Greater Greater Washington

Breakfast links: Feds pay up


Photo by WSDOT on Flickr.
Feds speed up Silver Line funding: The Federal Transit Administration announced early funding for Dulles Metrorail of nearly $20 million yesterday. With accelerated funding, the agency hopes to reduce costs, speed construction and provide regional investment. (Dr. Gridlock)

Congress orders feds to pay stormwater fees: Last week at the end of the lame-duck session, Congress passed a bill requiring federal agencies to pay local impervious surface area charges. DC Water was battling the EPA, arguing it couldn't meet requirements for stormwater quality without federal agency fees. (Switchboard, from NRDC)

Transit can never be fully secured: Policymakers and security experts acknowledge that mass transit will never be fully secured environment in the way air travel is. Some riders wouldn't mind more screening though, according to USA Today, which asked one man from Pennsylvania who took 24 trips on subway, Amtrak, and other trains last year, and who is afraid "a terrorist" could "demolish New York's Penn Station."

Glenmont getting garage: Metro will break ground on a new 1200-space parking garage at the Glenmont station. The current garage fills early forcing riders to drive to other stations to park and likely deterring some from riding at all. (Dr. Gridlock)

Silver Spring still debating library ped bridge: Advocates say the skywalk between the new Silver Spring library and its parking garage across Wayne Avenue is necessary to facilitate access for people with disabilities to the Disability Resource Center to be housed in the building. (TBD)

Car passenger pulls gun on pedestrians: When a mother had words for a driver who nearly hit her and her son in the parking lot of Potomac Mills Mall, the passenger of the car pulled a gun on the pair. (TBD)

Are film incentives worth it?: The new film How Do You Know, which received $1.4 million in DC tax dollars, was panned by critics and bombed in theaters. Should DC be spending money on film incentives, particularly given that states like Pennsylvania and New York can offer even the worst movies multimillion-dollar incentive packages? (TBD)

Buy America makes HSR costly: Buy America regulations essentially double the cost of acquiring high-speed trainsets, or any other rail rolling stock. (Systemic Failure) ... Stephen Smith is disappointed we cheer on HSR projects despite this. (Market Urbanism)

And...: $1.8 million in HUD grants will fund housing counseling programs to help the homeless and those facing foreclosure. (WAMU) ... The Federal Highway Administration has begun studying temporarily converting shoulders into traffic lanes. (WTOP) ... An appeals court ruled that Arlington did not violate the establishment clause by awarding affordable housing funds to an apartment building whose board is partially appointed by the adjacent church. (WTOP)

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Erik Weber has been living car-free in the District since 2009. Hailing from the home of the nation's first Urban Growth Boundary, Erik has been interested in transit since spending summers in Germany as a kid where he rode as many buses, trains and streetcars as he could find. Views expressed here are Erik's alone. 

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Re "How Do You Know": Non-sequitur. The economic benefit to the city (if any) is 100% realized by the time filming wraps. It doesn't matter if the movie never even makes it to the screen.

by Simon on Dec 28, 2010 8:47 am • linkreport

Re: "How Do You Know": I'm not sure anyone making the movie was thinking "let's make a terrible movie" so it's not like DC can selectively choose to only give tax breaks to movies that won't suck.

by Teyo on Dec 28, 2010 9:35 am • linkreport

@Simon: In principle, the economic benefit of films made in the area could include promoting tourism, attracting other filmmakers, and other indirect effects that do depend on how the film is received.

If we aren't getting any effects like those, then it's pretty obvious that spending $1.4 million isn't a good investment of public funds, isn't it? How could there possibly be direct payback from that just from the amount that the film crew itself spends in the area? Out of a $120 million total budget, the amount they spent in DC directly probably is less than the subsidy, and it would have to be many times greater for the subsidy to make any sort of sense for the DC government.

by David desJardins on Dec 28, 2010 9:49 am • linkreport

As a resident it's hard not to want the studios to be paying us for blocking our streets and diverting our police and emergency vehicles while they film our height-restricted vistas, not the other way around.

