by Michelle Knapik
Director, Sustainable Environments Program, Surdna Foundation
September 18, 2012
Photo from BlueGreen Alliance report, Green Manufacturing Action Plan (GreenMAP)
Over the next decades we should be able to fill the hundreds of billions in new transit, rail, and street car orders that are on the books in cities across the US in ways that create thousands of new, high quality jobs (Reconnecting America estimates that there are 413 projects valued at more than $230 billion). This opportunity should also revive US transportation supply chain manufacturing in some of the economically hardest hit regions in the country - the same places that in the 1930s produced and serviced the fastest, sleekest such transit vehicles of the times. The challenge is that key connectors in the transportation supply chain have been weakened, and in many cases have gone missing with foreign manufacturers quickly filling the void. Without efforts to reestablish these supply chain connections, we will miss regional opportunities for the US to once again compete in transportation manufacturing.
But before we get to the supply chain question, we need to reexamine how transportation vehicles and equipment are purchased. Despite living in a consumer savvy country, our cities - the main purchasers of transportation vehicles, are mired in archaic buying practices and slow-moving reform efforts. Cities "procure" things through public bids and many cities are required to accept the lowest bid for goods and services. Most of us have had the experience of sacrificing high return when we buy goods and services at the cheapest price, so thankfully, some reform efforts have enabled cities to replace low cost bids with "best value procurement." Best value enables cities to factor in provisions like experience, past performance, vehicle design, delivery schedule, and energy consumption so they can get the best value at the lowest cost.
Going one step further, Surdna Foundation grantees the Los Angeles Alliance for a New Economy (LAANE) and the Brookings Institution are organizing an effort to fast track new "best value transportation procurement" changes that will enable cities to consider the job creation and regional manufacturing benefits of their transportation purchases. In addition to boosting demand for vehicles and component parts that are produced in America, this initiative is also focused on high quality transit manufacturing jobs that when combined will help the public get the best value per tax dollar invested.
Getting this best value procurement initiative up the proverbial hill requires the development of a model bid process for cities to follow, along with research to fill data gaps and technical support that will enable cities to properly assess bid responses to the jobs and manufacturing questions. The few previous attempts by cities to do this have had mixed results. But it is hard to fault the transit authorities because they were basically handed a bundle of new considerations without, an evaluation roadmap. I liken it to assembling a dresser from IKEA without the diagrams or instructions -- good luck having it come out right!
Brookings' Rob Puentes hosts panel with transit manufacturers (Photo by Shawn Escoffery)
With a plan for improving links between cities' transportation purchases and an assessment of regional jobs underway, let's return to the need for the US to stitch back together the transportation manufacturing supply chain. This includes not just the big ticket production of train, bus, street car and related vehicle shells, but everything that goes in them, from gears to seat covers. Here's where we run into a chicken and egg situation that goes like this: many small US manufacturers produce items that can be included in this supply chain, but until these manufacturers are sure that transportation purchases will build back the US supply chain they do not want to assume the risk of jumping in. But until the US supply chain is in place, purchasers will continue to have trouble meeting Buy America requirements for transportation equipment. So instead of a system that supports a US manufacturing pipeline, buyers resort to the escape hatch in the Buy America requirements that says, in essence, if you can't fairly easily source a component that is made in America, you can purchase it from overseas.
A number of savvy government, nonprofit, business and academic leaders are working to solve this dilemma. For example, Surdna grantees the Environmental Law and Policy Center and The BlueGreen Alliance have been surveying, identifying and mapping potential supply chain manufacturers in various regions of the country. If we add a well mapped supply chain with a best value procurement process that includes transit manufacturing and jobs factors, we may be able to position America to reclaim a top transit manufacturing status.
Under the leadership of LAANE and Brookings, transportation advocates from various corners of the country will work on model best value bids standards and develop the technical assistance packages to support transit authorities in a few upcoming transit vehicle and rail car orders. The demand trend for public transit is growing and the need for jobs and an expanded manufacturing base is immediate. As this plan leaves that station, the question is whether all the signal switches will align so the little red engine's momentum can build until it reaches its US employment destination. Surdna is laying bets (via philanthropic dollars) behind this effort - and we are seeking other investors and riders.