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BUY AMERICA roeconomic forces, such as changes in shipping costs or shifts in foreign ex- change rates. According to calculations by the Apollo Alliance, a nonprofi t coalition of businesses, labor and government agencies advocating for developing a larger "clean transportation manufac- turing base," since 2005, U.S. compa- nies and governments have spent more than $10 billion in purchasing public transportation equipment sourced offshore, even though the fi ve domestic heavy-duty bus manu- facturers, a dozen railcar build- ers and a wide range of other transportation equipment mak- ers served the market during the period. However, it should be noted that more than $25 bil- lion was spent by transit agen- cies during the period just for rolling stock, let alone the many other billions for facilities and systems and related technologies, ac- cording to APTA data. The conservative transportation in- terest blog Systemic Failure makes an- other argument. It examined the FRA's recently announced pooled purchase with the more stringent Buy America requirement. Based on the FRA's press announcement that it would cost $551 million for the 130 bi-level railcars in the joint procurement, each car would be $4.2 million dollars each — rough- ly double the global market price for a bi-level car in recent years. Part of the explanation for this dis- crepancy is the small U.S. market as a share of the global industry; thus some of the above price differential would occur with a less onerous Buy America requirement. A 2010 Gen- eral Accountability Offi ce study esti- mated that transit railcars in the U.S. comprise about 5% of the worldwide fl eet. While the share of the U.S. total has increased slightly due to demand growth here and a fl attening of the worldwide market overall, the point largely remains true. Chuck Wochele, VP, industry and government relations, for Alstom Transportation, estimates that Buy America-compliant car builders might be able to increase their U.S. content to "as high as 80%," but 100% is much more diffi cult — maybe even impos- sible — given how all car builders have structured their supply chains. Most bus manufacturers expressed similar concerns and would be hard pressed to increase their share of supply much beyond their current amounts. This is because sourcing suppliers is much — not as far-fetched as it may sound, however dramatic, for every other en- gine supplier has done so. Buy America has not caused any of the non-U.S. manufacturers to alter their investment or commercial plans in the U.S. None of these companies has announced plans to build a U.S. facility, despite the fact that at least some of the waiver requests included such intentions. more complicated than simply fi nding them; they also must meet stringent quality assurance requirements that transit suppliers demand. STRONGER ENFORCEMENT Closing loopholes in the Buy Amer- ica waiver process and creating more transparency are important improve- ments, but if restrictions go beyond that — to include even eliminating some of the waiver categories that may be viewed by some as loopholes as some policymakers have suggested — the result could ultimately be coun- terproductive, actually leading to fewer industry jobs, says Paul Smith, execu- tive VP, New Flyer. One example he and others in bus manufacturing cite: There currently is only one engine builder for heavy-duty bus engines in the U.S. market. Current Buy America rules fl ow down the sup- ply chain to component suppliers that serve engine production, for things like electronic controls, fuel injection systems and related parts. If enforce- ment is too tight on this supply chain, many worry that Cummins will leave the market entirely out of frustration 66 < mETRO mAGAZINE SEPTEMBER • OCTOBER 2012 This is primarily because the U.S. transit bus market is such a small part of the heavy-duty engine business, par- ticularly when viewed globally. If Cum- mins were to do so, it would strand ev- ery single U.S. transit agency looking to buy buses. While bus engines are an ex- treme example, there are other parts of the supply chain similarly dependent on a declining list of suppliers. Other barriers to entry for for- eign suppliers exist; the 12-year useful life and Altoona testing are two of the most commonly mentioned. They probably help U.S. industry in the sense that they are regulatory barriers to imports, but the 12-year useful- life requirement disadvantages North American bus manufac- turers in export opportunities, because this 20% more stringent de- sign life requirement places additional price pressure on U.S. vehicles and commercial risk beyond that which are needed or desired in other world markets. In this sense, U.S. vehicles are viewed as overdesigned. Combined with the way that U.S. manufactur- ers are organized — i.e., not export- oriented despite interest periodically displayed from other markets — and their lack of experience in export busi- ness means that U.S. builders are usu- ally not interested. That goes for most Canadian companies as well. Such at- titudes also reinforce the political sup- port for domestic content regulations. Were this not complicated enough, the U.S. is also the only public trans- portation supply marketplace in which the supply chain preferences are di- rectly driven by the customers; all other markets have the bus and railcar manufacturer that decides. This means that bus builders are more systems in- tegrators than manufacturers per se. As another illustration of this point, the major bus builders that export, such as Volvo or Daimler Benz, do so by selling "knocked down kits" to agents metro-magazine.com