That being said $1.4m seems small in comparison to the stadium boondoggles, sweetheart tax abatements and other "incentives" granted to businesses in the name of economic development all the time.

Wait, that was for ONE FILM? How long did they shoot? How many DC residents did they hire and for how long? David desJardins is right. I think we lost money on this deal and Teyo is right, it has nothing to do with the quality of the film. It's the amount of time and size of the crew they brought here to shoot.

With a 10% restaurant tax, I estimate that the film crew had to have eaten the equivalent of about 20 million half smokes at Ben's to pay off the incentive.

by Ward 1 Guy on Dec 28, 2010 10:39 am • linkreport

My thought on the shoulders being used as temporary lanes is why don't they open up the shoulder lanes in off-hours when there is a back-up or construction blocking a left lane? There have been many times on 66 when I have wished they would just open up the shoulder lane especially since there are so many electronic signs they could use to alert the traffic that it has been temporarily re-opened.

by SMB on Dec 28, 2010 10:57 am • linkreport

Policymakers and security experts acknowledge that mass transit will never be fully secured environment in the way air travel is.

And what exactly is the benefit of that "fully secured environment" in air travel, other than a massive jobs program, good sales for metal detectors and porn scanners and massively increased sales of bottled drinks in airports? Did the public get anything out of this deal?

Can anybody show that all that security theater has prevented any serious hijacking? Cuz all I know is that the shoe and undie bombers still got on board, and yet - more importantly - still did not accomplish to blow up the planes they were in. On the other hand, they did change our behavior, and have the last laugh from their cells in CO.

by Jasper on Dec 28, 2010 11:01 am • linkreport

Car passenger pulls gun on pedestrians: Yeah, it's pretty ghetto around there.

by Marian Berry on Dec 28, 2010 11:01 am • linkreport

Terrorism attacks openness in society. Transit is an attractive target precisely because it is, by nature, an open system.

The article does a good job of illustrating how many more people use transit each day than fly. Hell, there are more subway stations in New York (468) than there are commercial airports in the entire US (450).

Security for transit systems will come from advanced intelligence and other law enforcement operations, not from passenger screening. You could say the same thing about air travel, too - effective security will come from identifying threats in advance. As Bruce Schneier notes, if the terrorist arrives at the airport, it's probably too late.

by Alex B. on Dec 28, 2010 11:11 am • linkreport

@ Alex B: if the terrorist arrives at the airport, it's probably too late.

Or they're clueless idiots. Still no reason to hassle all law-abiding citizens, and violate their basic rights.

by Jasper on Dec 28, 2010 11:18 am • linkreport

I really don't understand people sometimes.

All I ever see and hear are the loud protests from people that "all our crap is from China", and "nothing is made in America anymore and it costs us jobs", yet when it comes down to a honest to go homegrown industry that would provide tens of thousands of long term good paying jobs, the firs thing we want to do is buy it from China instead. California alone is looking to pay China 40 billion to build them an HSR.

Yes, Buy America does make things more expensive but thats not neccesarily a bad thing, especially when the alternative is so disgustingly dire.

Yes, China would be more than willing to accept our many hundreds of billions of dollars to build us a HSR, but why would we do that when we have the opportunity to not only do it ourselves, but become a world power in the technology and major manufacturing base?

by freely on Dec 28, 2010 11:23 am • linkreport

@ freely: "nothing is made in America anymore and it costs us jobs"

The problem is that Americans do not want to pay for their own jobs. And China is the perfect dealer. It is happy to loan money to the US that the US can use to buy stuff from China. That way China can boost its own economy and get the US to pay interest on top of that! Wohoo!

when we have the opportunity to not only do it ourselves, but become a world power in the technology and major manufacturing base?

You missed that boat by about 20 years. But if you don't like China, why not buy it from the French? 'Freedom Trains' sounds good to me. Or the Japanese? Or the Germans?

