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World’s high-speed train makers set sights on U.S.

(The following story by Chris Cooper of Bloomberg News appeared on the New York Times website on March 19,2010.)

TOKYO — Walt Disney World in Florida may be the next stop for bullet-train makers in Japan and China.

Central Japan Railway and China South Locomotive & Rolling Stock are competing for the $8 billion that President Barack Obama has granted for 13 high-speed corridors across the United States, including a line between Tampa and Orlando in Florida that may include a station at the Walt Disney resort near Orlando. The Japanese company, also known as JR Central, is eyeing North America as a shrinking population at home limits its growth.

Alstom of France, Siemens of Germany and Bombardier of Canada also want to sell trains, tracks and operating equipment under an initiative that the U.S. transportation secretary, Ray LaHood, called “an absolute game-changer for American transportation.” Other high-speed corridors run between New York City and Buffalo, New York; Los Angeles and San Francisco; and Chicago and Detroit.

“High-speed rail is going to be a big industry in the U.S.,” said Masayuki Kubota, a fund manager at Daiwa SB Investments in Tokyo. “A lot of companies are going to try and get a piece of the action.”

Bullet trains are generally considered to be those traveling faster than 180 miles, or 290 kilometers, an hour. Japan is home to the world’s first “shinkansen,” or high-speed train system. It also has the biggest high-speed network, which carried 308 million people in the 12 months through March 2009. JR Central runs the busiest bullet-train line in Japan.

By comparison, the Acela Express of the U.S. National Railroad Passenger Corp., better known as Amtrak — which can reach 150 miles an hour between Washington and Boston — carried 3.4 million passengers in 2008. Amtrak, which received $112 million of the Obama package to improve its Northeast Corridor, uses trains from Alstom and Bombardier, the world’s biggest maker of passenger locomotives.
JR Central is working with U.S.-Japan High-Speed Rail, backed by New Magellan Ventures in Washington, to sell its train systems in North America.

“Florida is at the top of our list,” the JR Central chairman, Yoshiyuki Kasai, said during an interview. “Our marketing partners in the U.S. have been in close contact with the routes we have targeted.”

Among those routes are one in Texas and one between Los Angeles and Las Vegas, he said.

JR Central showcased its trains to representatives from U.S. high-speed rail groups and embassies in November. Its N700 model accelerated to 205 m.p.h. within minutes of leaving a station in western Japan.

“It was probably the smoothest high-speed train I’ve been on,” Robert Eckels, chairman of the nonprofit Texas High Speed Rail & Transportation, said as he stood on the platform after the midnight run. The group aims to link the Texas communities of San Antonio, Dallas-Fort Worth and Houston by 2020.

JR Central is not the only Japanese train maker seeking to bolster exports. Kawasaki Heavy Industries of Kobe, Japan, made the trains for a $15 billion high-speed line in Taiwan that started operating three years ago, running from suburban Taipei to Kaohsiung in the south. Hitachi of Tokyo made high-speed trains that run from London’s northern suburbs to the city’s financial district.

More than 50 countries already use trains or rail parts made in China, which has three high-speed rail lines and plans to connect all provincial capitals and cities with more than 500,000 citizens by 2020, the Chinese Ministry of Railways has said.

The state-owned China South Locomotive and China CNR signed overseas contracts worth a combined $2.3 billion last year, according to their annual reports. The sales included switches to the United States and 20 locomotives to New Zealand.

“China’s rail parts and trains at least have advantage in price,” said Han Weiqi, an analyst at CSC International Holdings in Shanghai. “Chinese train makers want to go abroad because they want to sell the products at a higher profit margin.”

General Electric, the U.S. conglomerate that is the world’s biggest maker of freight locomotives, announced a partnership with the Chinese Ministry of Railways in November to manufacture equipment for U.S. high-speed rail projects. Shao Renqiang, secretary of the board at China South Locomotive, said the company would actively participate in U.S. railroad construction.

“It’s too early to say which lines will use Chinese products,” Mr. Shao said.

Walt Disney, the world’s biggest theme-park operator, offered to donate 50 acres, or 20 hectares, worth about $25 million, to Florida for a station at its Orlando resort, according to a Sept. 28 letter from Meg Crofton, the resort’s president.

In return, the company wants the rights to approve the station’s design and to operate it.

The link is scheduled to begin operating by 2015, with plans to reach Miami by 2017.

The $1.3 billion awarded by the Obama administration is half the amount needed for the line. Florida, where unemployment rose to a 35-year high in December and the state budget shortfall is expected to be $2.7 billion this fiscal year, is negotiating with the U.S. Federal Railroad Administration for the rest.

“The Europeans and other Asian competitors are all eyeing the U.S. market,” said Michael Finnegan, an executive vice president at U.S.-Japan High-Speed Rail. “The competition will be fierce.”

Monday, March 22, 2010

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