Streetsblog’s interview with Amalgamated Transit Union President Larry Henley hits on the normal points regarding labor issues and transit, but one bit there deserves additional followup, regarding Buy America provisions:
Tanya Snyder: Some transit advocates are also critical of things like Buy America provisions because it costs transit agencies more money.
Larry Henley: This is the Wal-Mart question. This is whether or not we have a country at all anymore.
If the goal is to race to the bottom, to get the cheapest products, which means the cheapest labor, then we ought to be mindful that while we’re preserving the fiscal integrity of the MTA, we’re ruining the lives of American kids. We’re making it impossible for them to get a job. And if you look at the unemployment rates today, as staggering as they sound, it’s 9 percent overall, but for college educated kids it’s 4 percent. Which means that people who lack a college education no longer have a future in America. They just don’t.
…So that now, we have people in China and India and all across the world competing with American kids.
…This is about a moral crisis in America. And then they have the gall to come back and make all these arguments about American people being inefficient or American people not working hard enough and why shouldn’t they all be part time. But the central issue is that we have allowed corporations like Wal-Mart to wring every ounce of hope out of young Americans’ lives.
In the comments, Stephen Smith already justly mocked Henley for complaining about China and India when the major rolling stock and bus vendors are from peer developed countries, and Buy America’s most recent derailing of a light rail order was about imports from Spain, a country with 21% unemployment. But there’s much more at stake here.
Buy America’s purported role is to create American jobs. But let’s examine the costs. Amtrak’s Sprinter locomotives, compliant with both FRA regulations and Buy America, cost 30% more than the European locomotives they’re based on, and 50% more than competitor products built only for passenger trains rather than also for freight trains. A 30% premium works out to an extra cost of about $100 million, providing 250 jobs. Since the income earned by skilled workers is normally around $100,000 or less rather than $400,000, we can conclude most of the premium doesn’t go to workers. Or, for an even more egregious example, but without job numbers specified, look to SMART’s DMUs, at twice the cost of comparable European trains.
In other words, it’s a scam. Blocking parallel imports ensures only a select number of vendors can bid, driving up prices. Usually there’s a small sop to American labor, well-publicized in the media with photo-ops of people in hard hats – e.g. the 250 jobs heralded for the Sprinter order – but the bulk of the extra money goes elsewhere. It creates makework for consultants and lobbyists. It increases vendor profits, since fewer companies, typically the largest and most global ones, can bid. (This also goes for regulations: Caltrain applied for its FRA waiver in consultation with the biggest train manufacturers, potentially locking out Stadler and other small up-and-comers.)
When the number of vendors is very small, the result can be not just high cost, but also shoddy work. The reason the US has no legacy domestic rolling stock vendors is that two of the few that remained by the 1970s, protected by Buy America but servicing an ever-shrinking market, sold New York City Transit defective trains, the R44 and R46 orders; this was one of many mishaps facing the city in the 1970s. The subsequent lawsuits bankrupted the vendors. The R44 is still a lemon, though since refurbishment the R46 has performed well. In the 1980s, NYCT switched to global vendors instead; the next order, the R62, was not federally funded due to Reagan’s cuts, so NYCT went ahead and imported trains from Kobe, which worked fine.
There is another way, but, as with most other issues facing transportation, it requires importing ideas from other developed countries. The idea in question is that parallel imports are not a bad thing, either for the economy or for workers. The US and Canada import cars from each other; neither is any worse for it. To a much smaller extent due to trade barriers and different sets of regulations, North America imports cars from Europe and Japan – and the attempts to fight it have not resulted in a union revival, but in the proliferation of non-union plants in low-wage states.
Parallel imports are not an anti-worker or anti-union tactic. The Swiss Socialist Party is for them, and, far from a neo-liberal sop, it also supports linking trade to human rights and workers’ rights and has a general roster of policy positions that most Daily Kos contributors would love to see the Democratic Party endorse.
The majority of trade is within the developed world. To the extent Buy America is supposed to protect American workers from low-wage countries, it has failed; NYCT’s Buy America-compliant R160 trains were partially manufactured in Brazil to save money. The main function of Buy America is to protect companies that do business in the US from competition, period. At that it has done a very good job; it’s just not good for the public, which has to pay for it.