In other words, why reinvent the wheel?

by Jasper on Dec 28, 2010 12:04 pm • linkreport

Yes, China would be more than willing to accept our many hundreds of billions of dollars to build us a HSR, but why would we do that when we have the opportunity to not only do it ourselves, but become a world power in the technology and major manufacturing base?

I'm curious--what country have you seen become a "world power in the technology and major manufacturing base" through rolling stock protectionism? Did autarky work well for India during the Cold War? Or were you thinking more along the lines of North Korea and communist Romania?

(I should also add that Canada and Western Europe are more likely sources of HSR trainsets than China.)

by Stephen Smith on Dec 28, 2010 12:07 pm • linkreport

Yes, Buy America does make things more expensive but thats not neccesarily a bad thing, especially when the alternative is so disgustingly dire.

The problem is that the ideal solution lies somewhere between the two extremes. Yes, it's probably a good idea for us to produce more goods domestically. However, if China/Japan/Germany happen to be exceptionally good at producing one particular component (due to economies of scale or whatever), it's to our own detriment to produce it ourselves, and deliberately subsidize a domestic industry that will never be profitable, competitive, or sustainable.

Look at those absurd DMUs produced by Colorado Railcar for an instance of why the Buy America restrictions hurt more than they help. Local rail operators were forced to buy an inferior product at twice the price, and the company still went under.

The "United Streetcar" venture doesn't seem much better, and is at best a loophole. How about we design and build a product that can actually compete with what's being built overseas? (Even the stuff being sold to us from overseas is cheap and nasty compared to what they're building for their own markets. The "futuristic" 7000-series railcars look like 1960s-vintage NYC subway trains, while Kawasaki and Alstom supply rest of the world with articulated railcars with painted bodies, carefully-planned interiors, and attractive exteriors. We're quick to settle for mediocrity, and often even include it in the specifications.)

by andrew on Dec 28, 2010 12:07 pm • linkreport

Any lawyers out there want to fill me in? I'm wondering if you are the pedestrian and someone pointed a gun at you, is there any legal recourse you can take? Is this just a criminal matter and you have to hope the gun nut is arrested and gets prosecuted? This kind of thing freaks me out.

by Ward 1 Guy on Dec 28, 2010 12:08 pm • linkreport

You can read here a very detailed analysis of why film subsidies are economically inefficient for local governments:

http://www.cbpp.org/cms/index.cfm?fa=view&id=3326&emailView=1

by David desJardins on Dec 28, 2010 12:26 pm • linkreport

Not a lawyer, but from what I understand, concealed weapons are to be used lawfully for self-defense in the event of an imminent threat -- not for threatening other individuals who pose little or no threat to you. I don't know about the state of Virginia specifically, but in many states there are laws prohibiting brandishing (displaying ostentatiously) a firearm in a clearly threatening manner, and that's even assuming you have a permit.

by Scoot on Dec 28, 2010 12:30 pm • linkreport

@andrew: However, if China/Japan/Germany happen to be exceptionally good at producing one particular component (due to economies of scale or whatever), it's to our own detriment to produce it ourselves, and deliberately subsidize a domestic industry that will never be profitable, competitive, or sustainable.

The problem is that China is better at producing these goods because they understand these are growth industries and so they are investing in developing the capability. If we just let them do that, then we become more and more dependent on the rest of the world to provide us with what we need, and we can't keep borrowing from them and buying stuff on credit forever.

@Stephen Smith: I should also add that Canada and Western Europe are more likely sources of HSR trainsets than China.

I'm not sure that's actually true. China is a likely source because they can afford to finance the purchase at low cost. Sort of like a drug pusher.

by David desJardins on Dec 28, 2010 12:36 pm • linkreport

@Ward 1, Yes. It freaks me out too. The first thing I thought of is the freedom-to-carry-concealed weapons laws in VA that contribute to a culture where 1)someone has a gun on them while Christmas shopping, and 2)feels comfortable aiming it at a mom and her kid who responded normally to almost being hit by a car. Its too bad the mom and kid didn't get the plate number. However, even if 'brandishing" is some kind of offense it seems it will never be prosecuted unless there were witnesses to corroborate. I am not against guns. I live with a hunter and there are hunting guns in my house -locked up. There is a big difference between that and someone who wants a hand gun on them at all times. What kind of a mind is that? And what sort of culture nurtures that mentality? It ends with assholes aiming guns at kids in parking lots when they walk where the asshole wants to drive.

by Tina on Dec 28, 2010 12:44 pm • linkreport

I'm not sure that's actually true. China is a likely source because they can afford to finance the purchase at low cost. Sort of like a drug pusher.

