OTTAWA — David Gunn has made a career of making trains run on time and on budget, the National Post reported. The tough-talking railway man is credited with having fixed ailing municipal subway and commuter rail systems in Washington, D.C., Philadelphia and New York City. His career was supposed to have wound down in 1999, after a successful five-year stint as the head of the Toronto Transit Commission.
The square-jawed 65-year-old was enjoying his retirement in rural Cape Breton earlier this year. Then Amtrak called and everything changed.
The U.S. passenger rail company offered to make Gunn its new president and chief executive.
He knew the mess Amtrak was in — flirting with insolvency, having mortgaged one of its premier assets, Penn Station in New York, just to allow the company meet its payroll obligations. He knew Amtrak was top-heavy, with more than 80 “vice-presidents.” It faced an impractical but legally required mandate to wean itself from federal subsidies — some US$521-million annually — by the end of this year. Gunn took the job anyhow.
He must sometimes regret not having simply laughed and slammed down the telephone, because Amtrak has lurched from one major crisis to another since he showed up for work in early April.
Two weeks after Gunn arrived at Amtrak’s Washington headquarters, a train derailed in nearby Virginia. Four Amtrak passengers, including a couple from Toronto, were killed and 160 others were injured in the wreck.
Eight weeks later, Gunn found himself before a Senate subcommittee on Capitol Hill, begging for emergency funding. Amtrak had run out of cash.
In July, another Amtrak train flew off its track, injuring 97 people. “We are in real trouble,” Gunn said at the time. He pointed out that Amtrak did not have enough cars to replace those damaged in the derailment.
Last month, problems arose with Amtrak’s new fleet of 20 high-speed, electric-powered trainsets — two engines bracketing six coaches — designed, built and maintained by a Canadian-French consortium led by Montreal-based Bombardier Inc.
Cracks were spotted in the trains’ sophisticated suspension system; Bombardier acknowledged they were stress fractures. Amtrak was forced to pull all of the equipment from service along its most crucial route, the densely populated corridor between Washington and Boston.
“Flaws risked derailment,” screamed a headline in The Boston Globe.
The cracks have been patched and most of the high-speed service — which Amtrak calls Acela Express — has been restored. But Amtrak’s troubles are far from over. The disruption reignited concerns that its flashy but temperamental Euro-style trains do not belong on the U.S. eastern seaboard, where operating conditions can be brutal. Some of the local railway infrastructure predates the war: the First World War.
Amtrak is now locked in a war of its own with Bombardier. The Canadian transportation and engineering giant is suing Amtrak for “not less than US$200-million,” claiming that persistent meddling by the train operator forced the consortium to incur cost overruns. Bombardier also claims Amtrak has withheld payment for the high-speed equipment.
Bombardier’s complaint alleges Amtrak rushed Acela into service, despite the manufacturer’s repeated warnings that “inadequate track quality” along much of Amtrak’s Boston-Washington corridor “would create unsafe conditions” if the new Acela trains, then in the testing phase, were allowed to run at high speeds.
Officials at Bombardier headquarters in Montreal refuse to say if Amtrak has made any payment on the trains at all.
Bombardier, of course, is experiencing financial challenges of its own. Profit outlook has been severely reduced by a drop in jet aircraft deliveries, the company’s bread and butter. Its stock price has recently hit six-year lows.
Prying any cash out of Amtrak could be difficult; an Amtrak lawyer alleges Bombardier “messed up this contract something fierce…. There was incompetence.”
Complicating matters is that Amtrak’s fiscal year ends on Sept. 30, and there has been no provision for more federal grants beyond that date. With no solid, long-term financial commitment from the U.S. government on the horizon, Amtrak will have to be completely restructured or privatized, or else allowed to fail. That would be bad news for Gunn, who has inherited the Amtrak mess, and bad news for Bombardier, which wants its money.
It should also cause a fuss among those unsuspecting people who backstopped the entire US$611-million high-speed train experiment: the Canadian taxpayers.
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Canada’s Export Development Corp. loaned Amtrak the money to purchase its new high-speed trainsets.
A Crown corporation that seeks to stimulate sales of Canadian products outside the country, EDC also lent Amtrak another US$400-million to buy additional Bombardier equipment; these include 15 electric-powered locomotives used for Amtrak’s regional passenger train service.
The loans have “been a closely guarded secret,” noted the Ottawa Citizen when it broke the story two years ago. “Details of the EDC-Amtrak loans are not disclosed in EDC annual reports or financial statements.”
These days, Amtrak officials freely admit the EDC loans were essential to their high-speed rail project. “Amtrak had no cash” of its own to pay for the trains, recalls Amtrak board member Amy Rosen.
