NYMTA to “Supplier’s 11”: You’re “In Jeopardy”

Written by Marybeth Luczak, Executive Editor
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New York MTA Chairman and CEO Patrick Foye. Andrew Burton/Getty Images

New York Metropolitan Transportation Authority (MTA) Chairman and CEO Patrick J. Foye sent warning letters to MTA’s 11 largest suppliers on Sept. 17. “The COVID-19 pandemic has exacted a horrific toll in human, social and economic terms across the nation,” he noted in the letters. “I am writing to alert you that because of this financial devastation, many current and all future contracts are in jeopardy without an injection of $12 billion in emergency federal aid.”

This writing campaign—and the potential for MTA service reductions, layoffs and fare hikes, for instance—stems from stalled federal relief talks, according to MTA.

The letter recipients are: Alstom Transportation, Bombardier Transportation, Cubic Transportation Systems, Hitachi Rail STS USA, Kawasaki Rail Car, New Flyer of America, Prevost Car (US), Siemens Corp., Thales Transport & Security, Transcore and Wabtec Passenger Transit.

The letters also covered how MTA contracts affect each supplier. In Foye’s letter to Alstom, which supplies railcars and signaling/train control technology, he wrote: “Since 2011, prior MTA capital plans have resulted in more than $2.2 billion in direct spending and created nearly 28,000 jobs in the states where Alstom has U.S. locations – California, Illinois, Florida, Missouri, Kentucky, and Delaware.”

MTA Chairman Patrick Foye. Photo by Todd Maisel/AM New York

The letters follow Foye’s New York Times op-ed earlier this month, co-written by Transport Workers Union International President John Samuelsen, explaining “the MTA’s dire fiscal crisis.” Railway Age republished the piece online.

According to Pat Foye, all this will disappear without at least $12 billion more in federal aid. Critics say that’s nonsense.

Following is selected text from the MTA press release on Foye’s supplier letter, outlining what he is positioning as dire consequences:

ALSTOM TRANSPORTATION, INC.: Since 2011, prior MTA capital plans have resulted in more than $2.2 billion in direct spending and created nearly 28,000 jobs in the states where Alstom has U.S. locations – California, Illinois, Florida, Missouri, Kentucky, and Delaware.

BOMBARDIER TRANSPORTATION: Since 2011, prior MTA capital plans have resulted in more than $2.6 billion in direct spending and created more than 33,000 jobs in California and Pennsylvania [and New York State], where Bombardier manufactures vehicles and produce rail products.

CUBIC TRANSPORTATION SYSTEMS INC.: Since 2011, prior MTA capital plans have resulted in more than $2.9 billion in direct spending and created over 37,000 jobs in the states where Cubic has U.S. locations – Alabama, California, Florida, Illinois, North Carolina, Tennessee, Texas, and Virginia.

HITACHI RAIL STS USA INC.: Since 2011, prior MTA capital plans have resulted in more than $230 million in direct spending and created more than 2,900 jobs in South Carolina, where Hitachi’s manufacturing facilities are located.

KAWASAKI RAIL CAR, INC.: Since 2011, prior MTA capital plans have resulted in more than $15 billion in direct spending and created more than 189,000 jobs in New York and Nebraska, where Kawasaki manufactures and tests railcars.

NEW FLYER OF AMERICA INC.:  Since 2011, prior MTA capital plans have resulted in more than $5.1 billion in direct spending and created more than 64,500 jobs in the states where New Flyer and NFI Parts have U.S. locations – Kentucky, Ohio, California, New Jersey, Minnesota, Alabama and Washington.

PREVOST CAR (US) INC.: Since 2011, prior MTA capital plans have resulted in more than $4.75 billion in direct spending and created more than 60,000 jobs in the states where Prevost has U.S. locations – Texas, Florida, Tennessee, California, Illinois, New Jersey and Washington D.C.

SIEMENS CORPORATION: Since 2011, prior MTA capital plans have resulted in more than $3.5 billion in direct spending and created more than 45,500 jobs in the states where Siemens has U.S. locations – Kentucky, Pennsylvania, Oregon, California and Illinois.

THALES TRANSPORT & SECURITY, INC.: Since 2011, prior MTA capital plans have resulted in more than $1.6 billion in direct spending and created more than 21,000 jobs in Pennsylvania, where Thales’ manufacturing facilities are located.

