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Thursday, Mar 28, 2024

Japanese Firm Gets on Track

Kinkisharyo International LLC, a Japanese company building rail cars for the Los Angeles County Metropolitan Transit Authority, is seeking space in Palmdale for final assembly of the vehicles. Kinkisharyo, the U.S. arm of Kinki Sharyo Co. Ltd. of Osaka, is in negotiations to lease a plant owned by Los Angeles World Airports, the Los Angeles city department that operates Los Angeles International Airport, Van Nuys Airport and Ontario International Airport. In April, Kinkisharyo received an $891 million rail car contract from Metro to deliver 235 railcars for use on the region’s expanding light-rail network. The first 28 cars are scheduled for delivery by the end of 2015. An assembly plant in Palmdale would be a boon for the Antelope Valley by adding hundreds of new jobs. Kinkisharyo would occupy hangar space on Site 9, a 307-acre parcel LAWA owns in Palmdale. Locating in the Antelope Valley would deal a blow to the CleanTech Corridor that L.A. Mayor Antonio Villaraigosa envisions in a four-mile section near downtown and along the Los Angeles River, where green-energy and other environment-friendly manufacturers could locate. Villaraigosa had pushed hard for an Italian rail car manufacturer to locate there but a deal fell through in 2009, leading to Metro’s selection of Kinkisharyo. A spokesperson for Villaraigosa said Kinkisharyo may look at other sites in the region for more space in addition to Palmdale. “They are still considering a number of different sites,” the spokesperson said. LAWA has about 628,000 square feet of vacant space out of the 1 million square feet it owns at Site 9. The only tenant at the property is NASA Dryden Flight Research Center, which operates aircraft for scientific missions. With ample vacant space, the hangar would be perfect for the final assembly of rail cars, said Palmdale City Manager Dave Childs, who added that the city has known for several months that Kinkisharyo was interested in Site 9. “They need the manufacturing space because they have a tight time frame on the delivery of the cars,” Childs said. He added that the city is not a party to the negotiations but would get involved in the permitting process. A representative of the Metro’s procurement division was aware of sites Kikisharyo is looking at but would not discuss their location so as to not negatively affect negotiations with site developers. Kinkisharyo International did not respond the requests for comment. Atmosphere of controversy The light rail contract is the first the Japanese company has had with Metro. It has previously supplied rail cars for public transportation projects in Dallas, Phoenix and other U.S. cities. The Metro job includes an initial contract for 78 light rail vehicles and four options to buy another 157 light rail vehicles for $591 million for a total contract value of $890 million for 235 new rail cars. They would operate on the Blue, Gold and Expo lines and a planned extension of the Expo line down Crenshaw Boulevard to LAX. Kinkisharyo received the contract in an atmosphere of controversy. AnsaldoBreda, an Italian manufacturer that had a previous contract with Metro, was going to open its factory in the 20-acre CleanTech Manufacturing Center, at Santa Fe Avenue and 15th Street. That deal fell through at the last minute in October 2009 when the Pistoria, Italy company said it would not subject itself to the severe penalties in the contract for late delivery. Kinkisharyo then became involved in the process as one of three companies involved in the bidding process in 2010 along with Siemens AG, based in Munich, and CAF of Beasain, Spain. Metro staff recommended to its board to award the contract to Kinkisharyo based on the company’s ability to deliver rail cars on time. CAF and Siemens filed protests over the procurement process arguing their proposals were superior to the Japanese company. CAF, in addition, submitted a bid of $786 million, a lower cost than the $891 million Kikisharyo bid. Kinkisharyo also came under criticism for producing its first few cars for Metro in Osaka, Japan. The contract, however, requires the company to perform final assembly of those vehicles in Los Angeles County, a process that will create 200 jobs for the base order of 78 train cars. If those jobs come to Palmdale, the area has a ready-made labor force from its ties with the aerospace industry over many years, said Drew Mercy, board president of the Antelope Valley Board of Trade. “Skilled labor is our specialty up here,” he said. And if Metro exercises its options for the maximum number of cars, Kinkisharyo is committed to manufacturing car shells in the U.S. That would add another 50 jobs in Los Angeles County, according to the transit agency. Modifications needed The Los Angeles Board of Airport Commissioners was scheduled to consider the Kikisharyo lease during closed sessions on Dec. 3 and Dec. 17. It was unknown the lease agreement might be approved. If Kinkisharyo reaches an agreement with LAWA, the company will likely need to improve the 30-year-old hangar before assembling the rail cars. Dryden Flight Research Center spent $6.5 million in modifications and upgrades to its hangar, and LAWA paid $4 million for roof repairs to the building and to install a new central utility plant. The hangars were built for assembling the B-1 bomber and were later used for aircraft repairs. A number of movies, including “The Terminal” and sequels to “Pirates of the Caribbean,” have filmed at the Site 9 hangar now occupied by Dryden. Meanwhile, Villaraigosa’s goal of a CleanTech corridor is not completely dead. The city recently received a $2.1 million federal grant to go toward the corridor’s La Kretz Innovation Campus that will offer offices, conference rooms, an event space, research laboratories, a prototype manufacturing workshop and classrooms in a renovated 60,000 square-foot building.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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