Still, according to a recent edition of The Boston Globe, the loan package “astonished some [U.S.] lawmakers, who had hoped Amtrak would put its money into a train proven to work on American rails, and into upgrading its deteriorating tunnels, wiring and tracks.”
That assumed the appropriate high-speed rail technology existed. It did not.
“People think that Amtrak should have just bought some train off the shelf,” says Scott Leonard, assistant director of the National Association of Railroad Passengers, a Washington-based rail advocacy group. “That kind of argument drives me crazy. There wasn’t anything out there. The new trains had to be built from scratch.”
Calls for high-speed, electric- powered train service between Boston and Washington had been heard for decades. In the early 1990s, says Leonard, the idea finally stuck. U.S. President Bill Clinton and Vice-President Al Gore both supported the notion that better rail service along the congested northeast corridor would take pressure off the region’s highways and airports.
Preparing Amtrak’s infrastructure came first; about US$1.8-billion in federal funding were earmarked for basic track improvements and electrification along the corridor.
The next step was experimenting with different trains. A number of sets were shipped from Europe; while they attracted attention, Amtrak didn’t settle on any single model.
By the mid-1990s, Washington’s political climate had changed. When the Republicans won control of the Senate in 1995, their new majority leader, Bob Dole, pledged to “roll back federal programs, laws and regulations from A to Z — from Amtrak to zoological studies.”
While the infrastructure program “had gone past the point of no return,” says Leonard, “Congress could not be counted on to fund the purchase of high-speed train equipment. So if someone came along offering outside financing, that became attractive.”
Enter the EDC. The Crown corporation offered to fund the entire trainset project and throw in another US$100-million for the purchase of 15 electric locomotives designed to pull existing Amtrak stock, on the condition that Amtrak award the contract to Bombardier and its bid partner, Alstom Transportation, Inc. of France.
The contract was awarded in March, 1996; Alstom got to work designing and manufacturing the propulsion systems and the trucks — the trains’ wheel and undercarriage assembly — while Bombardier designed and assembled the rest of the equipment.
The contract called for the first trainsets to be delivered in June, 1999. Amtrak was desperate to introduce high-speed service to the Boston-Washington corridor, especially after Congress passed a law in 1997 requiring Amtrak to become completely self-sufficient in five years.
“Republicans had become even more fixated on spending as little as possible on rail,” says Leonard. “So it was in Amtrak’s interests to get the trainsets delivered and running.”
Amtrak, he says, “had put all of its eggs into the high-speed basket. Absolutely everything, the design process, the manufacturing, the testing, would have to move flawlessly or things would fall apart.”
Of course, everything did not proceed flawlessly. Things fell apart. After a string of embarrassing delays, the first trainset finally arrived in December, 2000. By then, Amtrak was teetering.
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Bombardier filed its US$200-million-plus complaint against Amtrak last November, in the U.S. District Court for the District of Columbia. The move surprised everyone except insiders with the two parties; for months, they had been dickering behind closed doors over who messed up what.
The complaint is housed in a massive Washington courthouse, directly opposite the Canadian embassy. It makes for some startling reading.
Almost from the moment the contract was signed, Bombardier claims, Amtrak began meddling with the consortium’s work. “As a result of Amtrak’s continuing interference,” Bombardier alleges, “designs have been modified literally thousands of times, large numbers of already completed components have had to be discarded or retrofitted…. The magnitude of the extra work caused by Amtrak is reflected in the vast Contract record — more than 19,900 letters, 9,000 engineering change notices, 4,700 retrofit notices and 800 formally recorded meetings…. Amtrak’s conduct resulted in many months of delivery delays and large cost overruns.”
Bombardier points out that under the contract, Amtrak was to provide track that would allow the new trainsets to run at 150 miles an hour, with a maximum “cant deficiency” around curves of nine inches.
Defined by Bombardier, cant deficiency reflects the lateral forces imposed on rail equipment in curves. The higher the cant deficiency, the greater the lateral forces.
According to Bombardier, it told Amtrak in a confidential April, 1997, meeting that existing track along the corridor was “not good enough for the speeds required” under the contract.
Bombardier claims Amtrak’s “chronic financial problems precluded it from investing the funds necessary to bring Northeast Corridor track up to international high-speed safety and ride-quality standards.”
But in July, 1997, the Federal Railroad Administration (FRA) in Washington issued proposed safety track regulations that, Bombardier alleges, “would permit Amtrak to operate trains at high speeds and high cant deficiencies, on track whose overall quality was lower than that previously required for conventional train service.”