I don't know where you're buying your drugs from, but in my experience, dealers don't sell on credit.

But back to the HSR procurement issue – I'm not sure that any country outside of China has ever actually bought a Chinese HSR trainset. From what I understand, Alstom (France), Kawasaki (Japan), Bombardier (Canada), and Siemens (Germany) are the big rolling stock exporters. China basically manufactures their own for nationalist reasons, but even then they're mostly using pirated Western designs. And I don't know much about rolling stock finance, but from what I understand, it's usually financed by the purchaser, not the seller.

by Stephen Smith on Dec 28, 2010 12:46 pm • linkreport

@Stephen Smith: I don't know much about rolling stock finance, but from what I understand, it's usually financed by the purchaser, not the seller.

Exactly, that's why China's offer to finance California HSR is likely to be unique and attractive, in light of California's financial issues.

You might have more experience than me with the addictive drugs, I will defer to you on that.

by David desJardins on Dec 28, 2010 12:51 pm • linkreport

I believe some Western manufacturers have specifically pulled out of Chinese procurement contracts for fear that the only reason they were contacted was so that their designs could be pilfered and reverse-engineered.

Either way, the advantages China has in manufacturing right now are in labor and mass production. Western countries still have a significant advantage in technical products like trains.

by Alex B. on Dec 28, 2010 1:02 pm • linkreport

@Alex B.: Western countries still have a significant advantage in technical products like trains.

Have you been to China or invested in businesses there, recently? I'm afraid you're living in a pipe dream. Certainly, China can't be the world leader in every technology; they aren't keeping up with all of the effort that we put into weapons systems, for example. But they are perfectly able to keep up in areas like this that are among their highest national priorities (and among our lowest).

by David desJardins on Dec 28, 2010 1:08 pm • linkreport

The problem is that China is better at producing these goods because they understand these are growth industries and so they are investing in developing the capability.

Uh, no, the problem is China uses virtual slave labor and has no environmental protection, so of course they can undercut American wages. Throw in currency manipulation and is it any wonder American workers can't compete?

by Vicente Fox on Dec 28, 2010 1:11 pm • linkreport

But they are perfectly able to keep up in areas like this that are among their highest national priorities (and among our lowest).

So how come they haven't exported a single piece of rolling stock yet? http://en.wikipedia.org/wiki/List_of_high_speed_trains

by Stephen Smith on Dec 28, 2010 1:13 pm • linkreport

There was a sequence of events that I observed over the last 25 years culminating in the destruction of one private business. This was a small corporation owned by an American family who had started off using local talent to make a quality product and took great pride in the “Made in USA” label.

Early to Mid 1980s: Company is born, grows, and does well. Moves from a mom and pop shop to hiring non-family members. A lot of hard work and growth during this time pays off. To help facilitate growth, investment, etc., company takes on partners with expertise in specialized areas.

* Late 1980s: Company continues to do well, but growth plateaus. Original owner does not want to do a public offering of the business. Internal triangulation and disagreements on how to proceed leads to moves by newer partners to break-up/sell the business. Original owner/family takes out loan to buy their company back from the newer partners. This takes a significant amount of money out of reinvestment in the business and improving health/retirement plans for all workers (including the owners).

Early 1990s: Owners continue to use American parts and labor as other companies begin to outsource some production of parts to Mexico. The company survives the regional recession of the early 90s and the owners are able to make their payments to the bank for the buyout and are also able to do a large expansion.