TRANSCORE: Since 2011, prior MTA capital plans have resulted in more than $625 million in direct spending and created nearly 8,000 jobs in the states where Transcore has U.S. operations – Texas, Virginia, and Massachusetts.

WABTEC PASSENGER TRANSIT: Since 2011, prior MTA capital plans have resulted in nearly $575 million in direct spending and created more than 7,200 jobs in North and South Carolina, where Wabtec’s manufacturing facilities are located.

As outlined, certain states would be especially hard hit by the loss of MTA contracts. Kentucky, for instance, is home to multiple companies that depend on MTA projects to achieve their annual expected revenue totals. Alstom Transportation, New Flyer and Siemens all manufacture vital parts for MTA rolling stock at facilities located in the commonwealth.

Similarly, Cubic Transportation, Bombardier and Prevost Car all maintain production or operations facilities in Texas, another state with significant contracts and employment from MTA purchases. The MTA also works closely with as many as five companies that have Florida facilities. Companies with facilities and employees in Arizona, Pennsylvania, Minnesota, Kansas, Tennessee, Illinois, Connecticut, Missouri, Oregon, North Carolina, Massachusetts, New York, New Jersey, Virginia, Georgia, South Carolina, Washington and Nebraska would also stand to lose out on billions in MTA investment should Congress fail to deliver $12 billion in federal aid.

The MTA is currently experiencing $200 million in revenue losses every week – an unprecedented crisis that eclipses even the Great Depression’s impact on its ridership and finances. These declines, compounded by the loss of state and local taxes and subsidies that support the organization, have left the MTA with a $16 billion projected deficit through 2024.

Additionally, the MTA’s credit ratings are experiencing extreme stress. The Authority’s core credit, the Transportation Revenue Bond, providing a gross pledge of a diverse and deep revenue stream has been downgraded five times since March. The most recent downgrade occurred on September 14 from Moody’s Investors Service, which lowered their rating from A2 to A3.  All four rating agencies rating the Transportation Revenue bond currently have the credit on a negative outlook.

In the face of federal inaction, the MTA is preparing for drastic and necessary reductions that include possible service cuts of up to 40% on subways and up to 50% on the Long Island and Metro-North railroads – measures that would have a profound negative impact on mobility in the New York Metropolitan region. The MTA could potentially lay off more than 8,000 workers to reduce expenditures. This is compounded by a looming fare hike and potentially gutting the historic $51.5 billion capital construction plan necessary to bring the 116-year-old system into the 21st Century.

Without an immediate injection of $12 billion, the MTA will be forced to make draconian cuts that will reverberate throughout the entire economy.

BOMBARDIER AND THALES RESPOND

Bombardier Transportation spokesperson Maryanne Roberts responded to Railway Age’s request for comment:

“Bombardier fully supports the MTA in its request for additional federal funding during these challenging times. A well-funded MTA will not only continue to meet the mobility needs of the New York City Metropolitan region; a strong MTA will also continue to provide economic benefits throughout New York State and across the country. For example, we have manufactured approximately 3,500 subway and commuter cars for the MTA, most of them at our site upstate in Plattsburgh, N.Y., which opened in 1995. Over the years, these MTA orders have provided well-paying jobs for New York State residents as well as additional business for hundreds of transit parts and component suppliers located in the Plattsburgh area, throughout New York State, and across the country. Other Bombardier sites in the U.S. also provide products and services to the MTA, resulting in additional contributions to the U.S. economy.  Per the American Public Transportation Association, every $1 invested in public transportation generates $5 in economic returns, and every $1 billion invested in public transportation supports and creates approximately 50,000 jobs.”

Thales spokesperson Adam Kostecki told Railway Age:

“Thales strongly supports additional federal funding in the next coronavirus relief bill to sustain our nation’s struggling transit agencies hit hard by the pandemic. As referenced in a letter from MTA Chairman Patrick Foye to the MTA’s top 11 suppliers, including Thales, the future of the MTA is at stake. As a company with a long history in the ground transportation industry, we support the chairman’s request for $12 billion in targeted transit relief and we have expressed our position in letters sent to key members of Congress.”

Railway Age Editor-in-Chief William C. Vantuono Contributed to this story.

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