Canceled Car Contract Not Good News for Rochelle

The news that Nippon Sharyo has lost the contract to build new passenger cars for Midwest and California corridor trains operated by Amtrak is not good news for  Rochelle, Illinois.

Nippon Sharyo established a factory in the northern Illinois city that does not see any scheduled passenger trains to build the bi-level cars.

But a prototype car built at the plant failed to pass safety tests and many employees at the Rochelle plant had already been laid off before the California Department of Transportation announced that Siemens will instead complete the cars at a factory in Sacramento, California.

The contract with Nippon Sharyo had been announced in November 2012 by former Illinois Gov. Pat Quinn and was valued at $550 million.

The Illinois Department of Transportation had banded together with its California counterpart to oversee the car orders, which also involves the states of Michigan, Wisconsin and Missouri.

The original contract had called for 130 passenger rail cars of which California agreed to buy 42. The remaining 88 cars were earmarked for Amtrak’s Midwest corridor routes.

Some saw the new cars as a first-step toward creating 125-mph passenger service in the Midwest.

With more than $10 million in state and local financial incentives, Nippon Sharyo opened a new U.S. headquarters and the $35 million passenger rail car facility in Rochelle in July 2012.

As recently as 2015, the Rochelle plant employed 694. Last month employment there was 54.

Illinois officials had said when announcing the contract to build cars in Rochelle that Nippon Sharyo had agreed to create 250 jobs and retain 15 at its office in Arlington Heights. A report in the Chicago Tribune said it is unclear if this agreement has changed.

Nippon Sharyo said it “will continue its business operations going forward with a reduced number of employees to meet the needs of existing customers and contractual responsibilities.”

Caltrans recently said it has awarded a $352 million contract to Sumitomo Corporation of Americas and Siemens to complete the car order that Nippon Sharyo once had.

The new contract calls for 137 single-level rail cars of which 88 will be used in the Midwest.

The Midwest High Speed Rail Association says that single-level cars are safer and better able to protect passengers in the event of a crash.

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