Mid 1990s: Due to increased domestic competition due in large part to changes under NAFTA, owner begins to buy some of their parts from Mexico, but the majority of products are still made in the USA and assembled by American workers –local people who have lived in the area for generations. At this time, similar completed products begin arriving from China. Owner expands production facility again and contracts out labor for some parts and completed products to other American-owned businesses.

Under the traditional business model in a fair and uncorrupted market, this expansion should lower costs over the long-term while still providing a quality product to customers. The plan looks good to the bank, too.

Mid to Late 1990s: The cost of parts from Mexico begins to rise and the completed products are now no less in retail price than similar products from China. Despite production in a low-tax, low-wage state (as in not much above the minimum wage!), both the company and subcontractors have difficulty making any kind of profit against the rising tide of Chinese imports. By the late 1990s, they can’t figure out how the Chinese products can sell at a retail price which is still less than the combined wholesale prices of many of their parts. There are also times when the raw materials alone cost very close to the wholesale price of the Chinese goods.

Retail outlets sell both the Chinese and American goods and the difference in price is apparent on the shelf. Although the loan to former partners has been paid off, the owner begins to struggle financially at times to meet the loan for the expansion as sales drop. The owner has to get some short-term loans to cover operational costs.

At this point in time, he has no idea how GATT, WTO, and MFN are impacting his business and changing the playing field. In fact, the American company owner thinks tariffs are still on the books and enforceable, that his elected representatives will protect the local community, that the Constitution still means something outside of the town he lives in, and that multinational corporations haven’t been bribing…sorry, I digress…

Late 1990s to Early 2000s: Continued importation of Chinese goods which cost less than American raw materials pushes company owner to focus on a niche market by offering “Made in USA” products to consumers who have higher standards, i.e., quality over price. Catering to this high-end consumer seems to work for a while, but the company takes a major hit when one of their biggest wholesale customers (a retailer in that high-end niche market) declares bankruptcy. The timing is “unfortunate” since it happens right after the company had delivered one of its biggest orders ever to the retailer before the Christmas shopping season.

The bankrupt retail chain is a big player and has many creditors and suppliers. The company finds itself to be one of many small fish in a big ocean inhabited by larger fish, whales, and sharks. Nevertheless, the company demands their unpaid products be returned. The big retailer responds: Those goods have all been sold and there’s nothing to return to inventory.

A couple years later a federal judge from another district orders: All small companies to be awarded new stock cut by the big retailer. The stock “paid” to the company is literally worth pennies on the dollar against the products originally delivered, but never paid for, by the retail chain. Big retailer never changes the name on their storefronts, re-organizes on paper (board members play musical chairs), has a record year and is still in business to this day. (BTW, during the entire history I’m describing today the top value ever reached by this stock was 1/10th of the sum originally owed to the company for the products that the retailer ripped off…er, supposedly unable to pay for).

During this same time period, the bank which loaned the company money for the expansion demands larger monthly payments. Owner/family members sometimes defer their own pay, but the company is at least able to pay the bank and not go into a forced sale. Upon a review with the bank months later, the banks representative makes a comment to the effect of “I can’t believe you guys were able to make your payments” before raising the monthly payments even more. Negotiations for readjusting payments, rates, frank talk on how the company won’t be able to survive and local workers will be thrown into the unemployment line quickly go nowhere with the bank.

Owner has to go to another bank to get short-term loans to cover payroll for non-family workers as owner/family members go without compensation for health, retirement, etc. At least the workers understand the company is going through a rough time and do NOT demand raises or other increases in benefits. Many years of life in the community together, shared hardships and reciprocated loyalty still mean something at this point.

Mid 2000s: Owner can’t meet bank terms and is on the brink of losing personal/non-business property. They haven’t been able to put aside any money for retirement (I need to interject here that owner lived modestly and frugally as well). Open and honest discussions with workers about future of the company and tough changes ahead. Owner sells company, all contents, and product line and only retains ownership of the building.