Bombardier alleges it warned both Amtrak and the FRA that the corridor track was inadequate, and that it would “create unsafe conditions if trains ran at the high speeds and high cant deficiency required under the Contracts.”
What’s more, says Bombardier, high-speed experts from France presented Amtrak with confidential reports “demonstrating that the FRA’s new track standards were unsafe for high-speed train service.”
Amtrak, Bombardier claims, “continued to advocate standards that would decrease track quality and maintenance costs. As a consequence … the FRA issued track regulations that authorized train operation at high speeds and high cant deficiencies over track that, in key respects, was of lower quality than previously required for conventional train service.”
Amtrak’s poor track, Bombardier says, led to further design changes, more testing and delivery delays, all of which cost the consortium money.
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The problems did not go unnoticed. In 1999, The Boston Globe reported engineers had “discovered excessive wear on the new wheels after the train went around curves” during performance tests. Amtrak was forced to make the first of several announcements that its high-speed service would be delayed.
“Skeptics have begun the chorus of ‘I told you so’ and are questioning whether revitalized Northeast Corridor service, whenever it happens, will live up to its billing,” the Globe harrumphed.
By June, 2000, Bombardier was still concerned the trains could not meet contract requirements “in major respects,” including the performance of their undercarriages, or trucks.
Bombardier quietly informed Amtrak it was “not going to repeatedly tender equipment and then have Amtrak file claims alleging that the designs are not compliant in major respects.”
Amtrak would hear none of this; it wanted the trains delivered. The public had been told to expect the first high-speed trains by September, 2000, although that seemed optimistic. The company told Bombardier the track issue was not major, and that it need not be resolved “prior to the introduction of the trainsets into revenue service … the only consequence of this technical [track] issue is the potential operation of the trainsets at reduced speeds along certain portions of the Northeast Corridor.”
On Dec. 10, Amtrak’s first Acela train rolled out of Washington’s Union Station, and made the inaugural high-speed run to Boston and back in 13 hours, a little more than two hours better than a conventional Amtrak train. The new train was pulled from service the next day, after inspectors discovered some minor damage to a hinged metal assembly connecting it to overhead electrical lines.
Less than a year later, Bombardier filed its complaint. The lawsuit now seems prescient: Bombardier suggested the high-speed trains would experience difficulties, and this summer, they did. The question, of course, is why.
Not surprisingly, Amtrak denies the cracks in the suspension systems have anything to do with the quality of its track.
Amtrak has always denied that it made any inappropriate demands of Bombardier during the construction of its trains. Immediately after Bombardier filed its complaint last November, Amtrak issued a press release saying “it refused to cut corners or accept shoddy workmanship…. The Consortium’s record of failure … is staggering.” Amtrak maintains the Acela is safe.
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Since we paid for the things, I thought I’d take one for a spin.
The Acela trains haven’t been a complete bust; while they have a poorer record of reliability than Amtrak’s 20-year-old conventional trains, they are popular. Everyone I’ve spoken to who has taken the Acela Express enjoyed the experience.
But five minutes into my journey from Boston to Washington, I sensed that something was not quite right. The trains are sexy and sleek, boasting clean lines and smart interior styling. But they are not particularly swift.
We moved along in fits and starts, speeding up and then slowing with annoying frequency. Most of Rhode Island blurred past; it seemed the Acela might have approached its advertised top speed of 150 miles an hour.
Then we slowed to a frustrating crawl, clattering along ancient, uneven track, through Connecticut, Manhattan and much of New Jersey.
The man behind the snack bar scowled when I asked if he enjoyed working on the Acela trains.
“I like the old Metroliners,” he said, referring to Amtrak’s regular trains. Working in the Acela galley, he explained, made him feel claustrophobic. “It’s too long and narrow. You get banged around. And if you’re at the very end, you can’t hear what the customers are saying, because the chillers are too loud.”
He served me a hot dog, lukewarm on a stale bun, which I devoured. In the train’s first-class car, guests were offered a choice of poached salmon and seared beef fillet for supper, French Chardonnay and Merlot, and single-malt Scotch. Well after sundown, we pulled into Washington’s Union Station, a few minutes behind schedule.
The trip cost $176, and took almost seven hours.
Had I not taken the Acela, and opted instead for Amtrak’s conventional train service from Boston, I would have paid $81. In other words, I paid double the regular fare on Acela, and only saved about 70 minutes.
The little time I saved hardly seemed worth the money. The trains look nice, I decided, but they don’t seem particularly necessary. David Gunn seems to agree. “I’m not going to order any more of those,” he has said. He may never get the chance.