Stadler Rail announced the first phase of its plan to expand manufacturing in the US in November 2015. It has recently signed its biggest American contract so far. The rail manufacturer is confident that its US projects will secure jobs in Switzerland.
Stadler Rail signed its seventh and biggest US order to date in August 2016, just nine months after announcing plans to expand production in the US and move into a temporary site in Salt Lake City, Utah.
Under Stadler Rail’s $551m contract with the Peninsula Corridor Joint Powers Board (PCJPB), the company, which is headquartered in Thurgau canton, will supply 16 six-car double-decker electric trains, with an option for a further 96 cars worth $385m. PCJPB owns and operates Caltrain, the commuter rail line between San Francisco and San José in Silicon Valley.
Stadler Rail’s lightweight aluminium electric trains will replace the heavy steel construction diesel fleet currently in service.
“We are convinced that this will create other opportunities in the States for more European-style double-decker trains,” says Peter Jenelten, Executive Vice President of Marketing and Sales at Stadler Rail Group and former President of the SEC Chamber of Commerce.
The Caltrain deal follows Stadler Rail’s $100m contract with Fort Worth Transportation Authority to supply eight Flirt 3 diesel multiple-units for the future TEX Rail commuter line. The railway will connect central Fort Worth with Dallas Fort International Airport.
Although Stadler Rail has delivered 50 trains to the US from Europe under previous contracts, the TEX Rail deal is the first to include US federal funding. That subjects it to Buy America regulations, under which 60% of the contract value must be sourced in the US.
“We knew when we were participating in the tender that we had to localise,” said Jenelten. “In parallel to working out the order, we had to work on the localisation concept because we had to prove to the respective commission how we were going to achieve the 60%.”
The Caltrain deal is also subject to Buy America regulations, under which the 60% requirement will increase to 70% in 2020.
Jenelten underlines the importance for Stadler Rail to have the right tax and legal advisors on board, particularly with regard to compliance with the stringent regulations.
Silicon Valley: A reference
Although the main objective of Stadler Rail’s 15-year US expansion plan is to establish itself in the American commuter and intercity train markets in the field of diesel units, it is also exploring other projects such as metros, light trains and locomotives.
Jenelten believes the Caltrain project will trigger or speed up certain projects. “If you’re running in Silicon Valley, that’s a reference!” he says.
Stadler Rail aims to develop the market step by step. “For us, it will be a long-term investment and we believe that public transport and rail will grow in the next couple of years in the States,” says Jenelten. He also sees potential for exporting from the US to Canada in the future.
Securing Swiss jobs
All the engineering for the Caltrain project will take place in Switzerland. “For me, such a project is an add-on, it helps to secure jobs,” Jenelten says. “Switzerland will remain a centre of competence and development for new products and projects.”
Jenelten points out that, even with the Buy America regulations and the involvement of non-Swiss European suppliers, “20% of 500 million Swiss francs is still a nice portion that will stay in Switzerland.”
Stadler Rail has maintained its staff of 3,000 in Switzerland, despite difficulties generated by the strong Swiss franc. “When I look at what we have in the pipeline, we should not be forced to reduce staff,” Jenelten says.