New owner is able to get a better deal from another bank to buy the same company that the old owner couldn’t get a loan to maintain. New owner believes he can continue to focus on the well-heeled consumers in the niche market. New owner soon learns that Americans of all shoes would rather save a buck than buy “Made in USA” products. Production is curtailed and majority of workers are laid off. Repackaging of imported goods with very few finishing touches by American hands becomes the new norm just to survive.

The company’s base of buyers shrinks –they’ve either turned to suppliers representing the Chinese or have gone out of business themselves. Old customers aren’t happy about the change in leadership at the company and soon notice the lower quality of goods and services they receive. More customers begin dealing directly with importers/distributors rather than the company which appears more and more like an unnecessary middleman.

No one looks at labels to see where products are made or even asks about quality anymore –the bottom line is cost. The new owner sells to yet another person. This transaction still includes leasing the facility from the original business owner.

Mid to Late 2000s: The third and soon to be last owner quickly shrinks to a mom and pop operation. The company becomes a part-time operation in only a small portion of the original facility. The company’s products are no longer offered in retail catalogs. The last owner stops making payments on the building and the original owner has to get a short-term loan to cover the building (a debt leftover from the last expansion). A year later production stops altogether and the company closes. The building goes into disrepair and is put on the real estate market, but it’s already past the bubble and there are no buyers.

In the meantime, the original owner and last owner end up in court over the breached agreement on the building. Rather than cutting some stock for a company which no longer has any sales or apparent residual worth (nor was ever publicly offered), the last owner has to pay some real cash to the original owner. A settlement is reached for far less than what was owed.

Late 2010: Everyone involved with ownership of the company at some point in its history has debt. They’re all working for someone else now. But, at least they’re working. Unofficial unemployment is 20% in their area.

It’s easy to blame China for what happened, but it was only possible with the willing connivance of people who sit in D.C.

by Chris Sullins on Dec 28, 2010 1:15 pm • linkreport

@David

I'm not saying they're incompetent, I'm saying they produce an inferior product right now. As noted, the Chinese are not yet really exporting high speed trainsets. They aren't because their western competitors are better designed and better built. Their overall lifecycle cost is lower.

Now, this isn't some ironclad law, just a description of the current situation.

And I don't understand how you say HSR is among 'our' lowest priorities. By us, I mean the industrialized world. Not just the United States, but also countries with strong HSR systems and industries (France, Germany, Japan, etc). Within the west, HSR is certainly a priority - even when accounting for the US's slack.

by Alex B. on Dec 28, 2010 1:15 pm • linkreport

@Stephen Smith: So how come they haven't exported a single piece of rolling stock yet?

Because their capabilities are recent, and because most of the potential buyers have their own domestic industries or relationships with existing suppliers. The US is fairly unique in proposing to substantially expand into high-speed rail, nearly from scratch, and also in that its local governments are close to insolvent, and so presents a unique type of future market.

Really, I think you would find it easy to answer your own rhetorical questions, if you just tried.

by David desJardins on Dec 28, 2010 1:17 pm • linkreport

@Alex B: And I don't understand how you say HSR is among 'our' lowest priorities.

Maybe if you knew I was an American and that I was speaking of US priorities, it would help you understand.

by David desJardins on Dec 28, 2010 1:21 pm • linkreport

I'm aware that's what you're talking about, but you made reference to my post and I was clearly talking about the industrial West in general. The little piece of my text you quoted explicitly reads "western." Just so we're clear.

by Alex B. on Dec 28, 2010 1:43 pm • linkreport

regarless of what DdJ thinks, HSR IS one of our priorities. I'm an American and I'm speaking of US priorites. However, I am aware this is my opinion and I'm speaking for myself, which seems to contrast DdJ's assumptions about himself and who he speaks for. I hope I get to experience HSR in my lifetime for the 600 mi. trip I have to take regularly either by car or plane, which ends up taking nearly the same amount of time by either of those modes.

by Tina on Dec 28, 2010 1:50 pm • linkreport

@Tina: regarless of what DdJ thinks, HSR IS one of our priorities.

