought-out mutual plan outlining strategies and improvements to enhance production,” said Wang Zhaofu, president and chairman of the CRRC MA Corp.
As part of the new contract there will be additional on-floor assessments to ensure maximum workplace efficiency and also better communications with the MBTA, said Lydia Rivera, spokeswoman for CRRC Massachusetts.
MBTA and CRRC officials agreed one of the challenges the company faced was getting supplies and materials, which was complicated by a 2018 increase of tariffs on Chinese goods to 25% followed by the COVID-19 pandemic.
One of the new efforts will be to strengthen relations with suppliers and improve inventory management, Rivera said.
The company also plans to enhance production training, boost quality control and expand its second shift and weekend production, she said.
The MBTA initially hired the Chinese-based CRRC in 2014 to build the new railcars under a $566 million contract, which was upped to $870 million when additional orders for cars were added.
State officials even declined federal money for the program so it could insist that CRRC build a manufacturing plant somewhere in the commonwealth.
CRRC spent $95 million and built a 204,000-square-foot rail car manufacturing facility on a 40-acre site that was once a sprawling Westinghouse plant on Page Boulevard. Shells for the cars are made in China and shipped to Springfield where workers fit them with wheels, control systems, lights, electrical systems and seats.
For Springfield Mayor Domenic J. Sarno, the new contract is a relief because it means about 400 jobs, including nearly 300 union tradesmen, will remain here.
CRRC employs a total of 453 people in Massachusetts, including 297 union workers in Springfield. A small number of jobs are also in its Quincy office. Rivera said jobs at the Springfield plant will increase as needed.
“My number one goal is to protect the hundreds and hundreds of good-paying jobs for our brothers and sisters in labor,” Sarno said.
Sarno said he knows CRRC faced many challenges getting started and then the pandemic “threw them a curve ball,” making it difficult for them to get the supplies and materials they need.
The city is also benefiting from the tax money CRRC pays annually. While the city entered into a 10-year financing incentive agreement with the company in 2015, over its first decade of operations it will still pay $24.7 million in taxes on the property.
The city also sees other benefits from having the world’s largest rail company in the world operating in Springfield and Sarno said he hopes to see them expand to take in other contracts in the future as interest in rail continues.
The company already has contracts to build subway cars for Los Angeles and Philadelphia.
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