THE MBTA pulled back the curtain a bit on Thursday about what’s causing crippling delays in the production of new Red and Orange Line trains by a Chinese manufacturer and its assembly plant in Springfield.
Jeffrey Gonneville, the T’s interim general manager, said the Chinese company, CRRC, was supposed to deliver all 152 new Orange Line cars by December 2022, but so far has delivered only 78.
CRRC was supposed to deliver all 252 new Red Line cars by this September, but so far has delivered only 12.
The slow pace of delivery means the T continues to rely on an aging fleet of subway cars that are prone to breakdowns. The Orange Line vehicles originally came online from 1979 to 1981; the oldest Red Line vehicles date to 1969, with the rest put into service in 1987 and 1993.
Gonneville didn’t draw any conclusions in his presentation to the MBTA board, but he painted a picture of a politicized procurement in 2014 that has come back to bite the MBTA in 2023 and could cripple the transit authority going forward if the new Red and Orange Line vehicles fail to work properly.
Gonneville said all new train car deliveries have been suspended since July 2022 to give CRRC time to address its manufacturing challenges. He said deliveries may resume next month, but probably at half the pace (four cars per month instead of eight) required under the contract. He said the T is pressing CRRC to come up with a realistic schedule moving forward.
CRRC is facing enormous challenges externally and internally. CRRC, attempting to establish a beach head in the United States, submitted a winning bid on the original 2014 MBTA contract that was $200 million lower than the next highest bidder. At the time, Deval Patrick was governor of Massachusetts and Rich Davey was general manager of the T.
CRRC subsequently landed contracts with transit systems in Philadelphia, Los Angeles, and Chicago — and the MBTA in 2017 under former governor Charlie Baker purchased more Red Line vehicles, bringing the total value of the CRRC contract to $870.5 million.
The National Defense Authorization Act in 2019 barred the use of federal funding for transit procurements from Chinese companies and the T now says CRRC has “limited future work options” in the US, which may dampen its enthusiasm to make good on its existing contracts and stick around as a parts supplier down the road.
Gonneville said CRRC has no contract work scheduled in Springfield beyond the MBTA work, raising questions about the viability of the plant, which employs roughly 250 employees.
Gonneville said the Chinese company had difficulty producing train shells in China during the coronavirus pandemic and subsequently because of labor and supply chain difficulties. He also said CRRC’s assembly plant in Springfield has been plagued by manufacturing challenges, staff turnover, supply chain challenges, and “sudden and unexpected” technical and engineering issues.
CRRC makes the train shells in China and ships them to Springfield for final assembly. Gonneville said all 152 Orange Line shells have been produced, with 78 cars in service and the rest awaiting completion in Springfield. Only 44 of the 252 Red Line shells have been produced.
In mid-2018, the MBTA said, federal tariffs on Chinese imports to the United States were increased by 25 percent. Gonneville said CRRC claims the tariffs have increased its costs by $18 million so far and the tally will likely hit $35 million by the time the MBTA contract ends. The company is asking the T to compensate it for the unexpected costs, Gonneville said.
The interim general manager said the T has embedded staff at the Springfield plant to work with CRRC to address problems there. He also said Jamey Tessler, the secretary of transportation, and Betsy Taylor, the chair of the MBTA board, have participated in meetings with top CRRC officials.
Although Gonneville said some progress in negotiations has been made in recent weeks, he indicated the T is exploring its future options. He noted the CRRC contract calls for penalties of $500 per day for late deliveries of the Red and Orange Line trains.
Gonneville’s presentation to the MBTA board was the first time T officials have publicly gone into any detail on the problems with production of new Red and Orange Line cars. Gonneville, who took over as interim GM to serve as a bridge between the gubernatorial administration of Charlie Baker and Maura Healey, said the briefing was part of an effort to bring more transparency to the T’s operations.
Even though the news was dreadful, members of the T board had no questions for Gonneville at Thursday’s meeting. Taylor, the board chairman, described the Orange and Red Line vehicle procurement as “a very complicated situation” and urged Gonneville to come up with “a set of alternatives” for the T to consider.
Brian Kane, the executive director of the MBTA Advisory Board, which represents the municipalities in the T service area, said he was pleased to see the transit authority start to come clean about the problems it is facing with the new Red and Orange Line cars. He said he was “also real concerned that we’re never going to get these train cars that we need.”
Kane said Gonneville’s presentation suggested CRRC has little incentive to live up to its contract terms, let alone hang around as a future parts supplier or vehicle repairers.
“They’ve already lost a ton of money and they’re continuing to lose money with every car they ship,” he said.
One possible solution, Kane said, may be for the federal government to ease up on tariffs and sanctions against China. He urged the Massachusetts congressional delegation to explore that as an option.