No, manufacturing and even installing high-speed rail has NOT been a US priority. I am well aware that many Americans, including me, want it to be a priority. But the facts speak for themselves. When we invest almost nothing as a nation in an activity, we can't claim we are making it a priority. We just aren't.

by David desJardins on Dec 28, 2010 1:52 pm • linkreport

@DdJ, ok! Thanks for clarification. I am corrected as to the communication intent of your comment.

by Tina on Dec 28, 2010 1:59 pm • linkreport

@Alex B: "Western countries still have a significant advantage in technical products like trains."

OK, I still think this specific statement is factually incorrect and is far out of touch with reality as it now exists. A few years ago it might have been plausible, but circumstances are changing quickly. The statement suggests that China is inherently less capable of manufacturing "technical products", which I think is simply not true. If you want to assert that some Western manufacturers still have a (rapidly shrinking) lead in rail technology, just from having been at it longer, I wouldn't necessarily disagree with that. But that's not because it's a "technical product", it's just that developing any particular technology does take time. China can be extremely competitive in all sorts of "technical products" by copying Western technology and making up for the slight technological deficit with a lower cost of labor, more access to capital, looser environmental standards, and all of their other "comparative advantages" that apply across all sorts of manufacturing. They are not going to be competitive in every possible field, but they will be competitive or better than competitive in fields like this one that are top national priorities.

by David desJardins on Dec 28, 2010 2:03 pm • linkreport

The statement suggests that China is inherently less capable of manufacturing "technical products", which I think is simply not true.

No, that's not what it suggests at all.

First of all, this is foremost a statement of fact. Western products are of higher quality right now. That is undisputed. No one outside of China is buying Chinese HSR trainsets, but lots of people are buying French, German, and Japanese ones.

Second, the reason this statement is true is because these are highly technical products where China's own internal marketplace isn't sufficient to cover those deficiencies, and the Western manufacturers have a substantial head start.

There's a reason that Western companies have lost out on manufacturing employment but still produce substantial output - the workers that remain are highly skilled. Cheap labor is no substitute for skill when skill is required. China is making the transition, but it's happening slowly. Ergo, Western economies still have the skills and advantages over China when competing with these kinds of technical products.

Finally, you note that China will be competitive in this field. That's the operative tense - because they are not currently competitive amongst the field of mature Western competitors. I'm not making any future predictions here, just noting how things are.

by Alex B. on Dec 28, 2010 2:23 pm • linkreport

@ Chris Sullins: It’s easy to blame China for what happened, but it was only possible with the willing connivance of people who sit in D.C.

Or, you can look at personal responsibility and argue that the original owner should have never bankrupted his retirement account to continue his company that was not capable anymore of keeping up with changed circumstances. The fact that banks did not want to loan him the money should have been a hint that the investment was risky. [Odd to think that in the 80s, banks still assessed risk, what a concept!]

Or, you can argue that big business is destroying America.

Or, you can be happy that big business scaled up the production and lowered prices so that the customer base for the product has increase to more people that make less money.

Personal tragedies like the one you describe (I've seen the same up close as well) have many different sides. And also many (ir)responsible actors. It's not easy to only point as politicians, small business owners, large business owners, or international trade as a factor for good or bad. Matters like these are very complex.

by Jasper on Dec 28, 2010 2:48 pm • linkreport

Or, you can be happy that big business scaled up the production and lowered prices so that the customer base for the product has increase to more people that make less money.

I guess we should be happy with this outcome, since our society has become one where a tiny percentage of people at the top taking huge shares of the national income while every else must make do with stagnant incomes. Thank heavens for cheap plastic junk from overseas!

by Idi Amin Dada on Dec 28, 2010 3:30 pm • linkreport

@Alex B: First of all, this is foremost a statement of fact. Western products are of higher quality right now. That is undisputed. No one outside of China is buying Chinese HSR trainsets, but lots of people are buying French, German, and Japanese ones.

Well, that's not actually what you claimed. You said, "Western countries still have a significant advantage in technical products like trains." Not, "Western countries still have a significant advantage in the specific area of rail equipment." That's pretty different. I can refute the former statement by giving examples of other kinds of technical equipment that are "like trains", but where Chinese industry has an advantage or at least equity.

Secondly, correct me if I'm wrong, but I don't actually think many people are buying French, German, or Japanese high-speed rail equipment today, except for the French, the Germans, and the Japanese, respectively, who are hardly an unbiased sample. I see only a very few projects where they are exporting such technology.

Thirdly, any purchases made today reflect the state of the industry a few years ago, since completing such transactions takes a long time, and so what is being delivered now is not an accurate reflection of the state of the industry now, it is a lagging indicator.

Fourthly, your analysis of the labor issue is just conceptually flawed. Both the Western countries and China have pools of skilled labor. Western countries have more, but they, especially the US, also divert a large fraction of that skilled labor into other areas where China is not attempting to compete, or not with the same vigor. And so you have to compare the amount of skilled labor that China chooses to direct into this industry, with the amount of skilled labor that the US or other western nations choose to direct into this industry. China also has an economic and political system where, if they make it a high priority, they can invest a lot of resources in it; that just comes at the expense of something else. The absolute total of skilled labor in China or in the US or in Germany is not a relevant figure, because you also have to consider the share of that labor pool devoted to this particular area.

by David desJardins on Dec 28, 2010 7:38 pm • linkreport

Secondly, correct me if I'm wrong, but I don't actually think many people are buying French, German, or Japanese high-speed rail equipment today, except for the French, the Germans, and the Japanese, respectively, who are hardly an unbiased sample. I see only a very few projects where they are exporting such technology.

You are, indeed, wrong. USA bought Bombardier; Portugal, Czechia, Italy, Finland, Korea, and the UK all bought Astom; Spain's bought HSR trainsets from all over; Germany (which has its own domestic industry!) has bought Bombardier and Astom in addition to Siemens; Austria and Hungary have bought Siemens. For a more complete list, I again direct you to the following Wikipedia page: http://en.wikipedia.org/wiki/List_of_high_speed_trains. Japan seems to be the only country that buys exclusively from Japanese companies, but considering Japan has the best (and most profitable!) HSR lines in the world (sorry – some showy, useless maglev in China doesn't count), I doubt they're doing it solely for protectionist reasons.

Face it – China just isn't that big of a HSR player.

by Stephen Smith on Dec 28, 2010 10:12 pm • linkreport

@Stephen Smith: You are, indeed, wrong. USA bought Bombardier....

Good grief. That was 10 years ago. This has less than nothing to do with the current state of affairs.

If your point was only that China was not competitive in exporting rail equipment in the year 2000, you could have just said that!

But we are talking about current projects, which means potential purchases in the coming decade, not the one before last.

by David desJardins on Dec 28, 2010 10:17 pm • linkreport

I'm surprised you can even hear us little people from all the way up there in your cherrypicker.

by Stephen Smith on Dec 28, 2010 10:23 pm • linkreport

WTF? It was your example, not mine. And EU countries buying products from each other don't count as non-domestic purchases.

We don't have any empirical data comparing the competitiveness of Chinese with western rail today. Data from even a few years ago is hopelessly dated. You complain that I'm trying to predict the future, but at least I'm looking at data that's relevant to the future, not data from ancient history.

by David desJardins on Dec 28, 2010 10:33 pm • linkreport

@ David desJardins: And EU countries buying products from each other don't count as non-domestic purchases.

Yes they do. EU members are still independent countries, very much unlike US states (and for that matter, Mexican states and Canadian provinces).

It is however unlikely that the French would buy German trains. The only true international sales are when the Eurostar from Paris to London needs some new trains. Or the Thalys from Amsterdam to Paris. The Spanish are also working hard on their high speed network.

All in all, there is not a whole lot of international trade for high speed trains. Most countries with a significant network build them themselves.

by Jasper on Dec 29, 2010 10:38 am • linkreport

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